Energy Efficiency Initiatives at Upscale and Luxury U.S. Lodging Properties

Abstract

Energy costs in the lodging industry have been a focus for at least forty years, but the development of energy management programs and the employment of energy management systems have been uneven, at best. A 2011 study of ninety-nine managers of upscale and luxury hotels found that the operators were reticent to implement energy management programs that were excessively costly or might impair guest comfort. Thus, in-room sensors were suspect, and a substantial group of respondents were hesitant to install an electrical demand controller (or load shedder) for fear of interfering with guest satisfaction. These hotels also tended to use a short-term analysis that addressed raw cost and payback periods when considering an investment in energy saving equipment. A simple payback period of three years or less was favored over longer payback periods, even when a calculation of overall return on investment would have been favorable over the long term.

Keywords

sustainability automation and control systems hotel industry energy use benchmarking

The U.S. lodging industry has long focused on energy conservation, but that focus has waxed and waned with changes in energy supplies and costs. As early as 1945, the U.S. War Production Board prohibited certain types of electric lighting as part of a program to alleviate the country’s critical fuel shortage (Brown and Lefever 1990). Energy costs were relatively benign and supplies were constant from after the war until 1973 to 1974, when both costs and supplies became erratic due to the oil embargo by members of the Organization of Petroleum Exporting Countries (OPEC). This proved to be disastrous to the U.S. lodging industry due to fuel rationing, as travel became restricted and utility prices rose dramatically.

With the end of the embargo and easing of energy supplies, the urgency for conservation seemed to abate somewhat, but energy costs continued to be a factor, and over the intervening decades, academic, industry, and government researchers have published information on energy management for the hospitality industry, such as Aulbach’s (1984) seminal work Energy Management (Educational Institute of the American Hotel and Lodging Association), and the works of the International Hotel Environment Initiative (1996). In the interim, government and real estate industry associations developed energy conservation programs and certifications, such as, Energy Star, and the U.S. Green Building Council’s Leadership in Energy & Environmental Design (LEED). Other sources of energy management information included industry consultants (Dale and Kluga 1992) and manufacturers of energy saving devices (Schneider Electric 2012).

Guests’ recent attention to sustainability and rising energy costs have again tightened the industry’s focus on energy management initiatives, as the rise in the green movement in the hotel industry (Serlen 2008) has coincided with rising energy costs. According to the U.S. Environmental Protection Agency (2007), hotel utility costs increased an average of 12 percent each year from 2004 to 2006. Most of the research on environmental sustainability in the lodging industry, however, has either focused on the consumer (e.g., Choi et al. 2009; Han and Kim 2010; Robinot and Giannelloni 2010) or on sustainable practices in general (e.g., Bohdanowicz 2005; Jackson 2010; Kasim 2009; Scanlon 2007).

The industry’s great challenge in energy conservation is the balance between maintaining gracious service and controlling costs. Bohdanowicz et al. (2001) alluded to this when they wrote:

The hotel industry constitutes one of the most energy- and resource-intensive branches of the tourist industry. Substantial quantities of energy are consumed in providing comfort and services to guests, many of whom are accustomed to, and willing to pay for exclusive amenities, treatment, and entertainment. The energy efficiency of the many different end-users in hotel facilities is frequently low, and the resulting environmental impacts are, therefore, typically greater than those caused by other types of buildings of similar size.

Nizic, Karanovic, and Ivanovic (2008) concluded that the efficacious use of energy is the result of not only the investment in sophisticated technology but also the continuous monitoring and active management of energy consumption. Therefore, highly specialized knowledge is required at the property operations level.

With that in mind, this study examines the extant energy efficiency initiatives in upscale and luxury hotels, and the property managers’ familiarity with technology that can control a hotel’s energy use. In this study, we (1) assess the manager’s or decision maker’s familiarity with energy efficiency opportunities and their perceived impact on business performance, (2) ascertain the properties’ existing and prospective energy management systems and practices, (3) understand their motivations for making energy-related investments, (4) determine the type of benefits realized due to energy-related upgrades, and (5) examine the perceived benefits and drawbacks of energy-related upgrades and the barriers to their successful use and implementation in the lodging industry.

