The Impact of the California Environmental Quality Act on Hotel Development

By Larry K. Kimball Director of Hotel Development, C. W. Clark, Inc. | June 11, 2010

If you are not developing a project in California and think this article is irrelevant, keep reading because the California Environmental Quality Act ("CEQA") is the model for future regulations in your jurisdiction. We will highlight how CEQA shapes development projects but more importantly how politicians, organized labor, and environmentalists often leverage the CEQA approval process to further their self-interests at the expense of developers and communities.

CEQA Rules the Approval Roost

While the applicability of CEQA to a proposed project is not always automatic, if discretionary approvals from state and local public agencies are needed then prudent developers should increase their development budgets for higher costs from legal fees, consultants, focused community outreach programs, and hard construction costs. Likewise, operating pro-forma should include ongoing compliance costs which will reduce operating margins and subsequent project valuations.

An environmental review under CEQA guidelines includes science but the interpretation is an art. "The fundamental purpose of the Guidelines is to make the CEQA process comprehensible to those who administer it, to those subject to it, and to those for whose benefit it exists. To that end, the Guidelines are more than mere regulations which implement CEQA as they incorporate and interpret both the statutory mandates of CEQA and the principles advanced by judicial decisions. (1)" For all math-inclined readers, (Regulations + case law) * interpretation = CEQA.

It is beyond the scope of this article to present and discuss the Guidelines. Rest assured, it is a growing body of work. The latest amendment, effective March 18, 2010, addresses the new CEQA step of determining the significance of impacts from greenhouse gas emissions (2) from a project. As you close your eyes and imagine, an evolving art form will be future interpretations of this by agencies leading a CEQA review aided, of course, by a cottage industry of consultants.

A more interesting issue is how is the CEQA approval process used by stakeholders to advance their agenda. A couple of examples will follow to illustrate this mix.

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Sales & Marketing: Selling Experiences

There are innumerable strategies that Hotel Sales and Marketing Directors employ to find, engage and entice guests to their property, and those strategies are constantly evolving. A breakthrough technology, pioneering platform, or even a simple algorithm update can cause new trends to emerge and upend the best laid plans. Sales and marketing departments must remain agile so they can adapt to the ever changing digital landscape. As an example, the popularity of virtual reality is on the rise, as 360 interactive technologies become more mainstream. Chatbots and artificial intelligence are also poised to become the next big things, as they take guest personalization to a whole new level. But one sales and marketing trend that is currently resulting in major benefits for hotels is experiential marketing - the effort to deliver an experience to potential guests. Mainly this is accomplished through the creative use of video and images, and by utilizing what has become known as User Generated Content. By sharing actual personal content (videos and pictures) from satisfied guests who have experienced the delights of a property, prospective guests can more easily imagine themselves having the same experience. Similarly, Hotel Generated Content is equally important. Hotels are more than beds and effective video presentations can tell a compelling story - a story about what makes the hotel appealing and unique. A video walk-through of rooms is essential, as are video tours in different areas of a hotel. The goal is to highlight what makes the property exceptional, but also to show real people having real fun - an experience that prospective guests can have too. The June Hotel Business Review will report on some of these issues and strategies, and examine how some sales and marketing professionals are integrating them into their operations.