Mr. Weissman

Eco-Friendly Practices

Top Government Incentives for Greening Your Hotel

By Arthur Weissman, President and CEO, Green Seal, Inc.

Tax(1) incentives that are currently offered by state and local governments fall primarily into two categories: "hard" incentives such as grants, loans, tax breaks, or rebates that are given to developers and their clients by an agency; and "soft" incentives which include expedited plan review, permitting, and training or marketing assistance. The main difference between the two types of incentives is that hard incentives tend to focus more on building new relationships with prospective businesses to ensure resource-efficient facilities, and soft incentives tend to focus more on strengthening existing business relationships with a community to increase public awareness of environmental accountability. One example of a very common soft incentive that many state governments have already adopted is marketing to and encouraging their employees to use facilities for business travel and meetings that are managed in an environmentally responsible manner.

In comparison, hard incentives also tend to be very short-term and performance-based, which means they are awarded only after a developer completes the required design, construction, or operational requirement specified by the program. The extensive adoption of the US Green Building Council's LEED criteria by local agencies as metrics for grants or tax rebates is an example of incentives that are offered for energy, water, and resource-efficient planning and design by developers. The rebate programs from Southern California Edison1 and Pacific Gas & Electric(2) are examples of more long-term hard incentives for environmentally responsible operations and management.

A very thorough and updated listing for Energy Efficiency Incentive Programs available throughout the United States can be found in the North Carolina Solar Center's Database of State Incentives for Renewables and Efficiency (DSIRE)(3). Cities are also starting to offer carbon reduction benchmarking grants to businesses which voluntarily participate in third-party certification programs or other performance-based operational monitoring programs. Additional environmental planning, design, finance, and construction resources for developers can be found on the Green Building Finance Consortium(4) website.

Surprisingly, however, studies by both the American Institute of Architects (AIA) and the National Association of Industrial and Office Properties (NAIOP) have found that developers would rather see more soft than hard incentives offered by agencies. Since many environmental efficiency calculations now require specialized training and assistance from agency staff for businesses(5) and LEED criteria for building design and construction are becoming more popular for new real-estate development projects in the United States, developers are now asking how using environmental incentives will affect the speed at which any given property can come online and begin generating revenue(6). In response to this need by the development sector and to improve their ongoing support for existing businesses, many cities are now streamlining and consolidating their environmental incentives into green business programs.

Green Business Programs of Chicago, Los Angeles, and New York - Examples of Consolidated Government Assistance

In 2008, both the City of Chicago and the City of Los Angeles launched green lodging recognition programs as components of their larger green business engagement efforts; in early 2009, New York City and State have also begun discussions with their lodging associations regarding the benefits of green recognition programs. These cities, like many others which are working to develop city-wide climate action plans, are interested in developing green business programs as a means to re-engage with the local business sector and realize their commitments to the U.S. Conference of Mayors Climate Protection Agreement(7). In addition to recognizing local lodging facilities which are making efforts to adopt environmentally responsible practices, other business sectors covered by the green business programs of Chicago, Los Angeles, and New York also include restaurants, museums, office and retail spaces, and automotive services.

What is unique for each program, as a partnership with the private sector, is that they are making purposeful efforts to consolidate information and resources for their private-sector partners in the following areas: 1) All the business development and operational incentives offered by the various city departments, including economic development, permitting, planning, and environmental compliance for waste, water, and biodiversity preservation;2) Incentives that result from special climate change partnerships between the city and external groups or local utilities; and 3) Local supply sourcing and waste management networks that can help interested businesses realize their environmental goals. (8), (9).

In addition to these city-wide resources, both the Chicago and Los Angeles programs have developed specific marketing incentives within their green lodging tracks where lodging properties seeking certification by a third party receive co-branding opportunities with the city or achieve special recognition within the local market from the city for their environmental efforts. (In the interest of full disclosure, Green Seal is the third-party certification program chosen by Chicago and Los Angeles for their green lodging programs.) In addition to marketing, city employees managing these programs actively work with applicant properties to identify incentives that are most appropriate for the property's environmental compliance needs and goals.

