Top 5 Environmental Management Strategies Affecting Your Hotel's Bottom Line
By Bill Meade, Director, Tetra Tech
Why go green?
The environmental movement is not new to the hotel industry. The major hotel chains have adopted environmental programs, including corporate-wide targets to reduce energy use, water use, waste generation, and more recently greenhouse gas emissions. Federal, State, and utility resource efficiency programs target hotels and other commercial buildings to reduce electricity consumption. Many independent hotels have put in place customer-focused initiatives such as towel and linen reuse programs. The major motivation for the industry is cost controls in the face of rising utility rates. Utilities account for 5-15% of total operating costs for hotels, and cost-effective environmental management strategies can cut property-wide consumption up to 30% without major investments in physical plant, and up to 75% in targeted use areas.
However, most hoteliers have stopped short in their environmental programs with the misconception that guests equate quality with excess and that technologies guests will rebel against the poor quality lighting of compact fluorescent bulbs or low flow rates of efficient shower heads. Those trying to demonstrate their corporate commitment to sustainability have felt that a linen or towel reuse tent card on the nightstand proves the hotel management's commitment to "save the environment".
The reality is that guests are becoming increasingly environmentally-conscious and have a much better appreciation for technologies and practices in hotels that share their interests. At the same time, they have become intolerant of "green washing", with the most common complaint that housekeepers replaced the towel they intentionally hung to use again. Becoming recognized for your environmental programs in today's marketplace is more difficult today than it has been in the past. The early adopters have reaped the marketing benefits of being leaders in their industry. However, given public policy, government incentives, and rising utility costs, never before has the dual objectives of customer relations management and profitability been more aligned.
Understand Your Environmental Footprint
No two hotel properties are alike. They vary in terms of size, layout, facilities, amenities and services offered. They also vary in terms of utility rates, government incentives, and local environmental issues. Finally, there are differences in investment horizon and whether hotel owners or operators are responsible for improving a property's environmental performance. In other words, there is no "one size fits all" for hotels.
For hoteliers seriously considering an environmental management program, the first step in the process is to understand a property's environmental footprint, that how much energy and water are used, and waste generated. PA recommends preparing a 12-month baseline of resource use, with monthly averages expressed in terms of occupancy rates. The monthly consumption patterns can capture weather variations, high, shoulder and low seasons, and provide the basis for benchmarking your hotel against others in the industry. It will also allow hotel management to separate what is "fixed costs" (resources used in public or back of house areas) and "variable costs" (resources used by guests).
In order to translate the baseline into targeted areas for intervention, the next step is to breakdown consumption by areas in the property (e.g., kitchen or guest rooms) and by end use (e.g., lighting or irrigation). This can be accomplished through a detailed audit of the properties facilities, equipment and operations. PA recommends installing sub-meters in high use areas to monitor and evaluate the effectiveness of targeted interventions.
Because of the overwhelming number of "best environmental management practices" for hotels, PA has developed a rapid assessment tool to document environmental management practices already in place. The results of findings of the assessment can be translated into ratings (% of applicable best practices) by resource and department.
The following five strategies represent PA's insight into the opportunities to introduce environmental management practices that affect the hotel's bottom line, and their relative attractiveness in terms of investment cost and payback period. It should be noted that strategies 1 and 2 can reduce the capital requirements for strategy 3. For example, conservation and efficiency in water heating will reduce the size of solar hot water system requirement to achieve a targeted reduction. Strategy 4 is a proven way to maximize the impact of Strategies 1-3, and ensure that early gains are not lost through neglect. Finally, Strategy 5 allows the hotelier to go beyond its hotel property to optimize its environmental performance.
Strategy #1 - Change Staff Practices to Reduce Waste and Conserve Resources
It is important to note that the majority of resources used and wastes generated are within the control of line staff who are also the least educated and incentivized to the benefits of environmental management. Examples can be found everywhere in the hotel operations, from reporting leaking taps and creeping toilets to turning back thermostats and turning off lights to running laundry equipment at maximum loads.
Changing staff practices requires awareness, training, revisions of standard operating practices, and incentives for staff compliance. Without a comprehensive and reinforcing approach, changes in hotel operations will not take hold and most staff will revert back to standard practices. Reinforcement includes educational videos and lectures, on-the-job training, back-of-house signage, and checklists and supervision for line staff, and recognition for departments and individuals that have adopted best practices.
