Eight years after the introduction of the Leadership in Energy and Environmental Design (LEED) rating system, the hospitality industry has just 15 certified hotels. Some executives still believe the price of sustainable design comes with a 20-percent premium and the payback isn't worthwhile. One executive recently admitted to not understanding LEED for Existing Buildings while serving on a panel of green experts. Marc Heisterkamp, director of commercial real estate for the U.S. Green Building Council (USGBC), says the hotel industry has “definitely lagged behind other sectors” and “the overall numbers are dramatically lower in hospitality.”

There is reason for hope. The numbers and perceptions are starting to change. There are currently 600 lodging projects registered for LEED, which means they are at least aiming for certification. Heisterkamp believes there's an outside chance that another 50 hotels are LEED certified this year. Two projects of note opened recently—the Proximity Hotel in Greensboro, NC and the Nines in Portland—and have been just as open with their costs and projected paybacks. And maybe most significantly, the first LEED-mandated brand debuted last year with Starwood's Element.

“What we're seeing now (with the LEED-certified hotels) is people who started three to four years ago, usually as independent owners or maybe franchisees, who decided to take a leadership stance on their own,” says Heisterkamp. “The shift in the last 12-18 months has been the level of commitment at the corporate level. That's where we're going to see a bigger change in registrations.”

Heisterkamp won't reveal names, but he does admit the USGBC is in discussions with multiple and major hotel companies on LEED-designed prototypes. The reasons are becoming more obvious.

Proximity, which opened in late 2007 and became the first LEED Platinum hotel last October, was built for $28 million, seven percent more than it would have cost without the environmental focus, according to owner and developer Dennis Quaintance. He estimates the additional $2 million spent will be recouped within four years. According to a USGBC case study, the luxury hotel uses 39 percent less energy and 34 percent less water and 87 percent of the construction waste was diverted from landfills. The Nines, a Starwood Luxury Collection Property awaiting approval on LEED Silver status, was built for 1.2 percent more ($729,970), including both hard and soft costs (like LEED registration and management). State and local incentives brought dividends equaling $598,171, making the actual premium just .2 percent ($131,798), which should be paid back in 18 months, according to a comprehensive case study by Gary Golla at SERA Architects. The first Element to open, in Lexington, MA, cost two percent more to build with a projected payback in four years, according to Brian McGuinness, senior vice president of Element Hotels.

“Hotel owners and operators are seeing the value of building and operating sustainable hotels with many technologies realizing a return on investment in as little as one year,” says Cliff Tuttle, senior vice president of ForrestPerkins and the lead designer of the Nines. “When you add the savings up over an entire brand, it equates to quite a lot of revenue.”

Understanding LEED

The USGBC introduced LEED in 2000 as part of the non-profit organization's mission “to transform the way buildings and communities are designed, built and operated, enabling an environmentally and socially responsible, healthy and prosperous environment that improves the quality of life.” The rating system focuses on five main categories--sustainable site development, water savings, energy and atmosphere efficiency, materials and resources and indoor environmental quality--with prerequisites and credits, or points, available in each. A sixth section, 'Innovation & Design Process,' offers extra credit for a sustainable initiative not otherwise listed on the application or for going above and beyond the highest levels in the other categories. Projects are then scored and classified in one of four levels: certification, silver, gold and platinum.

Of the 15 LEED-certified hotels, 13 are in the 'LEED for New Construction and Major Renovations' classification and two are certified in 'LEED for Existing Buildings: Operations & Maintenance.' There are other more specific rating systems, including LEED for Commercial Interiors, Core & Shell, Schools, Retail, Healthcare, Homes and Neighborhood Development. 'LEED for Hospitality' is expected to be offered by the end of the year, Heisterkamp says, although he cautions it won't actually be called that and in fact the other sub-categories will no longer be branded that way.

“We're talking minor changes (to the current rating systems), we're not unveiling it or marketing it as a new program,” he says. “It will have the same bones and 80-90 percent of the same content, we're just tweaking 10-20 percent to represent hotel best practices. Retail, schools and healthcare...those do exist as standalones now, but that will be going away. We're not treating hospitality any different, we're just stopping the sub-branding of LEED because we could end up with 30 different (categories).”

Simply put, the different sectors will all be certified in the more broad new construction (NC) or existing buildings (EB) rating systems, but each will have slightly modified applications and credits specific to their industries. Hotels have faced unique challenges with LEED because of their often-complex owner/management arrangements and the basics of the business. Some of the steepest obstacles come from varying occupancy levels and tenants who often behave differently when they're not paying the utility bills.

Achieving LEED

Overcoming those challenges and earning LEED certification has been a daunting and potentially costly task, but recent projects have proven it can be done efficiently.

“The real key to getting it done is having someone to shepherd you through from the start,” says Dan Welborn, a vice president and principal at Gettys Hospitality Design and Development, and also a LEED-accredited professional (AP). “Developers need to focus on it up front; don't buy and then try to do it. Do your due diligence first.” A LEED AP doesn’t have to be a part of process, but using one to help navigate through is advisable and worth one credit under the innovation section. Ciji Hoffman, Best Western's first LEED-AP designer, says another key is having “someone on site making sure, taking pictures and documenting everything.”

“Focusing on green is good for the environment, it’s good for our guests and it’s good for our shareholders,” said Simon Turner, Starwood’s president of global development, during an industry roundtable at the end of last year. “But if it costs too much to do it and if the administrative process is too burdensome, then it’s going to move pretty slowly.”

Recent evidence of lowered costs and increased payback and tweaks to the rating system specific to this industry have quickened the pace There's good reason the USGBC wants hotels to succeed.

“It's a tremendous opportunity for consumer education,” Heisterkamp says. “With very few exceptions it's one of our best opportunities to educate about green sustainable practices ... It's about transforming the market and certification is really about making leaders people can follow.”

For a briefer on the LEED process: http://lhonline.com/green/leed/leed_basics_0327/

Web Resources: http://www.usgbc.org/