Green Hospitality: Boosting Guest Satisfaction and Profits with Clean Energy

Jim Rickard, CPA, Principal and Lena Combs, CPA, CGMA, Partner and Hospitality Practice Leader Withum May 15, 20251 month

The hospitality industry relies on significant amounts of electricity and gas to ensure their guests feel comfortable and safe. According to EnergyStar.Gov, hotels in America spend an average of $2,196 per available room each year on energy, representing approximately 6 percent of operating costs.

Sustainability has become an increasingly important criteria for travelers. According to various surveys conducted by the travel industry, most travelers say they want more sustainable travel choices, and many are willing to pay more to support certified sustainable travel options.

Solar

Solar is the most widely available clean energy source and can be used to generate electricity, heat water, and in some cases, power the entire hotel. Solar panels can be installed on roofs or in open areas to generate electricity. The energy provided by solar depends on the size of the systems installed. Solar water heating systems work by using the sun’s thermal energy to produce hot water.

There are two main types of commercial solar water heaters:

1Direct solar water heating systems, which heat water by passing it through solar panels,
Two-loop systems, where water passes through flat plate collectors in a closed loop, and then a heat exchanger transfers the solar energy to an open loop. Solar collectors can be installed on the roof or grounds to store heated water until used.

When evaluating a potential investment in solar, several factors may help to offset the initial cost. There are existing federal incentives including the Investment Tax Credit (ITC) and the Production Tax Credit (PTC). Many state and local governments also offer incentive programs to be considered. Additionally, local utility companies may offer solar incentives, solar equipment often qualifies for accelerated tax depreciation, and solar improvements may be eligible for favorable financing programs.

Solar installations are costly, so it is essential to assess the upfront investment versus the energy cost reductions to determine the timeframe for return on investment (ROI). Key factors to consider when calculating ROI for a solar system include:

Current electricity usage
Projected annual increase in the cost of electricity
Solar panel capacity
Equipment and installation cost
Income tax savings from accelerated depreciation
Incentives and rebates
Energy production estimates of the solar installation

Wind

Resorts located in windy areas can consider wind energy as a clean energy source. Wind turbines can be installed on roofs or the grounds of a property to capitalize on consistent wind patterns.

Hydropower

Hydropower, or hydroelectric power, refers to converting the energy from flowing water into electricity. Hydropower is one of the oldest forms of renewable energy. The Hoover Dam, built in 1936, is one of the largest and well-known hydropower projects. Resorts in locations with consistently flowing waters can consider hydropower as a clean energy source.

Geothermal

Geothermal energy harnesses the earth’s internal heat. Heat pumps move heat from one place to another using electricity, and an air conditioner is one of the most common examples of a heat pump. Temperatures below the earth’s surface remain relatively constant year-round, between 50°F (10°C) and 59°F (15°C). For many areas, this means the soil temperatures are usually warmer than the air in winter and cooler than the air in summer. Geothermal heat pump systems leverage these stable underground temperatures to provide heat in the winter and help cool during the summer.

Challenges and Benefits of Clean Energy Conversion

While converting to clean energy offers economic and environmental benefits, there are challenges. Conversion to clean energy alternatives can be costly and therefore difficult to obtain approval for major capital projects. Determining the accurate cost and ROI requires a detailed analysis. Existing facilities can be difficult to retrofit to make space for large equipment.

The most obvious benefit of converting to clean energy is the reducing an entity’s environmental impact. In addition, many entities can reduce utility costs and improve profitability. Finally, travelers are becoming increasingly environmentally conscious and are actively seeking to support businesses that align with their values.

Industry Trends

The adoption of clean energy has become widespread among the major hospitality companies, and many are publicizing their efforts through advertising and social media. Examples of clean energy publicity include:

Press releases announcing energy savings achieved through clean energy initiatives, installation of new systems, or reaching usage milestones.
Social media campaigns sharing images or videos of clean energy installations or showcasing guest testimonials about the organization’s initiatives.
Marketing materials featuring clean energy as a key selling point in brochures, advertising, and booking platforms.
Website content dedicated to the organization’s clean energy initiatives.

Certifications

Many organizations have obtained certifications to demonstrate their achievement of clean energy initiatives. Examples of certifications include:

LEED – Recognizes properties constructed from scratch with sustainable practices in mind.
Green Globe – Measures social, economic, and environmental sustainability and measures the sustainability of supply partners.
TripAdvisor Green Leaders – Showcases eco-friendly hotels committed to green practices.
Green Key Global – Certifies properties adhering to stringent environmental standards and undergo comprehensive evaluations in sustainable practices.
Green Tourism Active – Offers four levels of certification based upon the “pass rate” for sustainable practices around energy usage, water conservation, and other areas.
Audubon Green Lodging Program – Provides third-party verification of hotel properties that meet a specific set of environmental standards, with a strong focus on water quality, resource conservation, waste minimization, and energy efficiency.
Country-Specific Certifications – Many countries have eco-certifications. Some examples are Energy Star in the United States, Green Key in Denmark and EU Ecolabel in the European Union.

All organizations should be knowledgeable about the various clean energy options and understand the importance of sustainability to their customers. The hospitality industry’s shift towards clean energy is not only a response to rising operational costs but also a strategic move to meet the growing demand for sustainable travel options. The issue will continue to grow in the industry whether through new government regulations or expanding customer demands, and organizations need to be informed and ready to react to the evolving marketplace.

Withum is a forward-thinking, technology-driven advisory and accounting firm, committed to helping clients in the hospitality industry be more profitable, efficient, and productive in the modern business landscape. For further information about Withum and its cybersecurity, digital advisory and hospitality services teams, contact Lena Combs (LCombs@Withum.com) at (407) 849-1569, or visit www.withum.com/hospitality.

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