The consistent demand for heat and electric in hospitality businesses makes financial sense, but it can also enhance reputation and win new business.
The case for increasing the energy efficiency of hospitality operations
Hotels aren’t like other businesses. They run 24-7 for guests – serving food, heating and cooling rooms, lighting the building and keeping the water hot. This means the energy meter ticks 24-7, too.
Leisure centres aren’t much different, consuming energy from the moment the dawn swimming fanatics dive into the heated pool at 6am until the lights go out on the last boxercise class of the day at 10pm.
This means the UK’s hospitality sector spends £1.3bn on energy every year.
For the average business, energy costs will be somewhere between 5% and 10%. As the MD at a hotel in Hertfordshire noted recently: “That’s massive in an industry where the profit margin is generally low.”
The savvy hotelier’s savings
Given that the price of electricity could double between now and 2025, according to the National Grid, it would be stupid not to look at ways in which to reduce energy use.
As the Carbon Trust says: “Reducing energy use makes perfect business sense; it saves money, enhances corporate reputation and helps everyone in the fight against climate change.”
In other words, better management of energy in your business is a win-win, and there are plenty of savings to go at.
A report by the UN – Sustainable energy for all: opportunities for the travel and leisure industry – concluded that “significant opportunities exist to improve energy efficiency at scale”.
The UK’s Carbon Trust says that the average hospitality business can benefit from major savings on their energy bills through simple measures. The British Hospitality Association (BHA) has calculated that behaviour changes amongst employees alone can cut energy use by a fifth.
But the benefits of improving energy performance go beyond costs. Cash flow is freed up from lower energy bills, for example, which can be used to improve services.
Investment in energy efficiency can also “enhance brand image”, according to the UN’s report, which “can help both attract customers and potentially command a premium on room rates”.
Guests want green
There is a myth that energy conservation in hotels can undermine quality, reduce guest comfort, and deter customers from returning, the reality is the opposite.
A study by Cornell University’s Centre for Hospitality Research in the US showed that hotels with an energy efficiency certification (LEED Leadership in Energy and Environmental Design similar to BREEAM in the UK) experienced higher average daily rates and revenue per available room than comparable non-certified properties.
There is no guarantee that energy efficiency will bring more customers, but the direction of travel is towards a more sustainably-minded customer.
A recent Booking.com survey of 32,000 people showed that more than half (52%) are likely to choose a hotel or destination based on its social or environmental impact.
What’s more, those surveyed were three times more likely to choose ‘green’ accommodation in 2015 than they had been the previous year.
To cut their usage further, businesses are also looking beyond changing light bulbs and energy efficient appliances have become the norm. On a site which may require refrigerators, alarm clocks, dishwashers, TVs and hand-driers the savings from buying green can be around 10%.
The other way in which hotels can cut their bills and secure energy is to create their own energy, especially when the UK faces increasing energy risks due to a shortage of capacity.
Combined Heat and Power (CHP) can be the perfect solution for those in hospitality given that sites often have high and constant heat demands throughout the year. The system captures the heat created during generation of electricity and, with the right system in the right place, can cut emissions and energy use by up to 30%.
As the Carbon Trust summarises: “Reducing energy use makes perfect business sense; it saves money, enhances corporate reputation and helps everyone in the fight against climate change.”
Hotels and leisure centres have constant and high energy demands. The sector spends £1.3 billion on energy every year.
There are significant opportunities to improve efficiency, according to the UN, Carbon Trust, and BHA.
Staff behaviour change is a good starting point, with switches to efficient lighting a next step.
But energy prices will continue to rise, which means energy-efficient appliances will offer more attractive paybacks.
- Low carbon energy, such as Combined Heat and Power (CHP), is an attractive option for hospitality businesses given that heat is captured during the generation of electricity.