Gerrit Reinders, executive vice president of sales & marketing, Telkonet

In the current economic climate, hotels, conference centers, and resorts find themselves constantly searching for ways to reduce operating expenses. The hospitality industry, like any commercial enterprise, is driven largely by operating margins. With the economy still struggling, hotels seek intelligent ways to improve P&L performance without cutting back on offered services.

According to a recent EnergyStar report, hotels in the U.S. spend close to $4 billion on energy each year. Given that energy costs will only continue to increase, reducing energy expenditures has become a viable way to reduce overall expenses.

Hospitality properties can decrease energy expenditures in two different ways: 1) engaging in demand response measures to reduce the cost of electricity; 2) increasing energy efficiency to reduce energy usage.

Demand Response: Pay Less
Utility companies refer to the management of electricity consumption in response to supply conditions as demand response and may encourage customers to reduce their usage in response to market prices. In most cases, demand response is targeted at reducing peak demand to balance electricity production and consumption. An imbalance means the energy company must run peak power plants, generate extra emissions and charge higher prices for electricity.

One aspect of demand response is load shedding. Power plants may not always meet the need of “peak demand,” the greatest amount of electricity required by all utility customers within a given region. In effort to reduce the electric demand on power grids at critical periods, such as unusually hot summer days, hotels can shed load for power aggregators by drastically reducing energy consumption. The energy that a property would have consumed but did not becomes “negative energy,” which aggregators like Comverge or EnerNOC can sell to the power company. The load-shed process involves turning down or off certain appliances. For example, thermostats may be adjusted to lower or higher temperatures to use less energy when heating or cooling. Load shed can be done in two ways:

1. Manually, by adjusting thermostats in unsold rooms; or

2. Remotely, by using an energy management system, which can shed load for all unoccupied rooms to maximize negative energy without compromising guest comfort.

Though load shed is available only in certain regions, it may be an attractive savings option for hospitality properties, as buildings that can shed a certain amount of energy for aggregators on command may earn a lower utility rate by doing so.

Another aspect of demand response is off-peak energy usage. If customers consume energy at off-peak times, electric companies may reward them with lower energy rates. Because users pay higher rates during the day and lower rates in the evening, hospitality managers can arrange to do activities that require large amounts of energy in the evening, such as running laundry equipment. Because of the lower energy rates, hotels will see a direct benefit in the form of lower utility bills without the need to reduce overall usage.

Energy Efficiency: Use Less
Taking measures to promote energy efficiency allows buildings to use less energy to perform the same tasks. Installation of an energy management system allows a hospitality property to reduce energy usage while still providing heating and cooling for guests. In commercial buildings, HVAC costs make up about 47% of total energy usage. Decreasing the amount of energy needed to heat and cool will translate into lower utility bills.

Because the majority of hospitality properties cannot risk compromising guest comfort, the key is to integrate an energy management system that controls the climate in unoccupied rooms. When a room is unoccupied, an energy management system will reduce the consumption of energy and cut utility costs by controlling the runtime of the HVAC system. With current energy management technology, property owners see energy reductions ranging from 20 to 45% and find systems typically pay for themselves in three years or less. By installing technology that gives the same output while consuming less energy, hotels cut costs while maintaining the expected level of service.

As you consider energy management technologies, ensure that potential providers offer centralized management functionality—so each device or thermostat can be managed remotely, allowing room-by-room management to maximize effectiveness of both load-shedding events and day-to-day energy management.

Conclusion
Both “using less” and “paying less” have positive financial and environmental effects. Demand response programs allow participants to reap the benefits of decreased energy costs while also eliminating the need for the construction of new power plants, while increased energy efficiency reduces a property’s carbon footprint--and utility bill. In fact, many utilities offer incentives or rebates to reduce demand and consumption rates of large commercial energy users, such as hospitality properties.

While many hoteliers have examined energy management technologies, those actually implementing strategies to reduce energy costs are in the minority. Investing in energy management technology now will advance energy savings through reduced energy consumption and improve long-term P&L performance.

Gerrit Reinders joined Telkonet in early 2011 as executive vice president of sales & marketing after a career that included executive leadership responsibilities at Fortune 100 companies. He’s a frequent public speaker on topics dealing with energy efficiency, green buildings and sustainability—topics in which he has considerable experience and personal passion.