Potential Barriers

Despite vast quantities of sustainability and conservation information, one barrier to achieving optimum energy efficiency actually may be managers’ lack of information or awareness of specific measures and practices. Although nearly ten years have since elapsed, Bohdanowicz’s (2005) study of European hoteliers found significant environmental knowledge gaps among independent hoteliers and to a lesser extent among chain-affiliated managers. Along that line, Scanlon (2007) examined the environmental operating practices of hotels and resorts and found that many hotel operators and engineers were not aware of the cost savings of implementing sustainable practices.

The need for facility managers and general managers at the property level to acquire a higher level of understanding regarding the benefits of these energy management systems is not lost on many of these decision makers. According to the sixth annual hotel survey conducted by Hotel & Motel Management in 2010 (“What keeps you up at night” 2010, 31), when general managers were asked, “What is the first thing you would change to make your hotel’s operation more sustainable?” 37 percent of the respondents indicated that it would be to “incorporate sustainable products into operations,” and 33 percent indicated that it would be to “make lighting and energy more efficient.”

Mead and Pringle (2001) found that certain Caribbean hotels and resorts that adopted Environmental Management Systems realized significant benefits and energy savings, as a consequence of management’s energy knowledge. The authors concluded that a structured process and the right energy management system can yield significant improvements in a hotel property of any size. However, it has also been suggested that when there is a demonstrated lack of knowledge among general managers regarding best practices in energy management, their properties did not go beyond basic common sense practices (Kasim 2009).

We have seen many hotels and chains take advantage of recent developments in energy management systems and technology that reduce energy costs and improve sustainability. These include Hilton with its LightStay initiative, Starwood with its chain-wide commitment to reduce 30 percent of its energy costs (“Chains embrace energy management” 2010), and InterContinental, Marriott, and Wyndham with their various sustainability programs (Ricaurte, Verma, and Withiam 2012). This study tests whether other decision makers are sufficiently cognizant of all of the recent advances in technology.

Method

For this study, we developed a survey that focused on managers’ knowledge of energy efficiency and energy management systems. Finding no readily available set of questions or scales in the literature, we applied our literature review, examined homepages of several hotel energy management companies, and reviewed several surveys, such as the National Awareness of Energy Star for 2008 (Environmental Protection Agency Office of Air and Radiation, Climate Protection Partnerships Division 2009), conducted by the Environmental Protection Agency, and the 2008 American Hotel & Lodging Association’s (AH&LA) Green Assessment Survey. We developed our survey with the assistance of a major energy company, testing the questionnaire for content validity, wording, and clarity with several of the company’s supervisors and managers. In addition to information about the property itself, we asked about which energy management systems the hotel currently employed and barriers that prevent the hotels from adopting certain systems; motivations for making investment in energy management systems, the benefits realized, and marketing implications; and green certification, use of energy audit and energy efficiency professional, and energy costs.

Data were collected by the Cannon Survey Center via telephone in April 2011, in interviews that averaged twenty-one minutes. Founded in 1977, the Cannon Survey Center is located on the campus of the University of Nevada Las Vegas. The interviewers made themselves familiar with the energy management systems and terminology before conducting the interviews (please see the appendix). The interviewees were qualified at the beginning by asking whether they were the decision maker at the property for energy management purchases.

The researchers completed interviews with representatives of ninety-nine upscale and luxury hotels (i.e., Mobil 4 or 5 stars) drawn from the hotel membership directory of the American Hotel and Lodging Association. We attempted to contact all but 14 of the 1,383 hotels with valid records in the AH&LA list (these 14 hotels had duplicate phone numbers to other properties in the sample), but due to various issues (such as non-working numbers or no answer), we had access to 1,055 properties. In that group, however, many managers are protected by staff from unwanted telephone calls, further reducing the number of possible respondents (even though we sought out the chief engineer when the general manager was unavailable). In the end, the ninety-nine completed interviews represented a 9.4 percent response rate. We did not have e-mail addresses for the managers in question, so an online survey was not possible.

Results

Profile of the Hotels

Eighty-four percent of the hotels surveyed were upscale hotels and the remaining 16 percent were luxury properties (Exhibit 1). Casino resorts constituted 10 percent of the properties surveyed. Chain hotels (92%) predominated in the sample, which was relatively balanced among city downtown (27%), suburban (26%), and resort (25%) hotels. Only 7 percent were classified as airport hotels. Nearly half of the properties were located in western United States (48%) and 34 percent were in the south. Sixty-three63 percent of hotels had some kind of hotel certification, which included LEED, Green Seal, Green Key, Energy Star, or Green Palm. Most hotels (81%) were less than thirty years old. About one-fourth of the hotels (26%) had fewer than 250 rooms, about half (49%) were between 251 and 500 rooms, and the remainder (25%) were more than 500 rooms.

