How Energy Efficiency Helps Hotels Win the Hospitality Boxing Match
By JJ Steeley, VP of Client Experience, Carbon Lighthouse
Success in today’s hospitality industry is a boundless boxing fight (bear with me on this metaphor) to maximize revenue per available room (RevPAR) and over-index on the STR Report. When I was in the hotel business, I was so focused on improving customer experience to push rates that I never gave much thought to electric bills.
In boxing, it’s not always about how hard you hit — but how smart you hit. Energy makes up around 6 percent of hotel operating costs, according to Energy Star, so getting smarter about how your building consumes energy can help secure a competitive edge.
The resulting financial savings from energy efficiency can help finance renovations and updates that serve as a one-two punch for winning the fight.
Granted, many hotel operators have been made skeptics thanks to endless calls from providers promising energy savings — but times are changing.
Looking beyond towels on the floor to new sources of asset value
For many guests, being asked to reuse their towels to conserve water is the most visible hotel sustainability initiative. While this might make people feel good, its positive environmental and economic impacts are hard to quantify and don’t translate into significant financial savings. With energy, it’s a different story.
Commercial real estate is transitioning toward more efficient energy management to drive financial value. Here at Carbon Lighthouse, we routinely deliver 10 to 30 percent energy savings in buildings with central HVAC systems by tapping what we call “Efficiency Reserves” — the building’s wasted energy. We provide an ongoing service so that we can guarantee the real dollar value of those savings.
For a hotel owner, those energy savings can minimize operational expenditures (OPEX) — see my article in Lodging Magazine — re-value a building and bring in better refinancing terms to fund other investments they need to stay in the fight.
It all starts with data — capturing new and more building information to identify the small but smart changes that can lead to big savings.
Thanks to advances in sensors and data analytics, it’s now possible to understand the ugly details of how hotels consume (and often waste) energy. To find and deliver these savings, we use a network of sensors that capture data no one else does and crunch it with our patented CLUES® software.
All of this translates into greater savings per square foot and a higher building capitalization. That gives hotel owners — like Ohana Real Estate Investors and their Montage Beverly Hills Hotel — a leg up in the fight by making it easier to get financing for renovation projects.
What happens in Vegas…
Las Vegas is where one of the most aggressive hotel fights takes place. Not only do hotels have to constantly evolve and adapt to attract customers, the city’s extreme climate makes for gargantuan electric bills. At the Hilton Elara in Las Vegas — a soaring 52-story, 1201-unit timeshare vacation ownership building — Carbon Lighthouse worked with the building owners to uncover a series of energy upgrades that would save nearly $1 million.
Savvy hotel owners understand that sustainability is an investment, not a cost. Do it right and you create an asset, not a burden. Driving profits and sustainability requires finding hidden savings in how hotels operate their most energy-intensive equipment, watching in the background and guaranteeing those savings in writing and with ongoing monitoring.
JJ Steeley is the EVP of Client Experience at Carbon Lighthouse, an energy services company that makes it easy and profitable for building owners to eliminate carbon emissions caused by wasted energy. She previously served as Vice President of Marketing for Commune Hotels & Resorts where she ran marketing for Thompson, Joie de Vivre, and tommie portfolios and helped develop and launch world-class properties like The Beekman and Chicago Athletic Association.