Green Hotel Brands Sprout

The economy and near-shutdown of the commercial credit markets have hampered new hotel development across all segments. Yet, executives of the two new brands that position themselves as environmentally conscious are still bullish on their prospects for growth.

“No industry, company or brand has been immune to the credit challenges we’re facing, but Element is well positioned to weather the storm,” says Paul Sacco, senior vice president of North America development for Starwood. “We’ve seen that lenders are open to working with our developers on Element hotels because of the brand's leadership in green hotel building. Element is the first major hotel brand to mandate LEED certification, and both communities and lenders recognize the value in this pursuit.”

Element, a kin to Westin and easily the most ambitious green product to reach the hotel development marketplace, opened two properties in 2008 and two more this year. Three more—in Denver, Baltimore and Irving, TX—are scheduled to debut before the end of the year.

“With Element, Starwood has shown a commitment to green that no other brand company has made,” says Glenn Hasek, publisher of Green Lodging News, the online green hotels portal. “I’m also impressed that Starwood is allowing Element to evolve rather than cloning one property to another. Each one incorporates its own green features, such as the use of local foods.”

In fact, says Sacco, Starwood views the Element brand as its “green concept lab, in much the same way W did for design.

“We expect Element’s green initiatives to continue to evolve on an ongoing basis and look to share those new developments with other Starwood brands and the industry,” he says.

NYLO is another fledgling brand with a green profile but without the brand company firepower Element enjoys. The NYLO product has plenty of green features—notably its practice of buying credits for 100 percent of its energy consumption—but the brand markets itself as a chic lifestyle hotel that also cares about the environment.

Two NYLOs are open—Plano, TX and Warwick, RI—and two more—Las Colinas, TX and Overland Park, KS—will open this summer. And according to CEO John Russell, the brand’s franchising program is starting to gain momentum with 24 NYLOs and 24 XP by NYLOs, its select-service version of the brand, in the development pipeline.

Green or not, the proof of any brand is how it performs, and at least one Element owner is satisfied so far. Billy Brown, president of Medical Hospitality Group, owner of a new Element in Houston, says the property has had a fast start.

“Even though the market is off a little bit, we’re already even with our comp set on rate, and we’ve only been open 90 days,” says Brown, who has two more Elements under development. “Guest reviews have been good, too, even though it’s difficult to say whether guests are booking because the property is green or because of the efforts of the Starwood organization and our sales team.”

Barnes says chose the Element brand less for its greenness—in fact LEED certification wasn’t a brand mandate at the time—than for its ability to compete on a level playing field with Residence Inn, Marriott’s dominant upscale extended-stay brand.

“I didn’t necessarily want to be a pioneer,” he says. “We believe a lot of the success is tied to the fact that the brand is closely connected to Westin, both in the building and in the marketplace.”

Branded or not, green hotels have become a staple of the hotel development environment. According to Hasek, while just 21 LEED-certified hotels are now open in the U.S., more than 800 properties in the development pipeline (about 15 percent of the total pipeline) are pursing some type of LEED certification.

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