One New Year's Resolution That Always Makes Sense

By Steve Kiesner Director of National Accounts, Edison Electric Institute | October 28, 2008

With the price of natural gas predicted to be lower this winter than last year, you may be tempted to take your eye off the energy bill for a moment. Don't. The smart hotel executive knows that the search for ways to get more value from every dollar spent on energy-both natural gas and electricity-never takes a break. For the New Year, dedicate one of your resolutions to becoming more energy efficient. You'll find the payoff to be greater profitability for your company all year round.

The U.S. lodging industry spends close to $4 billion on energy every year, according to the U.S. Environmental Protection Agency (EPA). If hotels could improve their energy performance by an average of 30 percent, the nation would be breathing even easier, and the hotel industry's annual electricity bill savings alone would be nearly $1.5 billion. This would represent a savings of approximately $365 per available room night per year for every hotel room in the country. The good news is that there are many simple steps your staff can take to use energy more efficiently. And the great news is that electric utilities can help you.

The forecast for natural gas prices

According to the latest Short Term Energy Outlook from the U.S. Energy Information Administration (EIA), relatively high levels of natural gas in storage and a forecast of slightly warmer-than-normal weather (though not as warm as last winter) should result in lower natural gas prices lower this winter. Nationally, hotels and other commercial customers are expected to pay about $11.85 per thousand cubic feet (mcf) of natural gas, which is equal to approximately 10.27 therms, in the first quarter of 2007, and $10.51/mcf in second quarter. Last winter, prices averaged $13.19/mcf in the first quarter, and $11.59/mcf in the second quarter. A few regions, particularly the Northeast, will see higher prices this winter-$14.24/mcf in the first quarter, and $12.94 in the second-than last winter. And keep in mind that although natural gas prices overall are lower this year, the price for a therm of gas is still at an historical high. Today's price is about double the price in the 1990s.

All natural gas consumers-industrial, commercial and residential-are feeling the effects of high-energy prices. High prices for natural gas, heating oil and transportation fuels are having a ripple effect throughout the economy. Utilities that use natural gas to generate electricity also are feeling the pinch. Electric utilities do not benefit from higher energy prices, since they are often "caught" between high fuel costs and regulatory limitations on electricity rates. Like consumers, these utilities are seeking to use natural gas as efficiently as possible and are switching to fuels that are more economical whenever it is feasible.

There are no quick and easy answers to our energy policy challenges. Increasing the supply and diversity of our nation's available energy resources involves long-term solutions. Eighty-five percent of the natural gas consumed in the U.S. is produced domestically, and almost all the remainder of our supply is imported from Canada. New North American supplies and infrastructure need to be developed for the future, especially in those areas that are currently restricted or off limits in the Rocky Mountains and the Atlantic and Pacific coastal areas.

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Coming up in February 2018...

Social Media: Engagement is Key

There are currently 2.3 billion active users of social media networks and savvy hotel operators have incorporated social media into their marketing mix. There are a few Goliath channels on which one must have a presence (Facebook & Twitter) but there are also several newer upstart channels (Instagram, Snapchat &WeChat, for example) that merit consideration. With its 1.86 billion users, Facebook is a dominant platform where operators can drive brand awareness, facilitate bookings, offer incentives and collect sought-after reviews. Twitter's 284 million users generate 500 million tweets per day, and operators can use its platform for lead generation, building loyalty, and guest interaction. Instagram was originally a small photo-sharing site but it has blown up into a massive photo and video channel. The site can be used to post photos of the hotel property, as well as creating Instagram Stories - personal videos that disappear from the channel after 24 hours. In this regard, Instagram and Snapchat are now in direct competition. WeChat is a Chinese company whose aim is to be the App for Everything - instant messaging, social media, shopping and payment services - all in a single platform. In addition to these channels, blogging continues to be a popular method to establish leadership, enhance reputations, and engage with customers in a direct and personal way. The key to effective use of all social media is to find out where your customers are and then, to the fullest extent possible, engage with them on a personal level. This engagement is what creates a personal connection and sustains brand loyalty. The February Hotel Business Review will explore these issues and examine how some hotels are successfully integrating social media into their operations.