Who Says It Ain’t Easy Being Green?

With all due respect to my favorite Muppet, being green has never been easier. Whether its single stream recycling hitting your neighborhood or building and operating greener hotels, green is the new black when it comes to colors that make everything appear slimmer.

Some of my colleagues in the hotel industry will likely insist that green development fattens the cost of construction, but frankly, the argument is as old and out-of-date as the mullet some of us sported in the 70s. Truth be told, green building practices and attaining LEED certification is reasonably easy, cost effective, forward thinking and simply the right thing to do.

In 2008, we at Concord Hospitality Enterprises had heard the concerns about incremental costs of construction and apathetic consumers who were unwilling to pay more for a green hotel room. Being socially-responsible and contrarian by nature, we forged ahead and built our first LEED (Leadership in Energy & Environmental Design) project, the Settler’s Ridge Courtyard by Marriott in Pittsburgh, Pa., Indeed, it did cost an additional $500,000 to build, and, yes, we stubbed our toe a few times in the process. However, the annual savings quickly exceeded our expectations, so we persevered to figure out how to minimize cost and decided to build only LEED-certified hotels going forward. We expect to open five LEED-designed hotels this year and have another nine in the pipeline for 2015 for a total construction spend that is approaching $500 million dollars.

Five years after our first LEED hotel, sustainability is as much a part of our company’s culture as any of our other cornerstones.

Since that first hotel, we’ve made it our mandate to figure out how to make LEED-designed hotels more affordable. Working in tandem with Marriott, our Settlers Ridge Courtyard provided the design template for Marriott’s Volume Build prototypes that take much of the cost and brain damage out of LEED design for others. Now developers can attain LEED certification for about $350,000 over the cost of conventional prototypes.

But why bother? Why spend more? Does LEED certification mean anything to customers?

At Concord, we asked those questions, and here’s what we found out:

It’s About LEEDership
Mark Laport, Concord’s President and CEO and the rest of our company’s senior management team decided we wanted to do just that – lead.

We started on this venture because it’s the socially responsible thing to do. Our planet’s natural resources are limited, and there’s no reason to squander them when our own ingenuity is in infinite supply. All we needed to do was invest the brain power into figuring out how to make it affordable.

Being a LEEDer opens doors when we’re entering a new market. It signifies to mayors, city planners and local building code officials that we are responsible neighbors long before we apply for a single permit. And once the hotel is built, and we begin recruiting staff, our green cred helps us attract and retain top talent, associates who share that sense of pride with our guests.

Why Spend More?
We don’t. The LEED design choices we make for a 125-150 room hotel typically cost between $300,000 – $350,000 more than conventional construction and pay for themselves in five years or less through energy cost savings. We know this because we’ve done the math. We have both LEED-designed and conventional hotels in Pittsburgh. They are similar in size, scope of service and operating climate, and our utility bills are $50,000 less per year at the LEED-designed hotel.

Do Customers Care?
The traveling public seems to like the idea of green hotels, but they don’t want to pay a premium for them. When given a choice between comparable hotels, in terms of price, location and brand, consumers will, however, choose the green option over the conventional hotel.

When it comes to corporate and government sales accounts, LEED certification gives a hotel a distinct advantage. There are literally thousands of companies with established or burgeoning green cultures that are now directing their travelling employees to stay in LEED-certified hotels whenever possible. A hotel’s “green cred” now plays a part in the hotel selection process, and with few hotels currently qualifying, those of us who are LEED-certified have a significant sales advantage. When we are the first LEED-certified hotel in market, those four letters give our hotels a significant leg up on the competition.

There are three ways to increase RevPAR–increase rate, drive occupancy, or both. While guests aren’t willing to pay more for a green hotel room, more guests will choose a green hotel when given a choice. Regardless of whether you grow RevPAR with rate or occupancy, the additional revenue is all green.

Won’t Lenders Balk at Spending More?
Green hotels are easier to underwrite thanks to the additional $50,000 in NOI from reduced utility costs. Not long ago, lenders would question our projections, and nothing made me happier than turning skeptics into believers. We get far fewer questions these days as green buildings have become more mainstream.