Exhibit 1:

Profile of Properties Surveyed.

	Frequency	%
Hotel type
Upper upscale	16	16
Luxury	83	84
Total	99
Hotel ownership
Corporately owned (chain) franchise	63	66
Franchise	25	26
Independent	8	8
Total	96
Hotel age
15 years or younger	30	32
16 to 30 years	46	49
31 years or older	18	19
Total	94
Hotel size
Less than 250 rooms	26	26
251-500 rooms	48	49
More than 500 rooms	25	25
Total	99
Hotel location
Airport	7	7
City downtown	27	27
Highway	14	14
Resort	25	25
Suburban	26	26
Total	99
Hotel green certification
Yes	62	63
No	17	17
Total	79
Hotel region
West	47	48
Midwest	11	11
South	34	34
Northeast	7	7
Total	99

In addition to the substantial number of properties that have an environmental certification, other positive findings include the following: 58 percent of the properties indicated that they had either retained an energy efficiency expert or performed a recent energy audit, and almost 90 percent indicated that they use their energy-related accomplishments when marketing to their customers.

Investment Considerations for Electrical Energy Management Equipment

Based on a 5-point Likert-type scale (1 being “not at all important” and 5 being “extremely important”), the most critical consideration in making an energy investment is guest satisfaction and comfort (4.88), followed by payback period (4.39) and initial cost (4.38). The least important factor was found to be net present value of the investment (Exhibit 2). We were surprised that the respondents did not place a higher weight on the product’s total life cycle cost, which includes such factors as maintenance and energy costs, but it is also true that the hotel management must choose retrofits that are justified by cash flow or reserve for replacement.

Exhibit 2:

Important Factors in an Energy Management Investment.

Initial cost	4.38	0.91	20%	62%
Life cycle cost	4.16	0.93	30%	46%
Net simple payback period	4.39	0.85	24%	59%
Net present value	3.72	1.07	24%	31%
Internal rate of return	4.29	0.91	25%	55%
Environmental considerations	4.22	0.88	31%	48%
Guest comfort and satisfaction	4.88	0.43	4%	92%

Type of Energy Systems Employed

As shown in Exhibit 3, almost all the hotels surveyed have installed compact or tube fluorescent lighting (98%). The most common energy management systems were automation and control systems, including heating, ventilation, & air conditioning (HVAC) occupancy sensors (76%), lighting control systems for all applications (74%), variable speed drives on heavy equipment (86%), uninterruptible power supply (UPS) equipment or surge suppressors (85%), energy use benchmarking (78%), and data storage management systems (74%) . Less common but still much in evidence were electrical peak load shedding systems (demand controllers, 34%), energy control equipment on kitchen refrigeration units (44%), power factor monitoring systems (31%), and automated electrical energy tracking systems (58%). We infer that the reason that hotels have not installed some of these systems is that managers believe that they offer limited usefulness. For example, a property that has never experienced peak load issues and the corresponding demand charges would be unlikely to invest in a demand controller. The same is probably true for power factor monitoring systems, if the property has had no problems with inductive or capacitive power. Also, as we explain below, this may be a function of hotel size. With limited resources, a hotel might choose variable speed drives over energy control equipment on kitchen refrigeration units given a smaller return on investment (ROI). We suspect that the two-fifths of our sample hotels without automated electrical energy tracking systems may well believe that manual tracking is sufficient, but we are confident that automated tracking is more effective and should be used whenever possible.

Exhibit 3:

Adoption of Energy Management Systems.

Energy Management Systems	Yes (Frequency)	Rank
Compact or tube fluorescent lighting	98	1
Use variable speed drives on its heavy equipment	86	2
Uninterruptible power supply equipment or surge suppressors	85	3
Energy use benchmarking	78	4
Automation and control systems, including Heating, ventilation, & air conditioning occupancy sensors	76	5
Lighting control systems for all applications	74	6
Data storage management systems	74	6
Automated electrical energy tracking	58	8
Energy control equipment on kitchen refrigeration units	44	9
An electrical peak load shaving system	34	10
A power factor monitoring system	31	11
Other electrical energy conservation systems	25	12

