In 2012, Jean Garris Hand visited the iconic Boca Raton Resort & Club in South Florida to assess and make recommendations to its energy and water usage. The 1926 resort was a solid property, yet it had the abundance of opportunity for improvement that Blackstone, its owner for the last 10 years, requires in its real estate investments. She immediately brought to bear on the 326-acre enterprise an array of cost-saving initiatives.
In fact, it’s a rare hotel that Hand and her boss Don Anderson visit that doesn’t yield some nugget of energy and water savings. Errant thermostats, on light switches, and incorrect toilet flappers are just some of the low-hanging fruit they encounter in their mandate to trim from the expense column of Blackstone’s real estate portfolio.
In Boca Raton, Hand and Anderson found its staff central to implementing a heightened sustainability program. Virtually everyone involved in the operation of the five-star, five-diamond resort feels driven to go above and beyond the call of everyday duty to ensure the most memorable guest stays possible. Yet, behind their efforts was an overlooked core business opportunity common to grand resorts like Boca Raton: low-cost, no-cost measures to save energy and water usage. “In the course of day-to-day operations, little did they know that they as a team could be making a huge difference on the bottom line,” Hand recalls. “It took a top-down push across all departments.”
Simply by walking the premises, Hand noted numerous unoccupied meeting and banquet rooms fully air conditioned and illuminated around the clock. She found the same after hours in spas and fitness centers. Housekeepers routinely set thermostats on maximum cool while working in guestrooms, exiting them still being cooled regardless of occupancy status. Engineering staff typically allowed intake of too much fresh, outdoor air, which resulted in overworked chillers and condensation. In the kitchens, which account for 20 percent of a typical resort’s energy usage, she observed inadequate shutdown and start-up functions during third-shift periods.
The resort’s staff soon learned that tackling these shortcomings made their resort much more appealing to meetings and events customers with green requirements.
Using a playbook of systematic recommendations, Hand was able to achieve in the first month of its implementation a reduction of 15 percent in energy and water usage for an annual savings of nearly $500,000. This number got the attention of Blackstone’s senior management and set in motion the creation of a full-blown sustainability team uniting all of the firm’s hotel companies. And in this team’s first 12 months of operation, Blackstone realized savings in the millions of dollars spread across lodging assets approaching a million rooms.
But Blackstone’s sustainability machine didn’t materialize overnight. Anderson started laying the groundwork when he began consulting for Blackstone in 2008. At that time, the private equity firm already had the bulk of its hotel real estate investments in place and was engaging only in limited new investments in the aftermath of the economic downturn. Blackstone brought him in to assess the sustainability of its assets and then hired him full time in 2011 to oversee sustainability initiatives across all its private equity holdings—a tall order when your hotel holdings include Hilton Worldwide, La Quinta Inns & Suites, Extended Stay America, Motel 6, LXR/Luxury Hotels & Resorts, and a portfolio of select-service hotels. For a sense of the economic impact of the lodging portfolio, consider that Hilton was ranked the 38th largest private company in the United States at the time Blackstone acquired it in 2007. As a part of Blackstone’s gargantuan product and supply purchasing program, these hotel companies contribute significantly to Blackstone being Staples’ single largest customer. Suppliers don’t balk when these hotel companies suggest changes in manufacturing specifications of equipment and services. The challenge, Anderson found, was in getting his arms around so much potential.
His first order of business as chief sustainability officer was to integrate sustainability into the mission of the overall operations team. Private equity real estate is focused on buying, fixing, and selling assets to realize returns. So, the improvements in Blackstone’s hospitality assets needed to be cost-effective. And the savings realized from a low- and no-cost, high ROI approach could then fund larger energy and water management capital expenditures. But Anderson’s biggest priority was to keep costs down. “The easiest way to make our investors happy and improve our own companies and reduce our environmental impact was to go after energy cost savings,” Anderson says. “For me, that kept it simple. Throughout my career, this has made sustainability more real.”