With customers, shareholders, government regulators, and more than a few senior hotel executives growing increasingly vocal about the need for sustainable building, demand for LEED® certification is rising. Until recently, however, many leading hotel brands—companies that construct and manage large portfolios of buildings—have struggled to allocate the resources to individually certifying so many buildings. The advent of the LEED Volume Program cuts those time and cost requirements dramatically.
The just-launched LEED Volume Program is an innovative, prototype-based variation on the traditional LEED certification process. The program works by leveraging uniformity in building design, construction and operations in order to achieve consistency and eliminate the need for a full certification review of each new project.
The creation of a LEED volume prototype enables participants to gain certification on an entire portfolio of projects, whether they be new construction or building retrofits, at a fraction of the cost and in considerably less time than is possible with a traditional, “one-off” LEED certification.
According to Doug Gatlin, the U.S. Green Building Council’s vice president of market development, “Volume participants enjoy all of the benefits of LEED certification … including reduced operating costs, healthier indoor environments, greater access to financial incentives, and favorable brand perceptions. Plus, they profit from the efficiency of volume building; most notably, the ability to realize greater economies of scale based on more precise project planning and coordinated implementation.”
If, before the Volume program launch, most major hoteliers were interested in LEED certification, now, after the launch, many are beginning to incorporate LEED certification into their standard business practices. As Starwood Associate Director of Environmental Sustainability Gina Edner explains, “With Volume, we not only streamline the LEED certification process, but we also simplify our own internal design and construction processes. We now have a comprehensive LEED roadmap that lets us tighten production schedules, eliminate layers of consultancy, and accelerate the entire building process.”
Marriott Senior Design Manager Jefferson Thomas concurs, saying, “By simplifying the LEED documentation process and shifting the certification workload and much of the cost from individual hotels to the corporate or brand level, the program makes LEED certification even more manageable for franchisees. Owners who were once hesitant are now rethinking their position. Because Volume comes with a pre-approved list of tasks and goals, the entire design and construction process is precisely defined. There’s no guesswork. Team members, in all disciplines, understand their responsibilities and what they must do.”
Gene Singleton, president and founder of Summit Associates, a hotel development company, feels that every hotel owner should consider LEED certification. He says, “Operating cost savings along with demand from customers for environmentally friendly hotels make the decision to pursue LEED a no-brainer.”
Energy and water savings at his Fairfield Inn in downtown Baltimore give the hotel’s green features and LEED certification, which added less than 2 percent to total construction costs, an 18 percent return on investment and total payback in less than five years. He adds that for the type of hotels he owns a 25 percent increase in energy efficiency equates to about $75,000 in annual energy cost savings. He offers that, “This has a direct, positive impact on net operating income, increasing property value by $750,000 at a 10 percent cap rate or nearly $1 million at an 8 percent cap rate.” Because hotel appraisals are based so heavily on income stream, hoteliers don’t have to wait five years to begin seeing the value created by reducing operating costs—they experience it right away.
Singleton has also seen major corporations that might not normally consider a Fairfield Inn shift their business to his LEED-certified property because it is a green hotel. “For a select service hotel, with the moderate cost of getting LEED certification, all you have to do is turn your green strategies into a shift of a half a point in occupancy and you have a two-year payback,” he says.
Marriott’s Thomas shares that point of view, saying that LEED certification gives any property the response to sustainability-related questions that come in RFPs.
The LEED Volume approach also adds value for brands wishing to ease interaction with municipal authorities and expedite the permitting process. Starwood’s Edner sees LEED “becoming almost a requirement in some municipalities” and describes that as “a big sell point for Starwood’s own internal development team.” As more cities require LEED certification, participating in the Volume program provides a way to maintain a competitive edge.
But it may not always be that way. Singleton explains that, “The business is shifting to favor hotels that participate in sustainability programs. If you build a hotel today and you don’t integrate sustainability in a meaningful way, you’re going to be losing business to the people who are.”
He also believes that those who move to sustainability early will see the greatest benefit. Once the industry reaches a plateau where “everyone is doing it and you have to do it,” he expects green initiatives to lose some of their ability to provide a marketplace advantage.
As green practice becomes standard practice, more a requirement than a cutting-edge strategy, the third-party verification offered by LEED will continue to carry more weight and prestige as the leading internationally recognized benchmark.
“Anyone can say ‘I’m green’, but guests have no way of knowing,” says Singleton. Credibility will be king.
LEED’s third-party verification provides that credibility in a very comprehensive manner, emphasizing building strategies associated with energy and water efficiency, sustainable purchasing, waste management, occupant health and comfort, site development and property management. Now, with the LEED Volume Program, that level of detailed accountability can be applied effectively and affordably to entire building portfolios and across entire organizations.
Sara Schoen is hospitality sector lead for USGBC.
