Mr. Rizzo

Finance & Investment

LEED Certification and Other Green Initiatives Can Be Hotel Marketing Coups

By Carl Rizzo, Partner, Cole, Schotz, Meisel, Forman & Leonard, P.A.

Co-authored by Adam M. Goldstein, Associate, Cole, Schotz, Meisel, Forman & Leonard, P.A.

In the United States, hotels represent more than 5 billion square feet of space, nearly 5 million guest rooms, and close to $4 billion in annual energy use (1). However, as of January 2010, only 40 hospitality properties have achieved so-called LEED (“Leadership in Energy and Environmental Design”) certification. While an additional 900 hospitality projects have registered with LEED and are working towards certification, this number pails in comparison to the more than 35,350 commercial LEED registered projects.(2) While LEED certification may not be as popular in the hospitality industry as compared to other industries, in recent years, there has been a growing emphasis by businesses, across all industry segments, consumers and the news media, placed upon the topic of “green initiatives.” In fact, many hospitality companies have already instituted green initiatives or green practices. Whether or not a hotel chooses to seek LEED certification or instead make modest environmentally friendly changes, ownership would be wise to market any such green initiatives to the public.

LEED is a voluntary, third-party green building certification program that awards points to buildings for satisfying certain green building criteria. In order to be LEED-certified, a building has to implement a plan to reduce building operating costs, its environmental footprint, and resource consumption such as water and energy use. LEED was developed by the U.S. Green Building Council (“USGBC”), a non-profit organization, and is intended to provide building owners and operators a basic framework for identifying and employing practical and measurable green building design, construction, operations and maintenance solutions.

Under the LEED umbrella, there are several specific certification programs or rating systems, which are specific to different types of projects. These certification programs/rating systems include:

• new construction;
  
• existing buildings;
  
• commercial interiors;
  
• core and shell;
  
• schools;
  
• healthcare;
  
• homes; and
  
• neighborhood development.

LEED for New Construction and Major Renovations and LEED for Existing Buildings: Operations & Maintenance are the programs which have the most applicability to hospitality projects. While the USGBC is exploring a LEED rating system specific to hospitality, to date, none has been developed. LEED for New Construction provides a framework for green design and construction of new developments, whereas, LEED for Existing Buildings provides a roadmap for hotel owners and operators to improve operational efficiency and minimize the environmental impacts from existing hotel operations.

In addition, each rating system, including LEED for New Construction and Major Renovations and LEED for Existing Buildings: Operations & Maintenance, is organized into six credit categories. These credit categories are

• sustainable sites;
  
• water efficiency;
  
• energy and atmosphere;
  
• materials and resources;
  
• indoor environmental quality and
  
• innovation in operations.

Each of the six credit categories include certain prerequisites as well as optional credits that can further a project toward obtaining LEED certification. Once the essential prerequisites are satisfied, developers can thereafter chose which optional credits to pursue in order to obtain certification. Certification levels start at Certified and increase to Silver, Gold and Platinum designations.

The first hotel to receive LEED Platinum Certification was the Proximity Hotel in Greensboro, North Carolina. The Proximity Hotel uses 39% less energy and 33% less water then a comparable sized hotel. In addition, the Proximity Hotel was able to recycle 87% of its construction debris (1,535 tons), purchased 40% of the building materials and 90% of its furniture locally and even restored 700 feet of an adjacent stream. Proximity’s most impressive features, however, include:

• installation of 100 solar panels on the roof, which heat about 60% of the hotel and the hotel restaurant’s water;
  
• use of geothermal energy for the restaurant’s refrigeration equipment; and
  
• installation of the Regenerative Drive model of the Otis’ Gen2 elevator which reduces net energy usage by capturing the elevator’s energy and then feeding it back to the hotel’s electrical grid.

Irrespective of whether a hospitality company chooses to seek LEED certification, there are a number of green initiatives the hospitality industry should consider implementing going forward. Many hospitality companies have already introduced green initiatives, such as the use of compact fluorescent light bulbs, offering linen and towel reuse programs as well as various recycling programs. However, many more green initiatives can and should be implemented. Below are some examples of green initiatives being implemented by the hospitality industry at this time. Not only are these green initiatives environmentally responsible, but should a hospitality company at some future point seek LEED certification, these green initiatives would earn them points in furtherance of the certification process.

