The hospitality industry is a major segment of Tourism which is in turn a main economic contributor for instance for Small Island Developing States (SIDS). Sustainable tourism practices are promoted worldwide by international organizations like the United Nations World Tourism Organisation (UNWTO) to assist different countries. Varied frameworks such as the Global Reporting Initiative (GRI), the Sustainable Development Goals (SDGs), United Nations Global Compact (UNGC) and environmental indices and management systems such as ISO 14001 are common assessment tools for environmental sustainability. This research reviews the relevance of incorporating environmental and socio-economic factors within hotel operations which may lead to improved transparency, and operational effectiveness while guaranteeing adherence to sustainability within the hotel business. Accordingly, a comprehensive review of environmental sustainability assessment in hotels was carried out. A comprehensive analysis of research articles published between January 2000 and January 2023 by reputed databases ranging from Google Scholar, Scopus, and others, were used to conduct the literature review. A total of 38 papers were examined adhering to the PRISMA standards and it is worth noting that a significant increase in interest emerged from 2018, especially in Europe and Asia. The review reiterated the relevance and need to use relevant assessment methods and tools that aid in implementing sustainable development strategies to promote tourism-dependent economies, particularly in Small Island Developing States (SIDS). It additionally provides valuable knowledge for future directions, whilst improving research methods and incorporating innovative technologies. These advancements are essential as they may guide policy decisions to protect the environment in the hospitality industry.