PKF: Green Building, Operations Favorably Impact Asset Value
Investing in renovations that make hotels more sustainable will increase their value, slash operating costs and attract customers who are trending toward more sustainable hospitality experiences, PKF Capital managing partner Henry Bose told a conference here on green hotels.
“For every dollar you can add to the bottom line of a San Francisco hotel, more than $11 is added in value,” Bose says.
Bose said that so far there are too few hotels that have earned the U.S. Green Building Council’s LEED certification to compare their financial performance against traditional hotels. But he indicated that his firm, in conjunction with PKF Consulting and Research, is planning to produce a study on the issue.
He noted that the USGBC has recorded dramatic savings in large green commercial buildings the size of hotels—30 percent energy savings, 35 percent less carbon output, 50 percent less water and as much as 90 percent less waste. USGBC also reported a decrease in operating costs of as much as 9 percent for sustainable commercial buildings and an increase of 7.5 percent in value and a 6.6 percent higher return on investment.
Lower Operational Costs Equals Greater Value
“It is important to note that hotels are extremely resource intensive, open 24 hours, 7 days a week, whereas commercial buildings are used primarily only during business hours,” Bose says. “That means the financial benefits of operating a green hotel are likely to be much higher than what USGBC says about the commercial office sector. Hotels that are less costly to operate are simply more valuable to owners.”
Improving financial performance does not only come from savings on operating costs. Groups and individuals are increasingly choosing sustainable hotels in a trend that is being codified in many group contracts stipulating that hotel operators describe the degree to which their properties are sustainable.
“In contract negotiations with companies, consortia and government agencies for all of their travel and meetings business, hotel operators are being asked not only to confirm that they use sustainable business practices, but to prove it by naming the awards and certifications they have earned,” Bose says.
Greening Hotels in San Francisco
Bose spoke before a conference at the City Club in San Francisco entitled, “Green Hotels Can Be More Profitable.” The event was sponsored by the group Greening Hotels in San Francisco.
Also addressing the conference was Dana Merker, whose firm, Patri Merker Architects, designed the new InterContinental Hotel in San Francisco, along with other city hospitality landmarks, such as the Nikko Hotel, The Ritz-Carlton and the Omni Hotel.
Speaking on the topic of greener engineering practices among hotels was Scott Vollmoeller, managing principal of Glumac’s Seattle office. He is in charge of the sustainable engineering firm’s hospitality practice.
Both Merker and Vollmoeller underscored Bose’s contention that investments in greener hotels will provide tangible downstream financial benefits.
Source: Green Lodging News
Comments
This is a very interesting and informative post. I think the concept of greener hotels has been on a lot of owners minds for a while, and the prospect that new developments with undergo soon is a comforting thought. I find this post particularly interesting because it seems that there are only positives for company managers and owners to make their hotels greener. The problem that I see, which is a problem with all reconstruction for greener purposes, is timing and profit or funding. When it comes to new developments and renovation, the eventual return on investment needs to outway the costs. With the information you propose this deems true, however owners and investors will not see these returns for some time. That is where a huge drawback lies. Furthermore with the rising cost of fossil fuels, hotels will inevitably need to switch to alternative energy sources in the future, so why not now? I find the quote from Bose, “For every dollar you can add to the bottom line of a San Francisco hotel, more than $11 is added in value,” very interesting. This is definitely incentive for greener renovations, even if they will not immediately be seen. Another problem that I could see being a drawback is that state of the economy. The dark shadow looming over consumers disposable income means that there is a lot less vacationing and a lot less hotel room spending. Furthermore, with the high costs of renovation, there seems to be a lack of that extra push to get eco-friendly changes underway. Another issue that is very relevant to hotels and environmentally friendly actions is the idea of greenwashing. It is comforting to know that Bose claims that “in contract negotiations with companies, consortia and government agencies for all of their travel and meetings business, hotel operators are being asked not only to confirm that they use sustainable business practices, but to prove it by naming the awards and certifications they have earned.” It is time that we can move on to a greener world and hopefully the hotel industry will follow suit.
Posted by: VAH | November 3, 2008 8:59 PM