Will The Hotel Retain its Resale Value?
When it’s time to part with the asset, LEED certification adds real value to the hotel. That $50,000 in utility savings turns into a $500,000 increase in asset value at a conservative 10 CAP. So, with a five-year hold on a new build, you’ll recoup your initial investment in operational savings and be further rewarded at the closing table.

Is There an Easier Way?
Like anything it gets easier after the first one. It is paperwork intensive but easier than you think. The process is all done online at the USGBC website and reasonably intuitive to follow. However the LEED design process can be daunting. So here are a few no-brainer options that will help the planet and green up your bottom line at the end of the year.

Heat Recovery Systems
We spend a lot of money heating and cooling our hotels, and it all goes right up the chimney every time an exhaust fan is turned on. A heat recovery system uses the out-going exhaust air to pre-heat or cool the incoming fresh air, thereby reducing the amount of energy it takes to achieve the desired temperature. On a cold day, pre-heating 20-degree fresh air into warmer, 30-degree air before it goes through the HVAC system reduces the overall energy consumption required. Similarly, taking 100-degree summer air and cooling it a few degrees before it goes through the HVAC system makes a big difference.

Energy Management Control Systems
Intelligent guest room thermostats with built in micro processors can be networked into a building automation control system so that rooms are monitored and temperatures adjusted when the room is unoccupied. The system allows guests to have full control of their desired room temperature within reasonable limits, however when the guest leaves the room, it allows the temperature to drift to ambient levels until it senses an occupied presence in the room and returns to the customer’s last set temperature. The system can also be interfaced to the hotel’s PMS system which provides even greater temperature set back capability when rooms are completely unoccupied. This can yield substantial energy savings during low periods of occupancy.

Water Savings
Conserving water can be a bit tricky because traditional, low-flow shower heads render an experience that’s akin to human dry cleaning. Traditional shower heads use 2.5 gallons per minute, (GPM), and LEED shower head uses 1.5 – 2.0 GPM. We’ve found that a 1.5 GPM shower head is unacceptable however a 2.0 GPM shower head still delivers a good shower experience. In order to use the higher flow shower heads we must use 1.0 GPF pressure assisted low-flow toilets to achieve the additional water savings necessary for LEED calculations to pencil out. Waterless urinals and ozone laundry systems (which use one-third less laundry water) also add to the overall savings. Just as at home, cold water washing saves on the gas bill.
Building Envelope
There are two main reasons to properly insulate a building–keep heat or cooling in and moisture out.
While conventional building practices call for insulation between the studs, we’ve found that practice to be comparable to putting a colander on the side of the building. Every single stud creates a weak link in the building insulation envelope which translates to energy loss and becomes more prone to mold growth in the building wall cavities which leads to costly remediation.
To ensure a tighter, more energy efficient building that prevents condensation from occurring in the wall cavities and the mold that comes with it, we’ve begun “outsulating” our hotels using three-inch thick foam boards on the exterior of the building that essentially envelope the entire building in a seamless foam blanket. We then apply a moisture barrier to the foam to create a water tight building. Combined with using high performance glass for your windows, and your electric meter will make you happier.

While I don’t pretend to have a crystal ball, I do believe that it won’t be long before local building codes are very similar to, or even exceed, today’s basic LEED certification standards. Developers can get on board now and master the techniques or be dragged kicking and screaming into the future reality.

We’d prefer to look ahead and deliver hotels that exceed the comfort and convenience requirements of our guests and the long-range performance demands of our investors.

Timothy Osiecki and Concord CEO Mark Laport were custom home builders before Concord Hospitality was founded in 1985 with a vision of developing and managing high quality hotels to become industry leaders. Mr. Osiecki led the design team responsible for the first LEED-certified Courtyard by Marriott prototype hotel, and received Marriott’s first Icon Award for smartly creating new innovative ways to enhance brand design without additional cost. In 2012, he reprised his role as brand innovator by leading the design of the Gen IV SpringHill Suites prototype in Latrobe PA and received a “Design Excellence” award for his efforts. Mr. Osiecki can be contacted at 919-455-2900 or tim.osiecki@concordhotels.com

Reprinted from the Hotel Business Review with permission from www.HotelExecutive.com