Hotel Characteristics and Type of Energy Management Systems Employed

Neither chain scale nor location showed any relationship with the type of energy management systems adopted, but we found a modestly significant relationship between system adoption and hotel size at p < .10 (Exhibit 4). In short, larger hotels had installed more sophisticated equipment. Hotels with more than 250 rooms were more likely to have installed automation and control systems and UPS equipment or surge suppressors, while hotels with more than 500 rooms were more likely to adopt an electrical peak load controller system and energy use benchmarking. The relationship between hotel ownership (franchise, independent, or corporately owned or operated) and type of energy management systems adopted was also examined with the result shown in Exhibit 5. We found that corporately operated and independent hotels are more likely to use lighting control systems for all applications, variable speed drives on heavy equipment, UPS equipment or surge suppressors, and data storage management systems (p < .10). Corporately operated properties are also more likely to use energy control equipment on kitchen refrigeration units.

Exhibit 4:

Hotel Size and Energy Management Systems Employed.

	Hotel Size
Energy Management Systems	≤250 Rooms (n = 26)	251-500 Rooms (n = 48)	>501 Rooms (n = 25)	χ²	Significance
Automation and control systems including heating,ventilation, & air conditioning occupancy sensors	14 (53%)	38 (79%)	24 (96%)	12.9	.002*
Lighting control systems for all applications	17 (65%)	36 (75%)	21 (84%)	2.34	.31
An electrical peak load shaving system	7 (27%)	14 (29%)	13 (38%)	4.67	.09*
Energy control equipment on kitchen refrigeration units	12 (46%)	20 (42%)	12 (48%)	0.31	.85
A power factor monitoring system	8 (31%)	15 (31%)	8 (32%)	0.01	.99
Compact or tube fluorescent lighting	26 (100%)	47 (98%)	25 (100%)	1.07	.58
Use variable speed drives on its heavy equipment	23 (89%)	39 (81%)	24 (96%)	3.21	.20
Uninterruptible power supply equipment or surge suppressors	23 (88%)	47 (98%)	25 (100%)	5.30	.07*
Automated electrical energy tracking	12 (46%)	29 (60%)	17 (68%)	2.64	.27
Energy use benchmarking	18 (69%)	36 (75%)	24 (96%)	6.26	.04*
Data storage management systems	19 (73%)	33 (60%)	22 (88%)	3.28	.19

Note. Percentages are column percentages.

p ≤ .10.

Exhibit 5:

Hotel Ownership and Energy Management Systems Employed.

	Hotel Type
Energy Management Systems	Franchise (n = 25)	Independent (n = 8)	Corporately Owned or Operated (chain) (n = 63)	χ²	Significance
Automation and control systems including heating, ventilation, & air conditioning occupancy sensors	19 (76%)	6 (75%)	49 (78%)	0.05	.97
Lighting control systems for all applications	14 (56%)	7 (88%)	50 (80%)	5.90	.05*
An electrical peak load shaving system	6 (24%)	2 (25%)	24 (38%)	1.87	.39
Energy control equipment on kitchen refrigeration units	7 (28%)	2 (25%)	33 (52%)	5.57	.06*
A power factor monitoring system	7 (28%)	2 (25%)	21 (33%)	0.39	.82
Compact or tube fluorescent lighting	24 (96%)	8 (100%)	63 (100%)	2.87	.24
Use variable speed drives on its heavy equipment	18 (72%)	8 (100%)	57 (90%)	6.58	.03*
Uninterruptible power supply equipment or surge suppressors	22 (88%)	8 (100%)	62 (98%)	5.24	.07*
Automated electrical energy tracking	12 (48%)	3 (37%)	41 (61%)	3.71	.16
Energy use benchmarking	16 (64%)	7 (87%)	52 (82%)	4.05	.13
Data storage management systems	15 (60%)	6 (75%)	52 (82%)	4.99	.08*

Note. Percentages are column percentages.

p ≤ .10.

