It’s that time of the year again when the hospitality industry is set abuzz because of one word: Numbers. Budget season is in full swing for 2012, and in meetings across the country skilled professionals are seeking ways to increase profitability and reduce costs in the year ahead. Choices are everywhere. Can we reduce our labor costs? Can we decrease our operating expenses? The answer is a simple and resounding “yes”: focus on hotel energy savings.
Energy reduction technologies and strategies will reduce labor, energy, and utility expenses. The cost reduction in these areas can positively affect P&L statements in 2012 and beyond. A change in the way a hotel utilizes energy is one of many sustainability initiatives that can reduce wasteful spending and increase bottom line revenue.
Energy purchasing in deregulated markets
In states where the monopoly system of electricity providers has been deregulated, a retail scenario has emerged with numerous competing firms that provide renewable energy options from the supply side. In these markets, competitive pricing among suppliers can provide an increased cost savings in addition to any incentives they may offer. By focusing attention on renewable energy sources, the overall carbon footprint of a single hotel can be drastically reduced. A renewable energy evaluation can provide solutions that will not only reduce your cost per kWh but also procure your energy with a provider producing energy through a renewable source.
In markets where deregulated energy options are available, commercial consumers of these utilities benefit from increased competitiveness and transparency. What’s the bottom line? Competition is good and the savings can be substantial. Though not available in every marketplace, the options for renewable energy are increasing each year.
Perhaps the most appealing facet of energy procurement is that it has zero out of pocket cost. This is an easy, affordable transition that can translate into both utility cost reduction as well as your company’s own sustainability initiative.
Energy Benchmarking
Did you know that guestroom energy usage typically exceeds 50 percent of the property’s utility bill? Decreasing your energy usage by 10 percent can equate to an increase in RevPAR by 60 cents for limited service hotels and by more than $2 for full-service hotels. The savings are real, and they flow right to the bottom line.
In order to know where you can save resources, it is imperative to know your baseline operating costs. An Energy Benchmarking analysis allows a hotel to establish a base cost for operating essential equipment. Once established, a property has a reference that they can utilize to compare themselves to similar property’s performance levels as well as to track their own progress. Benchmarking your hotel allows owners, management companies, and operators to view an energy profile of their hotels and the potential benefits that “green” transitions can afford them.
An energy analysis is an excellent way to identify these metrics and create a tool for measured, quantifiable data that can present areas for adjustment and potential retrofit. There are wonderful benchmarking tools for the hospitality to utilize including:Energy Star Benchmarking, Hilton LightStay Support, IHG Green Engage Support, and WasteWise (recognized by the EPA).
Once a hotel has been properly benchmarked a customized energy profile can identify potential areas for improvement and reduced energy consumption. By benchmarking annually and measuring monthly you can see the impacts of your energy saving adjustments. A third party energy professional can support to build a plan of potential improvements you can make to help reduce your overall utility expense.
Plan your 'capital expenses'
Energy reduction technologies and strategies aren’t free, but they pay for themselves in the overall savings. Planning in advance during your budgeting process can provide you with the options to see drastic expense reductions in the New Year. Plan for capital expenses now. By making adjustments to your property with capital dollars, you avoid impacting your operating budget and P&Ls for 2012.
Some of the most effective energy reduction technologies that you can utilize capital dollars for are:
- Occupancy Based Guestroom Energy Management (evolve, Inncom, Energy Patrol, etc.)
- Ozone Laundry Solution (Del, NuTek, ect.)
- Back of House Lighting Occupancy Controls (WattStoper, Lutron, etc.)
- Hot H2O Saver (Domestic Hot Water Efficiency)
- LED Lighting Upgrades (Cree, Solais, ect.)
- Window Film (Huper Optik)
Still using incandescent bulbs? The planned phase-out of this out-dated technology means that hotels need to plan for an appropriate retrofit now before availability decreases. Why not plan for an overhaul in 2012 by setting aside those dollars now?
Rebates and Incentives
In many areas of the country hotels can take advantage of utility rebates and incentives. Lower interest energy loans, hotel energy rebates, and state programs with subsidies are also available to possibly offset the initial costs of an energy reducing technology. There are options available at the local, state, and federal level to encourage businesses to engage in energy reducing technologies and upgrades.
Now is the time to act
By taking advantage of some of the new energy reducing technologies and programs now, you are investing in the future profitability of your hotel energy savings. Utility costs are among the highest expense line items at any hotel property. By engaging in a coordinated plan to reduce energy consumption, your overall bottom-line performance is bound to improve.
Scott Parisi is the founder and president of EcoGreenHotel, a firm that develops energy and sustainability projects for commercial buildings with a large focus on the hospitality sector; sparisi@ecogreenhotel.com.
