An outdated, tired-looking hotel is bad for business. But if you only focus on an interior facelift, you’re missing an incredible opportunity to improve your bottom line without raising guest rates.
Energy and water efficiency improvements free up money that goes directly back into your pocket. Deferring these capital projects will continuously chip away at a property’s value, but forward-looking hoteliers can capitalize on these upgrades to generate significant savings.
Create a Game Plan
Whether a hotel has the backing of a national chain or is independently run, the same opportunities for energy and water savings are available to each. If you’re unsure of which areas to tackle first, invest in audits that target energy use, water consumption, and waste diversion.
“A comprehensive audit will clearly and succinctly identify where opportunities exist and what the ROI would be per application,” says Sean O’Kane, director of Hotel Strategic Alliances for Schneider Electric Buildings Business.
Cornered by tight budgets, hotel owners often hesitate to invest in projects with lengthy paybacks. Yet this approach neglects the long-term structural health of the building, particularly if you’re just delaying these measures.
“A simple two- to three-year payback is what a lot of hotels are looking for. I question the logic of that,” O’Kane says. “If a project has a five-year payback and you say it’s too much, you’re paying that money to the utility anyway.”
To help owners feel more comfortable with projects that require higher initial costs and longer paybacks, O’Kane asks them how much they would have to increase incremental sales to generate the same impact on the bottom line as an energy efficiency project would. Typically it’s a dollar figure that simply isn’t available in the current market.
“If dollars are an issue, look at a tiered approach to solving energy waste,” recommends O’Kane. “Start with the low-hanging fruit and develop a program over several years that continuously attacks the issues, working your way through the whole list. All of those savings ultimately go to your bottom line.”
With 19 properties largely located in Las Vegas, MGM Resorts International understands the value of prioritizing efficiency projects. Famous hotels such as the MGM, Bellagio, Mirage, and Luxor have far-reaching brand recognition, but that doesn’t preclude the need for upgrades.
Cindy Ortega, MGM’s chief sustainability officer, also capitalizes on a layered project strategy. “Take the money you have and split it between big projects and small retrofits,” recommends Ortega. “Do at least one big project, even if it’s multi-year, and then fill the rest with lighting projects. One smaller project may not have a large impact on your energy bills, but they are very important collectively.”
Target HVAC Upgrades
When was the last time you evaluated your HVAC system for improvements? These behind-the-scene measures are often simple to address and offer immediate savings.
Fan coils often need a thorough tune up because poorly fitted enclosures result in air leaks, says Harry Hobbs, chief engineer for the InterContinental San Francisco. Variable speed drives will also benefit central air conditioning systems. When the InterContinental installed them, the ROI period was three and a half years or less.
If your mechanical systems still rely on fixed set points for supply of chilled water and air, you can upgrade to an optimized system. This resets the points in real time as it responds to real-time demands.
“Why would we produce 42-degree chilled water and 55-degree supply air if 48-degree water and 58-degree air will meet the need? When I implemented this in my hotel, we saved 16% on electricity and 25% on natural gas in the first year,” says Hobbs.
Monitoring will also help you identify problems. It’s critical to perform simple fixes to prevent an issue from escalating into a costly replacement. It also ensures your performance levels stay in peak shape. This is especially true for room units.
“If a hotelier recommissions room HVAC units but they aren’t continuously monitored and serviced, within five years those efficiencies originally gained will evaporate,” warns O’Kane. “This is a costly mistake. Maintaining the units preserves the efficiency and extends the unit’s lifecycle.”
Light Your Way to Savings
Just because a hotel is newer doesn’t mean you can sit back on autopilot for a few years. The InterContinental San Francisco serves as a case in point.
Completed in 2008, it would have been easy to keep the 32-story, 600,000-square-foot hotel’s operations as is. But Hobbs started rooting around for savings only six months after opening, finding many opportunities to improve the lighting. By reducing watts in hallways, parking garages, supply closets, and employee backrooms, the InterContinental was able to save more than $100,000 annually in lighting costs, including:
- Over 100 metal halide lamps, which consumed 210 watts each, originally graced a valet parking garage that was only used for a few hours a day by staff. By switching to a 42-watt CFL, the wattage was slashed by over 75%.
- Another inefficiency was found in the hotel’s two evacuation stairwells, which contained over 250 54-watt fluorescent fixtures. While security light is paramount during an emergency, 24/7 lighting had become a significant energy waste. The solution was to retrofit each lamp with an occupancy sensor. These were supported with a 3-watt night light to provide low-level lighting until the system is activated. With the support of a $17,000 rebate, the $45,000 retrofit provides $35,000 in annual savings with a 10-month payback.
- LEDs have also been successful for applications in public areas. Hobbs installed 900 6.5-watt MR16 lamps to replace a variety of 20- and 30-watt halogens. Two sets of 75-watt halogen PAR30 lamps were also retrofitted with 11-watt LEDs. These measures further reduced the hotel’s energy costs by about $5,000 a year.
- Another retrofit replaced 3,000 guest room lights with LEDs. With an initial investment of $40,000 paired with an additional $17,000 rebate, payback is expected in one year and will shave another $30,000 off the electric bill annually.