Program managers also have held a series of informational workshops for interested property GM's to ask questions and learn more about the details of participating in the program.

Another potentially soft, but analytically helpful, incentive for participation in either Chicago's or Los Angeles's Green Business Program is access to the online databases that each program is beginning to develop in partnership with the International Council for Local Environmental Initiatives (ICLEI). By using ICLEI's Clean Air and Climate Change(10) software to benchmark applicant lodging properties and other companies, city program managers are beginning to track how the efforts that are being made by resident businesses reduce the overall greenhouse gas emissions output of the city. These databases are similar in design and reporting function as the environmental management and monitoring software systems currently in-use by individual lodging properties and chain brands. Participation within the city programs, where individual property metrics can be uploaded into the CACP database, can also provide an additional marketing analysis tool for property and chain managers who are interested in understanding and adapting their current environmental policies to the metrics used in the cities in which lodging properties are located.

Butler also points out that many of the incentives that are currently available from local governments for energy efficiency will only be around as long as green building standards are not the norm (11) As the incentives disappear, regulations stricter than California's AB32(12) may come into force, and include carbon taxation regimes for businesses operating outside the energy-efficiency targets of the city or state where properties are located.

While many hotels are incorporating environmentally responsible design, construction, and management polices into their operations, additional help for fully integrating environmental construction and management into lodging properties can be sought out from cities like Los Angeles, Chicago, New York, and others which are actively seeking ways to consolidate and package their technical services and fiscal incentives for businesses that share the communities' environmental performance goals. As environmental design and management become the standard, these opportunities are likely to be replaced with stricter regulation and taxation for businesses that do not comply with city, county, or state environmental goals. Why wait until then?

Preliminary research for this article was done by Rani A. Bhattacharyya, Executive Assistant to the CEO, Green Seal, Inc. She holds an M.S. in Recreation Parks and Tourism Management from Western Illinois University and has assisted rural communities in the United States and internationally with tourism development projects.

References

(1) "Case Studies: Hospitality". Southern California Edison. 12/30/08
(2) "Energy Savings & Rebates". Pacific Gas & Electric Company. 12/26/08
(3) "State & Local Energy Efficiency Incentives". Database of State Incentives for Renewables and Efficiency (DSIRE). NC Solar Center. 12/30/08
(4) "Section 11: Gov. Regulations and Incentives & Section 50.5 Trade Groups: Real Estate". Industry Resources Webpage. Green Building Finance Consortium (GBFC). 12/26/08
(5) "Local Leaders in Sustainability". The American Institute of Architects. 12/15/08
(6) "Green Building Incentives That Work: Look at How Local Governments Are Incentivizing Green Development". For The National Association of Industrial and Office Properties Research Foundation (NAIOP) By Yudelson Associates 12/10/08
(7) "The U.S. Conference of Mayors Climate Protection Agreement". The U.S. Conference of Mayors. 01/09/09 http://usmayors.org/climateprotection/agreement.htm
(8) "Where We Have Been". Chicago Climate Action Plan. City of Chicago. 01/09/09
(9) "Proposed City of Los Angeles Certified Green Business Program." EnvironmentLA. City of Los Angeles. 01/08/09
(10) "CACP Software". ICLEI. 01/08/09 http://www.icleiusa.org/action-center/tools/cacp-software
(11) Butler, James. "The Compelling "Hard Case" for "Green" Hotel Development." Entreprenur.com. Cornell Hospitality Quarterly. 01/09/09.
(12) "California Global Warming Solutions Act of 2006". State of California. 01/09/08.