Barriers to Adopting Energy Management Systems and Equipment

The two main reasons that hotels had not installed some of the energy systems we studied were concerns about cost and guest satisfaction (see Exhibit 6). For “automation and control systems including HVAC occupancy sensors” and “lighting control systems for all applications,” the major barriers were high initial cost of installation and low ROI, along with other unrelated reasons, such as the imminent closing of a property. The respondents also thought that occupancy sensors diminished the guest experience. This has a basis, in fact, as guests have had negative experiences with room occupancy sensors, and travelers have gone so far as to post instructions for disabling these devices. Part of the problem involves specific operating issues found in some occupancy sensors. One common problem associated with the units is poor sensor placement that makes it impossible for the sensor to recognize when a guest is in the room. Another problem is a sensor that is not properly calibrated to recognize sleeping or otherwise immobile guests. A third problem is that the automatic setback temperature (when the guest is out of the room) is either too high in the summer or too low in the winter, so when the guest returns, the room is uncomfortable for an extended period of time, even as the system returns to the temperature set by the guest.

Exhibit 6:

Perceived Barriers for Adopting Each Energy Management System.

	Perceived Barrier
Energy Management Systems	High Initial Costs^a	Low ROI^b	Lack of Knowledge^c	Negative Guest Experience^d
Automation and control systems including heating, ventilation, & air conditioning occupancy sensors	19	14	6	9
Lighting control systems for all applications	22	13	6	5
An electrical peak load shaving system	43	26	27	16
Energy control equipment on kitchen refrigeration units	21	26	19	4
A power factor monitoring system	33	29	32	3
Compact or tube fluorescent lighting	1	1	0	0
Use variable speed drives on its heavy equipment	9	6	4	0
Uninterruptible power supply equipment or surge suppressors	4	1	2	1
Automated electrical energy tracking	19	12	17	2
Energy use benchmarking	7	5	12	0
Data storage management systems	7	5	15	2

Note. The numbers in the cells are frequencies indicating the number of properties who agreed, rated 1 (strongly agree) or 2 (agree) with the following barrier statements for each energy management system. ROI = return on investment.

The initial product and installation costs are too high.

ROI is too low.

Do not know enough

Diminish guest experience.

Sometimes the units also control the room’s electrical system, which means that they shut down refrigerators and lighting when the guest is away, spoiling guests’ food and beverage items. Refrigerators, clocks, and the like should be on dedicated circuits not controlled by the room occupancy sensor. In that regard, the operation of sensors that are properly implemented and calibrated should be almost invisible to the guest. As one strategy for offsetting any misgivings on the guest’s part, we suggest sharing the purpose of the sensors’ function with the guest either upon check-in at the front desk or with a table tent in the guestroom, as shown in Exhibit 7.

Exhibit 7:

Table Tents: Sample Table Tent for Guestroom Occupancy Sensors.

Our respondents again cited cost and guest satisfaction issues as reasons for not installing some of the sophisticated systems, along with low ROI. This includes electrical peak load shaving systems, energy control equipment on kitchen refrigeration units, and power factor monitoring systems. We were puzzled by a fairly frequent concern that demand shedders might diminish the guest experience. That should not occur if hotels connect load shedding systems to circuits that do not affect the guest experience, such back-of-the-house lighting, maintenance shop equipment, and any large motors. Even in the front of the house, one bank of hall lights could be controlled by the load shedder while others respond immediately to switches—and certainly guestrooms would not be subject to demand control. Selected individual responses regarding the possibility of a negative guest experience due to the use of occupancy sensors, lighting control systems, and peak load shaving systems are shown in Exhibit 8.

Exhibit 8:

Selected Respondent Comments on How Some Energy Management Systems Are Perceived to Diminish the Guests’ Experience.

Heating, ventilation, & air conditioning occupancy sensors:

Guests would check into rooms that are too hot or too cold.

The A/C would turn off while the guest is asleep.

The lights would turn off.

The system may malfunction and the guest would be upset.

There might be a premature shutdown of the HVAC.

The temperatures would make it hot and stuffy (in the room).

The guests feel they have no control over their heating and air-conditioning.

It takes too long for the system to return to the set temperature.

Peak load shaving systems:

It could result in an electrical outage.

Guests want complete control.

Lights would be turned off in some areas.

I cannot have equipment shutting off in the middle of summer in Phoenix.

It may turn off loads that might affect their comfort level.

These are the systems that turn off A/C compressors when your demand reaches a preset level leaving no consideration for guest comfort.

Another pattern observed was the fact that the high initial cost of installation, low ROI, and a lack of knowledge were mentioned as barriers to adopting automated electrical energy tracking systems. Unfortunately, some lodging companies demand a short simple payback period regardless of the long-term financial and environmental benefits of a system. Here is a case where life cycle cost analysis would be a far better approach to budgeting.

