CBRE: Overcoming Sky-High Hotel Energy Bills in the USA
Around the world, hotels are feeling the pinch as their electricity, gas and water bills soar.
Though the spikes initially caused by Covid-19 and the conflict in Ukraine have settled, they remain a substantial financial burden.
In the US, electricity prices have increased by 3.6% over the last year, outpacing general inflation, indicating a trend that may well continue well into the future.
This growing demand for electricity is fuelled by various factors, including the rise of electric vehicles, an explosion of data centres and an increased need for cooling services as global temperatures climb.
Sustainability practices, as proposed by the Dallas-based real estate firm CBRE, offer a viable solution for managing these escalating costs effectively.
The rising cost of utilities
CBRE has released a report, written by Robert Mandelbaum, Research Director, CBRE Hotels Research, and Alan Figot, Consulting Manager CBRE, Specialising in Sustainability.
Writing on LinkedIn, Robert Bernard, Chief Sustainability Officer, CBRE, gives a succinct summary: “The bottom line: hotel operators need to take proactive steps to manage their utility costs.”
He adds: “Pandemic-induced market shocks, geopolitical tensions and extreme weather: these factors are driving utility costs upward and likely will be persistent.
“While this impacts all sectors, for hotel investors and operators this means energy efficiency and resource management are no longer optional – they are essential for long-term financial sustainability.”
He says the numbers tell a concerning story, including the following:
- Gas and fuel costs surging at 8.4%
- Electricity costs climbing at 4.2%
- Water and sewage rates continue to climb, driven by strained resources and ageing infrastructure.
Driving factors of sustainability
Central to this report is the continuous rise in utility prices, which demands that property managers aggressively seek out efficiency improvements.
Even though recent drops in natural gas prices may provide temporary financial relief, it anticipates that energy costs will generally continue to rise.
This is in part because the shift towards renewable energy sources, while reducing overall power generation costs, necessitates significant investments into grid modernisation and expansion, thereby influencing future bills.
Factors like escalating electricity demands and the depletion of water resources underline the necessity for energy and water efficiency strategies to sustain business success.
These strategies are particularly pertinent for the hospitality sector, which operates continuously throughout the year.
Exploring cost-cutting and resource conservation measures is critical for navigating the spiralling utility expenses while enhancing overall operational performance.
Tackling new energy regulations
Rising utility bills are compounded by the pressure from new regulatory measures aimed at promoting environmentally friendly and energy-efficient buildings.
Cities and states have begun enforcing performance standards that call for specific energy and emissions reductions among other benchmarks, pushing property managers to comply or face financial repercussions.
Furthermore, utility companies and third-party programme administrators have set ambitious multi-year energy savings targets focused on initiatives like peak demand reductions.
This regulatory environment, coupled with increasing expectations from stakeholders for sustainable practices, places additional urgency on hotel operators to invest in energy efficiency which not only lowers operating costs but also enhances cash flow.
Challenges and opportunities
Given their unique position as some of the highest consumers of energy and water per square foot, hotel operators confront notable challenges in managing resources efficiently.
Factors such as occupancy rates, extreme weather events and sociopolitical dynamics add complexity to consumption patterns, demanding vigilant management of energy and water use.
To address these challenges, hotels are adopting innovative solutions like LED lighting, occupancy sensors, more efficient electric heating and cooling systems and water-saving measures such as greywater reuse and smart irrigation.
Beyond these, integrating advanced energy management systems that provide real-time monitoring and control and investing in battery storage systems enhance energy resilience, while green roofs and walls offer both aesthetic and functional benefits by mitigating urban heat and improving insulation.
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