PHOENIX-Although it may cost a developer more to build a green hotel, the payoff will come when the property is sold. That was the message during a panel discussion, “Going Green: Environmentally Profitable Hotels,” held Thursday during the 13th annual Lodging Conference.
As president of Atman Hospitality, Wen-I Chang built the first LEED Gold-certified hotel project in the US, the 133-room Gaia Napa Valley Hotel and Spa in American Canyon, CA. The project opened in November of last year. Chang said that constructing the Napa Valley property to LEED Gold standards added about 15% to the development costs. However, he noted that he has a second project now under construction in which the premium to build with environmentally friendly specifications will be between 6% and 8%.
Gary Golla, an associate with the Portland, OR-architecture firm SERA, said he has seen two studies on the issue. One said the cost to go green increases construction costs by 5%, while another says it has no significant impact. Therefore, he said the cost probably falls between those two estimates. The expense, he added, further depends on the level of LEED certification the building aspires to and where the project is being constructed. His firm is currently involved in the development of two hotels in Portland–the 331-room the Nines, part of the Starwood Luxury Collection, and 256-key Courtyard by Marriott–using green principals. Golla pointed that Oregon has “great incentives” to go green.
According to E. Gail Suchman, an attorney with Stroock & Stroock & Lavan LLP who specializes in environmental law, as of August, there were five hotels in the US that had LEED certification, with another 60 in the pipeline.
Two panel members, however, stressed that a developer or owner will recoup those extra costs when it is time to sell the property. Greg Hartmann, managing director of HVS International in Boulder, CO, said that buildings without LEED certification will be viewed as less desirable and therefore, will not get a good price.
Joseph A. McInerney, president and CEO of the American Hotel & Lodging Association, concurred with Hartmann, adding that green hotels will fetch higher values because they have operating cost savings built into them.
Other topics addressed during the session included the difficulty in ensuring that furniture and fixtures in a hotel property are also environmentally friendly. Panel members agreed better certification by a third party is needed.
And as to whether a green hotel brings in more revenue, panel members agreed that many guests prefer to stay in a property that is energy efficient and reduces allergens in its rooms. And Golla cited a study by the EPA that reported a full-service hotel that reduces its energy costs by 10% can get $1.62 more in average daily rate.
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