Arthur B. Weissman, Ph.D., is President and CEO of Green Seal, Inc. He has experience in environmental science, policy, and standard-setting in public and private sectors. He has led the non-profit's resurgence as a force to make the economy more sustainable. He served as an international convener in developing the ISO 14000 standards for environmental labeling, and was the first Chair of the Global Ecolabeling Network. He has developed policy for the Superfund waste-cleanup program, served in the U.S. Senate as a Science Fellow, and worked for The Nature Conservancy. Mr. Weissman can be contacted at 202-872-6400 or aweissman@greenseal.org Extended Bio...

HotelExecutive.com retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.com.

Receive our daily newsletter with the latest breaking news and hotel management best practices.
Hotel Business Review on Facebook
RESOURCE CENTER - SEARCH ARCHIVES
General Search:

OCTOBER: New Developments and Best Practices on Maximizing Revenue Management

Angie  Dobney

You’ve heard the expression - "better late than never!"... Well it appears this expression may apply to a majority of the traditional hotel industry when it comes to embracing total revenue optimization. After years of dipping its toes in the water, the hospitality industry appears ready and willing to jump headfirst into a concept that, for more than a decade now, has helped many casino-hotels take their revenues to new heights – anywhere from 5- to 15-percent increases! Below are some of the key practices of casino-hotels that are applicable for traditional hotel to incorporate- READ MORE

Kevin Robinson

Packages are valuable marketing components that increase hotel awareness, create value for the guest, and often times drive room nights over need periods. The effectiveness of the package often is dependent upon the elements associated with the overall experience as well as the price point at which the package is offered. READ MORE

Michael  Brownsdon

Capital allowances are a widely misunderstood routine tax relief that taxpayers regularly fail to maximise. An in-depth analysis of capital expenditure on property assets, including their acquisition, can yield HMRC approved reductions in tax. Poorly defined terms for plant and machinery in legislation gives rise to the undervaluing and misallocation of qualifying assets within tax computations. Reviewing historical and current capital expenditure can result in significant tax savings in current years. READ MORE

Matthew  Goulden

The battle to tilt a traveler's decision in favor of a specific brand - be it for a supplier or an intermediary - continues to get intense. The focus is on identifying a "lead" as soon as it emerges in the digital domain, and that's where travel metasearch engines are showcasing their prowess. A travel supplier such as a hotel chain or airline needs to plan astutely for real-time hotel inventory availability/ pricing, and optimize campaign, budget and bid management. Since suppliers are dealing with an increasing number of traffic generation sites, associated costs have gone up. No category is feeling this more keenly than hotels. And importantly, a large component of this expenditure is going into competing with OTAs, either via brand.com or other channels such as metasearch. This is unproductive since travel suppliers are paying multiple times for the same conversions! How much to embrace the metasearch phenomenon is a topic of debate at hotel distribution conferences such as those held by HEDNA in January and June of this year. READ MORE

Coming Up In The November Online Hotel Business Review


Feature Focus
Hotel Sales & Marketing: The Heart of the Matter
Of all the areas of a hotel’s operation, perhaps none are as crucial, challenging and dynamic as the Sales and Marketing department. In their rapidly evolving world, change is the only constant, driven by technological innovations and the variable demands and expectations of a diverse traveling public. These professionals occupy a vast, multi-channel universe and it is incumbent on them to choose wisely when determining where and how marketing dollars are to be spent to generate revenue from all their multiple constituencies – individuals, corporate guests, groups and wholesalers. Complicated decisions are made and complex plans are devised, based on answers produced from intricate questions – What is the proper balance between Direct vs. Indirect Channel Sales? What kinds of resources are to be devoted to a comprehensive digital marketing program (website, email, social, blog, text and online advertising) on multiple channels (desktop, tablet and smart phone)? What are the elements driving local market conditions and how can local people be attracted and the local competition bested? How does an operation research, analyze and partner with group business generators, meeting planners, wholesalers, incentive travel companies, corporate travel departments, and franchise-sponsored marketing programs? How can effective sales incentive programs be implemented and how can a strategic marketing campaign be deployed? How are new sales leads prospected, qualified, sold and closed? The November Hotel Business Review will examine some of these critical issues and explore what some sales and marketing professionals are doing to address them.