• Paving Parking Lots with Highly Reflective Materials or Open Grid Pavers. Many hospitality properties are surrounded by large asphalt paved parking lots. Darker colored surfaces absorb more heat and therefore increase a building’s heat island effect. By using highly reflective concrete and/or open grid pavers, hospitality companies can help reduce the summer cooling loads for their building, which in turn reduces energy use and pollution generation. In addition, the lighter colored surfaces reflect more light from artificial sources, therefore requiring less lighting than projects improved with traditional asphalt pavement in order to achieve the same lighting standard.(3)
• Installing High-Efficiency Plumbing Fixtures. Hospitality companies should certainly consider the installation of high-efficiency plumbing fixtures. For example, a standard showerhead uses 2.5 gallons of water per minute (“gpm”), whereas a high-efficiency showerhead would use 2.0 gpm or less. In addition, replacing an older, existing toilet with a high-efficiency toilet can save 4,000 gallons of water per year. Moreover, the installation of a high-efficiency bathroom sink faucet can reduce a sink’s water flow by 30 percent or more without sacrificing performance.(4)
• Landscaping with Native Plant Species. Landscaping with native plants improves the environment, because native plants generally do not need pesticides, fertilizers or watering. In addition, this type of landscaping needs less regular maintenance than conventional lawn applications. Native landscaping can help improve air quality in two ways. First, native landscaping effectively eliminates the need for lawn maintenance equipment (e.g., law mowers, weed edgers, etc.) which are fueled by gasoline, electricity or batteries. This is important because these fuel types generate air pollutants, which account for 5% of ozone forming volatile organic compounds in areas with smog concerns. Second, native plants reduce more carbon dioxide in the atmosphere than traditional mowed grass due to their extensive root systems and increased ability to retain and store water. By eliminating the use of pesticides and fertilizers, native landscaping also improves water quality as these pollutants will not run-off into streams, lakes and bays.(5)
• Green Cleaning – Using Sustainable Cleaning Products, Materials and Equipment. By implementing a green cleaning program, hospitality companies can both reduce costs and avoid toxic fumes and skin irritants that can harm both guests and employees. A green cleaning program may include the use of Green Seal Certified household cleaners, Green Seal Certified laundry products, micro-fiber cloths, and dual motor vacuum cleaners with HEPA (high efficiency particulate air) filters that prevent particles from becoming airborne. Green Seal is a non-profit, third-party certifier. A Green Seal Certification mark on a product means that Green Seal has evaluated the product from the raw materials through the manufacturing process and ending with recycling or disposal and ultimately concluded that the product has less of a negative impact on the environment and human health.(6)
• Using Local Materials and Goods. By using raw materials, goods and products from local vendors, hospitality companies can reduce fuel use, pollution and greenhouse gas emissions associated with the transportation and delivery of these products. In addition to the environmental benefits associated with reducing long-distance transportation of these materials and/or products, a hospitality company can also avoid the costs and logistical challenges associated with importing and transporting materials, goods and products.

While not every hotel or hospitality company may be in the financial position to seek LEED certification or undertake costly capital expenditures, there are numerous green initiatives that each and every hospitality company should be considering to improve their efficiencies while also attracting green conscious consumers. Hospitality companies must recognize that the proverbial train is leaving the station and they need to get on board or be left behind from a competitive perspective. A simple Google search of “hotels” and “green initiatives” returns more than 27,000,000 hits. The hospitality industry therefore needs to continue to strive to make eco-friendly changes from both an environmental and economic standpoint.

Co-Author: Adam M. Goldstein is an associate at Cole, Schotz, Meisel, Forman & Leonard, P.A.. His practice focuses primarily on financing, acquisition, leasing and development of commercial real estate.

References

(1) Practical Strategies in Green Building, Hotels,
www.usgbc.org
(2) FAQ, LEED and the Hospitality Industry,
www.usgbc.org
(3) Reflectivity and Sustainability,
www.cement.org/decorative/sustainability.asp
(4) WaterSense, an EPA Partnership,
www.epa.gov/WaterSense/
(5) Green Landscaping: Greenacres,
www.epa.gov/greenacres/index.html#Benefits
(6) about green seal,
www.greenseal.org/AboutGreenSeal.aspx

Carl Rizzo's broad and diverse practice includes concentration in commercial litigation matters and chancery practice relating to contractual disputes involving such matters as surety, construction and construction liens, real estate transactions, commercial tenancy, employment covenants and partnership/shareholder discord. He also concentrates his practice in tax court ad valorem proceedings, where he has successfully negotiated and litigated numerous matters involving millions of dollars in tax reductions for his commercial property owner clients. Mr. Rizzo can be contacted at 201-525-6350 or crizzo@coleschotz.com Extended Bio...

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