Another barrier to installation that we note is unfamiliarity on the part of some respondents regarding the intended function of some of the energy management systems, as is evident in Exhibit 5. The five highest “strongly agree” responses for “don’t know” were power factor monitoring systems, electrical peak load shaving systems, energy control systems on kitchen refrigeration units, automated electrical energy tracking systems, and data storage management systems.

Personal Beliefs Regarding Sustainability

Despite their personal belief in the importance of sustainable operation (see Exhibit 9), the respondents did not plan to get too far ahead of the curve on environmental issues. Only 34 percent of the hotels, for instance, indicated that they have plans to install charging stations for electric automobiles any time in the future.

Exhibit 9:

Personal Beliefs on Sustainable Development.

	M	SD	Agree (%)	Strongly Agree (%)
Investing in energy management systems makes me feel like I’m helping to protect the environment for future generations (Planet)	4.52	0.70	24	64
Investing in energy management systems makes me feel like I’m acting as a fiscally responsible decision maker (Profit)	4.47	0.73	27	61
Investing in energy management systems makes me feel like I’m contributing to society (People)	4.30	0.83	32	51

Financial Considerations

With a few notable exceptions, a majority of the ninety-nine respondents had reasonable control over their energy cost percentages. Nearly two-thirds, 59.4 percent, had energy costs between 2 and 5 percent of their gross revenue. However, there was considerable disparity among the other respondents. Twelve of the respondents reported energy costs at 10 percent or higher of the property’s gross revenue and three respondents reported energy costs at a remarkable 30 percent of gross revenue.

Two-thirds of the respondents (62%) had performed an energy audit on their property at least once in the previous three years, and about the same number (59%) employ or retain an energy efficiency professional to guide their decision making. Quite a few would engage an outside firm to implement an energy improvement project: thirty-five of them indicated that they would retain an engineering firm and forty-seven would engage “a firm specializing in energy efficiency projects.” All but eleven properties indicated they would be more inclined to make the initial investment if they could realize a 25 percent reduction in annual energy costs. About 60 percent sought a sweeter deal, admitting that “they would be more likely to invest in energy management technology if there was low cost financing available to help with the initial expense.” When considering an investment’s return, just over half considered two to three years to be the maximum simple payback period.

Future Adoption of Energy Investments

Compared with other energy investments, “automation and control systems including HVAC occupancy sensors” and “an electrical peak load shaving system” are more likely to be adopted in the next three to five years; “energy control equipment on kitchen refrigeration units” is more likely to be adopted within the next year; but “a power factor monitoring system,” on the contrary, is more likely to be adopted in more than five years as shown in Exhibit 10.

Exhibit 10:

Future Expectation of Hotels’ Adoption of Energy Investments.

	Within the Next Year	1 to 2 Years	3 to 5 Years	>5 Years	Not at Any Time in the Near Future
Automation and control systems including heating, ventilation, & air conditioning occupancy sensors	2	2	9	0	7
Lighting control systems for all applications	0	5	6	5	7
Electrical peak load shaving system	1	8	22	1	20
Energy control equipment on kitchen refrigeration units	6	5	11	6	13
Power factor monitoring system	2	5	11	9	17
Variable speed drives on heavy equipment	1	1	4	3	4
Uninterruptible power supply equipment or surge suppressors	0	0	1	0	2
Automated electrical energy tracking	0	3	9	6	10
Energy use benchmarking	0	1	5	3	4
Data storage management systems	1	0	2	1	9

Motivations and Benefits for Energy Management Systems or Equipment Investments

The motivations for energy investments are ranked as follows: monetary savings (94%), hotel image (88%), and guest loyalty (74%). Thirty percent of the respondents included environmental impact and carbon footprint as reasons for energy investments, and more than a few indicated that it was simply “The right thing to do.” Moreover, guests’ interest in sustainability had not escaped notice of these hoteliers. Twenty-seven percent of the respondents strongly agreed and 50 percent somewhat agreed with the statement “When your guests make a lodging decision, choosing an environmentally conscientious hotel is a factor.”

The benefits realized from their investments followed the same order as motivations: monetary savings (97%), hotel image (83%), and guest loyalty (69%). The other benefits mentioned (25%) included items such as employee motivation and morale, environmental impact, increasing equipment life span, and personal satisfaction derived from the energy savings.