One of the most successful hotel chain efforts to tapping the full human resource potential for environmental management was Canadian Pacific Hotels (now operated by Fairmont Hotels). Because of the unique and historic properties they operate, Canadian Pacific created an internal competition among its hotels whereby a property was awarded points (green trees) for each successful change in practice. The "green team" of the hotel with the most points was awarded an educational trip to the Caribbean to exchange lessons learned with leading hotels in the region.
Strategy #2 - Improve End Use Efficiency
End-use efficiency is characterized by reducing the resource (i.e., electricity, water) used to perform the same end use (e.g., lighting, heating, ventilation and air conditioning, refrigeration, laundry loads). It is achieved through controls, resource recovery systems, and higher efficient technologies, with the payback period typically increasing across the same spectrum. Payback periods for controls are usually measure in terms of days or weeks, while, at the other end of the spectrum, energy efficient lighting with a payback period of less than 1 year.
Energy controls include timers, occupancy sensors and other thermostatic controls, and photo-censors for exterior lighting. Water controls essentially restrict flow rates at taps to the minimum standard for guestrooms and public bathrooms, kitchen, etc. Water controls also include automatic shut off valves, foot pedals for kitchens to ensure taps are shut off when not attended, and sensors on toilets and taps in public bathrooms.
Energy recovery systems focus mainly on recovering the waste energy from hot water boilers through the use of heat exchanger technology typically for use in laundry and pool heating. The most common water recovery systems include collecting condensate from water chilled air conditioning systems, and rinse-cycle laundry water recovery systems. Another best practice is harvesting rainwater for laundry and irrigation uses, reducing the cost of water utility bills as well as the chemicals to treat hard, chlorinated potable water sources.
Advances in end-use efficient technologies, both in terms of efficiency and reliability, suggest that hoteliers revisit new technologies not just on a replacement basis (i.e., at the end of the useful life of equipment), but also on a retrofit basis (substituting for functioning equipment). Energy efficiency technologies include compact fluorescent lamps and light-emitting diodes for exit signs and grounds lighting. They also include energy efficient drives and pumps, individual air-conditioning systems, refrigerators and freezers1. Water efficient technologies include laundry equipment, low-flush and waterless (vacuum) toilets.
It is important to note that a federal tax deduction of $1.80 per square foot is available to owners of new or existing buildings who install 1) interior lighting; 2) building envelope, or 3) heating, cooling, ventilation, or hot water systems that reduce the building's total energy and power cost by 50% or more in comparison to a building meeting minimum requirements set by ASHRAE Standard 90.1-2001. Deductions of $0.60 per square foot are available to owners of buildings in which individual lighting, building envelope, or heating and cooling systems meet target levels that would reasonably contribute to an overall building savings of 50% if additional systems were installed.
The deductions are available primarily to building owners, although management companies may be eligible if they make construction expenditures. Deductions are taken in the year when construction is completed.
Strategy #3 - Invest in Cost-Effective Renewable Energy Systems
Like end-use efficiency, advances in renewable energy technologies and the rapidly increasing cost of petroleum fuels and electricity suggest revisiting the application of renewable energy systems. These include groundwater source heat pumps, solar hot water, solar electric or photovoltaic (PV), bio-diesel, and, in selected locations, small wind energy systems. Given that the capital investment in these systems is substantial, and that the performance of the solar and wind systems will vary considerably based on availability of sun and wind resources, PA recommends a feasibility study be done to determine the cost effectiveness for a specific hotel property.
With Federal and State tax incentives and financing options, on top of the current cost of energy, these systems can payback as quickly as 2-3 years. Exhibit 1 provides a summary of state and utility renewable energy incentives. The following Federal renewable energy incentives are available, but are due to expire at the end of 20082:
- Clean Renewable Energy Bonds provide 0% interest rates whereby the borrower pays back the principal only.
- Corporate Renewable Energy Tax Credit provides a 30% tax credit on qualifying solar hot water, PV, and solar lighting (fiber-optic light tubes)
- Accelerated Depreciation provides for the depreciation of 50% in the first year, and the remaining 50% of the normal depreciation schedule
- Renewable Energy Production Tax Credit provides for a tax credit of 1.5 cents per kilowatt hour for wind and biomass electric systems.
