Green Hotels Have Greater Value, PKF Says

PKF Capital -- Hotels, 9/22/2008 11:45:00 AM

Investing in renovations that make hotels more sustainable will increase their value, slash operating costs and attract customers who are trending toward more sustainable hospitality experiences, PKF Capital Managing Partner Henry Bose told a conference here on green hotels.

“For every dollar you can add to the bottom line of a San Francisco hotel, more than $11 is added in value,” says Bose.

Bose said that so far there are too few hotels that have earned the U.S. Green Building Council’s LEED certification to compare their financial performance against traditional hotels. But he indicated that his firm, in conjunction with PKF Consulting and Research, is planning to produce a study on the issue.

He noted that the USGBC has recorded dramatic savings in large green commercial buildings the size of hotels—30% energy savings, 35% less carbon output, 50% less water and as much as 90% less waste. USGBC also reported a decrease in operating costs of as much as 9% for sustainable commercial buildings and an increase of 7.5% in value and a 6.6% higher return on investment.

“It is important to note that hotels are extremely resource intensive, open 24 hours, 7 days a week, whereas commercial buildings are used primarily only during business hours. That means the financial benefits of operating a green hotel are likely to be much higher than what USGBC says about the commercial office sector,” says Bose. “Hotels that are less costly to operate are simply more valuable to owners.”

Improving financial performance does not only come from savings on operating costs.  Groups and individuals are increasingly choosing sustainable hotels in a trend that is being codified in many group contracts stipulating that hotel operators describe the degree to which their properties are sustainable.

“In contract negotiations with companies, consortia and government agencies for all of their travel and meetings business, hotel operators are being asked not only to confirm that they use sustainable business practices, but to prove it by naming the awards and certifications they have earned,” says Bose.

Bose spoke before a conference entitled “Green Hotels Can Be More Profitable,” sponsored by the group Greening Hotels in San Francisco at the City Club here.

Also addressing the conference was Dana Merker, whose firm, Patri Merker Architects, designed the soaring new InterContinental Hotel in San Francisco, along with other city hospitality landmarks, such as the Nikko Hotel, The Ritz-Carlton and the Omni Hotel.

Speaking on the topic of greener engineering practices among hotels was Scott Vollmoeller, managing principal of Glumac’s Seattle office. He is in charge of the sustainable engineering firm’s hospitality practice.

Both Merker and Vollmoeller underscored Bose’s contention that investments in greener hotels will provide tangible downstream financial benefits.

PKF Capital provides real estate investment advisory services to the hospitality and leisure industries. For more information, visit www.pkfcapital.com.