Conclusions and Recommendations

As mentioned in the beginning of this article, given the sample size, we cannot generalize these findings to the entire population of U.S. upscale and luxury properties. The results may also suffer from a potential self-selection bias. That said, more than 60 percent of the properties reported having some kind of green certification and having performed an energy audit, and we take this as being fairly common to upper echelon U.S. hotels.

If the sample is indicative of a larger group of hotels, we note the prevalence of the traditional concerns of high initial cost and lengthy payback period. Capital budgets were fairly tight at the time of this survey, and the current economic climate has not loosened spending limits. We found it interesting that the respondents seem to have rejected relatively robust measures of value (notably, net present value) in favor of simpler measures, looking at initial cost versus total life cycle cost, or focusing on simple payback period versus ROI. There is also the possibility that adoption of state-of-the-art energy management technology is not in the best personal interest of the decision makers simply due to a brief prospective holding period for the hotel. Depending on the relationship between the property owner and the operator, the general manager and the chief engineer may be rewarded if they succeed in minimizing capital expenditures at their property even when such expenditures will significantly contribute to the bottom line in the future. We anticipate that guests’ focus on sustainability will diminish such short-sighted corporate policies.

The survey underscores the importance of having the industry apply the most robust financial measures possible in making purchase decisions, not just for energy management equipment but for all capital expenditures. We liken the reliance on “simple payback period” to the use of the old “dollar-per-thousand” rule-of-thumb method for setting room rates. The use of more accurate financial measures should be championed not only by the energy management system purveyors but also by professional associations, educators, suppliers, and consultants.

Better measurement of energy costs (such as power factor surcharge information) may change a manager’s view of the importance of various energy management systems and equipment. In this survey, we found substantially different attitudes toward such equipment as energy efficient lighting systems, occupancy sensors, variable speed drives, lighting controls, and surge suppressors, which were favored over peak load shaving equipment, power factor monitoring systems, kitchen refrigeration energy control systems, benchmarking, and energy data tracking systems. Granting that some properties may actually see no benefit to the adoption of some of these systems, we suggest that the decision be based on the most sophisticated possible analysis. It is also essential to focus on ensuring that energy saving equipment will not affect the guest experience (in the case of demand controllers) and will be transparent to the guest (in the case of in-room sensors).

Even though respondents listed cost savings as the top benefit sought from energy management systems, our study once again underscores the commitment of hotel operators to the highest standards of guest service, particularly in this segment of the market. Any system or program that might even remotely compromise guest-service standards will be rejected, even if there are energy savings to be had. We say this because hotel image and guest loyalty—both customer-oriented items—are not far behind cost savings in energy considerations. Transparency of these systems to the guest is a highly valued benefit in U.S. properties. This transparency is why, for example, HVAC occupancy sensors are preferred in the United States over the key card control systems that one finds in Asia and Europe.

In the time since this survey, we observe that guests are willing to become more involved in sustainability. The industry has involved guests in many four- and five-star properties with linen exchange programs that have been well received when done well. We believe that operators could take the same tactic with other energy management systems and programs, such as alerting the guest to the use of in-room sensors. Guests have also become concerned with a hotel’s carbon footprint (and their own) and they want to know what the property is doing to reduce that footprint. Numerous lodging companies share with their guests what they are doing to reduce energy use, such as Xanterra’s Ecologix program (Xanterra 2013), and we encourage this trend.

Footnotes

Appendix

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, or publication of this article.

Funding

The author(s) disclosed receipt of the following financial support for the research, authorship, or publication of this article: Funding was provided by Schneider Electric and the Caesars Foundation for the study, a proprietary report, and this article.

Author Biographies

Seyhmus Baloglu, Ph.D., is a professor and Harrah Distinguihed Chair in the W.F Harrah College of Hotel Administration at the University of Nevada, Las Vegas (seyhmus.baloglu@unlv.edu) . His teaching areas incude: marketing, international tourism, research methods, and multivariate statistics. His reseach interests revolve around branding and brand development, customer loyalty, customer relationship marketing, data minining, and sustainability in the hospitality industry.

Thomas Jones, Ed.D., is an associate professor in the W.F. Harrah College of Hotel Administration at the University of Nevada, Las Vegas (thomas.jones@unlv.edu). He teaching areas include, facilities management, housekeeping, front office, and sustainability in the hospitality industry. His research interests include occupational health in the hospitality industry, sustainability in the hospitality industry, housekeeping operations, energy management, and hotel engineering.

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