Strategy #4 - Implement and EMS for Continuous Improvement
An Environmental Management System (EMS) is a systematic framework for integrating environmental management into an organization's activities, products, and services. A critical step in any organization's adoption of an EMS is the identifying those aspects of operations (e.g., use of chemicals in landscaping) and introducing changes in facilities and practices that minimize the impact of the organization on the natural and social environment. The voluntary EMS standards, e.g., Green Globe and ISO 14001, distinguish themselves from environmental performance standards in that they focus on the organizational aspects and the process for determining appropriate levels of environmental performance, rather than prescribing specific technology criteria.
EMS adopts the concept of continuous improvement whereby the organization can begin at any level of environmental performance. Through an iterative cycle of setting policies, planning environmental objectives and targets, implementing specific actions, measuring the results, and reviewing the overall effectiveness of the program, the organization will optimize its environmental performance over time (see Exhibit 2).
Environmental Management System
The EMS essentially shifts the responsibility of improving environmental performance from the engineering department to the entire organization. It empowers staff at all levels to both comply with best practices, but also identify further improvements based on their detailed knowledge of the hotel's operations.
Typically, the hotel organizes itself around a Green Team or Environment Committee with supervisor level representatives from all the relevant departments. One individual is charged with the role as Green Team leader or Environmental Officer responsible for organizing internal meetings, bringing in external resources as needed, reviewing the changes in training programs, best practice adoption, and new SOPs, preparing monthly EMS reports to senior management and owners, and documenting the EMS particularly if the hotel is seeking to have its EMS certified under Green Globe International3 or ISO 14001.
Strategy #5 - Establish "Outside the Fence" Partnerships to Green the Supply Chain
The final challenge facing those hoteliers seeking to minimize their environmental footprint is what to do when you have exhausted all cost-effective improvements within the property (i.e., Strategies 1-4 above). PA recommends exploring partnerships that result in "greening the supply chain". Such partnerships include working with chemical suppliers to offer non-toxic cleaning agents, food and other suppliers to distribute in bulk, returnable containers to minimize packaging wastes, and contractors to remove construction wastes.
Where available, hoteliers can sign agreements with resource recovery and recycling companies to off-take glass, paper and cardboard, aluminum, and recyclable plastic bottles that would otherwise require solid waste contractors to haul away from the property. There are now companies that will take used kitchen grease to make bio-diesel4. Shelters and local community organizations often will take damaged towels, linens and bedding.
Another partnership to explore is purchasing renewable or "green" power. In 2007, total utility green power sales exceeded 4.5 billion kilowatt-hours (kWh), about a 20% increase over 2006. Approximately 600,000 customers are participating in utility programs nationwide. The following utilities have green (renewable energy) power programs: Austin (Texas) Energy, Basin Electric Power Cooperative, City of Naperville Public Utilities, City of Palo Alto (California) Utilities, Florida Power & Light, Holy Cross Energy, Lenox (Iowa) Municipal Utilities, Los Angeles Department of Water and Power, Massachusetts Electric, Montezuma Municipal Light and Power, Nantucket Electric, Narragansett Electric, Niagara Mohawk, New York State Electric and Gas, Northern States Power, Oklahoma Municipal Power Authority, Pacific Power, PECO, Portland General Electric, Public Service Company of Colorado, Puget Sound Energy, River Falls Municipal Utilities, Rocky Mountain Power, Sacramento Municipal Utility District, Silicon Valley Power (California), Southwestern Public Service, and Wisconsin Public Power Inc.
Finally, tourism businesses are competing to be the first to be "carbon neutral", by reducing and offsetting their carbon footprint. Expedia and Travelocity both rolled out new programs this year that let travelers buy carbon offsets. Marriott aims to reduce emissions by 20% in 10 years.
Mr. Meade heads Tetra Tech's clean energy and sustainable tourism work. He is currently directing the USAID Indonesia Clean Energy Development (ICED) project supporting energy efficiency and renewable energy project development. Mr. Meade has over 25 years international experience and has led assignments supporting government agencies, industry associations, and private companies in the design and implementation of energy management, environmental management, and sustainable tourism development. He helped introduce Green Globe 21 sustainability certification, and has developed national and regional programs to recognize hotels for sustainability practices. He has also assisted private hotel companies and chains to develop corporate and property-level environmental management programs. Mr. Meade can be contacted at 703-387-2134 or email@example.com Extended Bio...
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