Hobbs understands some hoteliers’ hesitation with LEDs, but encourages them to adopt the technology where it makes sense. “When you consider the labor savings of replacing a 2,000-hour product with a 35,000-hour product, some risk is sensible,” says Hobbs. “I require compliance with LM-79, LM-80, UL, and ENERGY STAR for my needs and work very closely with my local utility to be sure we are getting the best available technology.”
For MGM Resorts, LEDs have also been worth the risk despite the design challenges. “LED lighting is great for its longevity, but it’s difficult to get it to perform the way we’re used to with incandescent lighting,” says Ortega. “In Las Vegas, lighting is paramount because our hotels are like theater stages.”
To capitalize on the efficiency without sacrificing the impact of the lighting design, Ortega found the best applications for LEDs were for marquee signage, guest rooms, lobbies, slot machines, and conference spaces.
Renovate Guest Rooms
When guest satisfaction and experience are your top priority, how do you quietly and quickly renovate hotel rooms? Ask the Bellagio.
With over 4,000 guest rooms, the Bellagio is one of the 15 largest hotels in the world. Built in 1998 in the heart of Las Vegas, the famous landmark recently launched a $70 million upgrade. A primary component of the project is the renovation of 2,400 guest rooms.
To keep noise to a minimum and meet the six-month deadline, construction crews took advantage of the 33 stories in the Bellagio to create a unique renovation technique.
Three floors are taken offline at a time, leaving plenty of space to accommodate average volumes of guests. The lowest floor is used as a sound buffer with no activity. The middle level houses the loudest renovations, including demolition and installation. The top floor’s updates are minimized to interior design and furnishings.
“This cushions the construction floor between two buffer zones to keep renovation noise far away from sleepy guests,” explains Ortega. “It also allows remodeling teams to work continuously through the night. By doing so, each floor takes an average of 10 days to complete.”
While a design facelift was a primary objective, the Bellagio took the renovation opportunity to install enhanced efficiency measures in individual rooms. Each modification satisfied the hotel’s need for greater control over energy and water while ensuring guest approval:
- LEDs improve lighting efficiency by 60%.
- Thermostats are connected to occupancy sensors and door locks. Once the room controls sense it’s vacant, the thermostat reverts to an automatic setback.
- The same configuration is also tied to remote monitoring, which allows inconsistencies to be identified.
- Showerheads and fixtures were updated with low-flow models.
While the upgrades have reduced energy consumption, the biggest impact has been on the guest experience. Clients appreciate both the behind-the-scene measures and those they directly interact with.
Keep to Your Renovation Schedule
Avoid renovation delays or prolonged disruptions to protect funds and keep customer satisfaction high. Hobbs suggests facilitating communication between all operational departments and construction teams. This ensures all affected parties are in the loop and accountable for adhering to the schedule.
Prior to remodeling, vet your construction firm for experience, affordability, and timeliness. Request a detailed scope of work and schedule and include strict contractual controls during negotiations, suggests Hobbs. “Set construction standards that reduce any possible punchlist that may extend beyond the project and further disrupt the business after the project has been completed.”
As work progresses, stay involved with routine project meetings. Document progress, expectations, and feedback to celebrate milestones while monitoring the renovation’s headway.
Leverage Green Certifications
Growing evidence confirms that when room rates are competitive, customers are more likely to book with a green hotel. Both the transient and meeting markets are increasingly recognizing the value of sustainable accommodations.
Make it clear to potential guests that your hotel is working to reduce its environmental footprint. Just like you would emphasize a feature like a pool or free parking, advertise your green efforts too.
One of the quickest ways to communicate these sustainable amenities is to earn a green certification or advertise the use of certified products. With greenwashing inundating the market, a recognizable certification such as Green Seal, ENERGY STAR, LEED, or WaterSense can build customer loyalty and become a part of the brand experience.
The InterContintental San Francisco earned LEED Gold for Existing Buildings: Operations & Maintenance in 2011 to the tune of $500,000. According to Hobbs, the investment has already been recouped and the savings have increased cash flow.
“Our competitors spend 3.5% to 4.5% of total revenues on utilities; we spent 1.8% in 2011,” Hobbs explains. “For our sales efforts to yield the same profit as these savings, they would need to find $7 for every $1 these projects saved.”
The hotel is also bolstered by an ENERGY STAR rating of 87. Hobbs sees great value in the rating, as it provides an excellent baseline for comparison with other hotel properties. Patience is required for the program, Hobbs cautions, as it uses year-to-year comparisons. Since opening in 2008, the InterContinental has moved past its initial ENERGY STAR score of 64 and steadily increased it by 23 points.
“Third-party verification was very useful to getting the project funded. Sometimes the project money gets lost when it’s only 3 or 4% of the total revenue – it’s not a big mark on your P&L,” says Hobbs. “But the rating increase becomes another data point that validates that what we are doing makes a difference.”
Combined with LEED certification, Hobbs feels the programs provide him the backing necessary to get a green light for continuing projects. “LEED and ENERGY STAR give me a great excuse to do the things that I’ve always wanted to do. The third-party accreditation is worth its weight in gold. While many people claim to be doing a lot with greening their hotels, I can prove it.”
Jennie Morton (email@example.com) is associate editor of BUILDINGS.