10 Ways to Better Manage Your Energy Budget

By Jim Poad Director of Client Solutions, Advantage IQ | August 03, 2010

With skyrocketing fuel prices eating into profits, hoteliers have few reservations about cutting energy expenses. They're adjusting thermostats, dimming lights in lobbies and hallways, consolidating trips for supplies, and even posting signs that ask guests to "please reuse towels."

While these are all good ideas, they're really just a start. To maintain or even maximize profitability, hoteliers need to go beyond mere cost-cutting and step into the realm of energy budget management. It can be a very effective strategy for reducing operating expenses and is something that, surprisingly, many hoteliers are overlooking.

That's too bad. This year, hoteliers will spend over $5 billion on energy expenses. In fact, utility expenditures represented the fastest-growing expense for hoteliers, increasing an average of 12 percent per year from 2004 to 2006, according to PKF Consulting's Hospitality Research Group. It's likely that energy costs will continue to climb in the foreseeable future.

Fortunately, an energy consultant can help hoteliers reduce operating expenses as much as three to five percent. An added plus: implementing an energy budget management plan can green your hotels, which may help drive revenue by attracting increasingly environmentally conscious travelers.

Better still, engaging an energy consultant is a low-risk, high-return approach that typically has a rapid and substantial ROI. Here are some areas that an energy consultant should be focusing on and what you can do to best manage and engage the relationship.

  1. Be prepared.
    To ensure that your energy consultant can accurately budget
    and plan for your future, provide them with utility bills collected from the
    prior year at a minimum. This will provide your energy consultant with an
    accurate picture of what they're working with, what they should expect, and
    how they can affect change. If you don't have them anymore, historical
    invoices may be available from the utility, though even historical expense
    reports can be a proxy for consumption history. Current operational
    procedures and recent capital or infrastructure investments that affect
    energy consumption would also be beneficial.

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.