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.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.