Evaluate Energy Expenses to Survive Today's Economy

By Jim Poad Director of Client Solutions, Advantage IQ | May 16, 2009

According to ENERGY STARR, typical energy expenses account for more than 6 percent of a hotel's total operating costs. These costs have increased approximately 25 percent from 2004 to 2008.

By investigating procurement options, analyzing a history of utility invoices, exploring what rates you should be paying, and implementing green energy practices, operators can drive down utility costs without negatively impacting the comfort of their hotels or quality of the guest accommodations.

Profile Your Energy Costs

The first step is to develop an accurate "load profile" that reflects your energy usage. This information can be found within your utility invoices. Once you have gathered all of the demand information, a quality profile will consider how demand might have been affected by operating hours, occupancy, temperature, the amount and age of equipment, and lighting. For operators managing several sites, establishing a load profile for each site across the entire portfolio can help significantly in monitoring performance and reducing energy costs.

Next, analyze the information on the bills further. Were you billed properly? You would be surprised how often billing errors are found on utility bills. There are a lot of variables that can effect how you are billed. Review the rates to determine whether you are on the appropriate rate for your load profile.

For example, say a hotel is being billed a rate suitable for a 9-to-5 business, but obviously has different demand characteristics - it's a 24 hour-a-day operation! This qualifies it for a Time of Use rate that may be more favorable. An oversight of this kind dramatically increases monthly costs. Mistakes of this sort are surprisingly common. Operators assume that a utility rate can be reviewed once, never to be looked at again. On the contrary, rate review should be revisited regularly as sites open, close, or demand characteristics change.

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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.