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Using Eco-Friendly Programs to Unearth Profits

Using Eco-Friendly Programs to Unearth Profits

The new 756-kilowatt solar panels at the Wyndham Philadelphia in Mount Laurel, N.J., were a huge capital investment, with payoffs promised to the environment and spreadsheets down the line. This year alone, the hotel is projected to reduce energy costs by $65,000 and CO2 emissions by an estimated 1.6 million pounds.
And it’s been making an immediate impact with the public by acting more or less like a green billboard for the hotel, according to Rishi Shah, the Wyndham’s asset manager. Capital intensive projects like these can make a huge impact on the carbon footprint of a property, but they’re even more effective when part of an effective set of sustainability programs. In fact, the most successful factor in their efforts, according to Shah, is through their hotel green team, which is able to synthesize input and ideas from all areas of the property. Indeed, one of the best practices for leading companies is building a sustainability team, responsible for establishing goals, directing efforts, and reviewing results.

At Hersha Hospitality Group, the Philadelphia-based hotel management and investment firm with some 80 hotels in key urban markets, Bennett Thomas, VP of finance and sustainability, oversees EarthView, the company’s sustainability directive, which serves to improve green efforts both inside and outside its properties’ walls. While every measure is meant to stay in step with the company’s green values, Hersha is also challenged to keep its investors happy. “Financial gains and sustainability are not mutually exclusive,” Thomas said at the Lodging Green and Sustainability Conference in September. His company believes that forward-thinking individuals profit. Hersha’s goal is to reduce carbon emissions by 10 percent, water by 7 percent, and waste by 40 percent. Through simple measures like recycling materials, installing energy-efficient lighting, using Energy Star–rated appliances, switching to green key cards, eliminating phone books and Styrofoam, and implementing towel and linen reuse programs and in-room recycling, Hersha expects a 30 percent rate of return.

Like so many leading brands keen on making a positive influence on citizens and empowering them with knowledge, Hersha’s environmental efforts paint a positive picture for its hotels, which can only bode well for business. Still, any endeavor has to make financial sense. “Every $100,000 you bring to the bottom line, at a 7 percent cap rate, equals $1.5 million in value,” explains Thomas. Not only does this look good to Wall Street, but energy savings are being used to fund social initiatives, like Clean the World, a volunteer effort to improve hygiene through recycled soap. This, notes Thomas, results in a cumulative internal rate of return, where the company’s savings can help the community and make Hersha a better corporate citizen and serve its guests better. “Our shareholders are noticing us and evaluating us not only based on our financial performance,” he adds.

Going green, or, more aptly, practicing sustainability, used to be thought of as a luxury. More than ever, consumer preferences and public perception are tilting the bar to where sustainable lodging is no longer a niche but the norm and a necessity for hotels in operating smarter businesses. As a result, hoteliers are discovering added value by upping sustainability efforts in their practices. “We’re seeing a movement going on,” says Pat Maher, the AH&LA’s Green Guru. “As bad as the recession was, many big brand programs were cut, but sustainability was an area that didn’t get dropped. In fact, smart brands stepped it up and saw returns on reductions in electricity, waste, and water.” Maher points out that the industry as a whole uses about 3 percent less energy than it did last year and about 7 percent over the last three years. Wastewater is down 4 to 8 percent. Companies that employ the AH&LA’s 14 minimum green guidelines (see sidebar) are taking the first steps to save more. The next step would be to apply and be accepted into a green certification program, like Green Key Global and LEED.

The first guidelines were drawn up in 2011. According to Maher, the major brands committed to meeting the minimum guidelines within two to three years, and sustainability is now a recognized unit within corporate structures. “Everybody looks to the big brands for leadership, so they read their sustainability reports and in doing so are seeing areas where they might improve,” says Maher. “The remaining hoteliers are learning how to focus on it. Before, they just didn’t know how. They just needed help. They thought they’d be losing money, but they now realize that they’re going to be saving money. They need to feel good about it, realize that it motivates people and it’s the right thing to do.”

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