“Going green” is a consumer value gaining increasing importance as time goes by. One of the most financially savvy ways to” go green” for today’s property owners is by using Commercial Property Assessed Clean Energy (C-PACE), a financing mechanism which allows for the implementation of clean energy into any commercial building that qualifies. This flexible financing option allows commercial buildings to upgrade their facilities which in turn enhances their functionality and saves on operating expenditures, while simultaneously improving the built (and natural!) environment. One particularly important user of C-PACE is the hotel industry, an industry whose facilities are in constant need of maintenance and upgrade.
When one thinks of the hotel industry, one might think of how much energy a single hotel may use every year. According to energy star, the average hotel in America spends $2,196 per available room on energy each year. With hundreds of rooms occupied under one roof, energy efficient measures are an absolute must in order to achieve strong productivity in building operations and a healthier, more comfortable environment for customers. More and more, consumers are opting to demonstrate their values with their pocketbooks, and often prefer green hotels. According to forbes.com, two thirds of consumers prefer to stay in green hotels as concluded by a survey by TripAdvisor, where 1,300 travelers were interviewed. Furthermore, C-PACE is a way to finance the requisite improvements that go alongside upgrading a hotel property for a performance improvement plan. Even if the underlying goal is not to build a “green” hotel, “green” i.e. energy saving measures are a smart investment that decrease costs over the long run. Particularly for hotels that need significant investment to achieve a higher standard in a performance improvement plan, C-PACE financing is a financing option that requires property owners to pay nothing upfront and allows them to finance the cost of improvements over 20+ year terms.
Property improvement plans (PIP) allow for hotels to function at their peak capability, “help[ing] owners gain market share, increase guest satisfaction, drive revenue performance, and enhance profitability,” as stated by lodging.com. A smart PIP increases revenue as the building becomes more desirable to guests and renovations make the hotel more valuable. These plans are an integral part of the success of any hotel but may seem overwhelming or unachievable due to renovation costs. C-PACE opens the door to that possibility in many ways as it allows for hotel properties to finance renovations and property upgrades required for PIPs without paying anything out of pocket at the outset of the project. Not only does it allow for a hotel to keep operations running smoothly, but it helps owners to save money on their energy bills over the long term as the newly installed efficiency measures take effect. PIPs and C-PACE go hand in hand, as demonstrated by a hotel in Omaha, Nebraska. A 105-year-old building was able to finance insulation, energy efficient lighting, water-saving fixtures, and an HVAC system. C-PACE provided $3.4 million in project financing, to be repaid over a 25-year term.
C-PACE is especially suited to hotels due to its ease of repayment. Since borrowers pay for C-PACE through their property tax, they are able to charge hotel customers a slight premium which can be used to cover the costs of financing. Hotels are also one of the highest consumers of energy and water. The costs of water and energy are an outsized proportion of their operating costs, and these costs can be reduced with energy efficient measures. C-PACE for hotels is an effective and obvious solution to a financing need. The ability for C-PACE to improve a hotel and allow for it to comply with PIP standards in the most cost-effective way possible is why C-PACE’s popularity is rapidly increasing in the hotel industry.
Clean energy is the way of the future, and hotel owners are beginning to realize the immense benefits it can bring to them and their business. The millions of dollars which are saved coupled with the reduction of energy use allow for hotels to create strong financial positions for themselves while satisfying customer comfort and preference.