Turn the lights off - The growing importance of energy efficiency for hotels by Nigel Mills

Climate change and global warming have become increasingly important challenges facing countries all around the world today. Climate change is with us and not only scientists acknowledge the fact.

PKF At last, public opinion and increased pressure on governments around the world has finally had some positive impact on changing attitudes and policies with regard to environmental issues. However, what impact has this had on the hotel industry specifically and has it been perceived positively?

In 1997, at the Kyoto Summit on climate change, the EU signed up to an agreement to reduce greenhouse gas emissions by 8% from 1990 levels by the year 2010. The UK set itself a domestic objective far beyond the legally binding Kyoto target; to reduce emission of carbon dioxide by 20% from 1990 levels by 2010.

As part of the UK's ambitious target to reduce greenhouse gases a range of stringent measures has been imposed including the Climate Change Levy (CCL) introduced in April 2001 a fiscal tax on energy used and adding as much as 15% to energy bills in hotel and catering establishments. Our industry, like many, has in the past generally ignored the government's attempts such as the Energy Efficiency Best Practice programme (EEBPp), to persuade consumers to use less energy.

Wake-up call

The UK government has given businesses around the UK a wake-up call to the fact that we cannot continue to abuse the earth's resources. However, while the environmental concerns are commendable, the introduction of the CCL has caused an additional requirement for hoteliers to become ever more rigorous in tightening costs to maintain profits. Its introduction could not also have come at a more testing time for hoteliers following foot-and-mouth disease and the string of bad luck that has faced the industry ever since notably 11 September 2001, SARS, the impact of the war in Iraq and the ongoing threat of terrorism. Nevertheless, it is certain that its introduction has and will continue to compel hoteliers to put their 'energy saving' thinking caps on.

Reap the benefits

Hotels are large consumers of energy for heating, cooling and electricity etc. Changes in hotel policy and attitudes are already profoundly noticeable. Walk into some hotels, particularly newly-built, and see an array of gadgets which help to save energy programmable thermostats to control ventilation, supply of sensors for taps, lights and urinals and electronic key cards which automatically turn on lights in guestrooms to mention a few. Hotels are also increasing the awareness and importance of energy saving to staff and guests through introducing such measures as focused staff training, incorporating the measurement of energy costs in financial reviews, increasing awareness through notices throughout the hotel and on the hotel/company website or other marketing material. Developers are even keen to develop low-energy hotels such as the proposed 200-room hotel planned for the Eden Project in Cornwall.

You also only have to look at some of the major hotel companies to see how they have responded over the past two to three years to see their changing attitudes to environmental issues. The majority of these operators have now developed some form of energy efficiency programme that is being standardised and implemented for hotels across their groups. Many companies highlight their continuing commitment and note their success stories to date. For example Radisson SAS reported to have reduced energy consumption per square metre by 11% and carbon dioxide emissions by 15% between 1999 and 2001. This was helped by installing programmable thermostats to control ventilation for around 65% of the hotels. Whitbread have introduced new low-energy light fittings in 85 of their hotels and as a result of the programme they estimate to have saved 4.5 GWh a year and around 2,000 tonnes in carbon dioxide emissions. These are a few of the many success stories being reported over recent years and it is evident, particularly with the major international hotel operators, that energy efficiency has become an important factor for hotels.

What else can hoteliers expect in return for their commitment to the environment? In general terms, hotels that introduce energy efficiency measures, small or large, gain some form of benefit. The most obvious being enhanced profitability through a reduction in energy costs as well as reducing the impact of the CCL, more efficient power supply and improving environmental conditions. It will also bring a number of other intangible benefits, for instance improved publicity and enhanced corporate reputation. While intangible, these can nevertheless contribute to profitability.

The way forward

The perception, particularly in the past, has been that the introduction of an energy management programme can be time-consuming and difficult to implement, requiring some form of capital investment or incurring some additional associated cost (ie in the form of new, high-tech equipment or increased payroll). Monitoring energy savings and usage is also seen to be a difficult process. Nevertheless, hotels without a proper energy management programme could be wasting a lot more money than they could imagine, thus the perception is misguided.

The question I am sure most hoteliers are currently asking themselves is where do you draw the line when investing and implementing such a programme? Clearly, there may well be certain constraints particular hotels face, ie planning constraints or the requirement to fund alternative projects. Hotels within a large organisation will be governed by the company's environmental policy whereas independently operated hotels will not have that advantage. Nevertheless, there are many initiatives such as Hospitable Climates (an energy efficiency agreement between the UK hospitality industry and the government's EEBPp, launched in 2000) and grants and loans that can assist and reward hoteliers for implementing energy saving and following best practice. In real terms there are few limitations to introducing an energy management programme and investment/implementation, small or large, is likely to bring short and long-term benefits. However, the key issue is to have your hand on the tap.

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Nigel joined PKF in 2000 and gained considerable experience in the Hotel Consultancy Services' research department, at both an associate and managerial level. He was responsible for overseeing PKF's monthly trends surveys and annual publications. He also gained extensive knowledge in monitoring and analysing hotel performance results, strategic benchmarking and comparative analysis of hotel profitability. More recently he was promoted to consultant within the department, undertaking assignments throughout the UK, Europe, Middle East and Africa. Prior to PKF Nigel held many positions within the hotel industry and has in depth operational experience in finance and food and beverage operations.

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