News from the front desk: Issue 385 So CEFC has splashed some money into a new hotel project in Melbourne.
The improved design of the Holiday Inn Express at Southbank, is using a $39 million leg up from the Clean Energy Finance Corporation that will allow it to save 25 per cent of the energy consumption than it otherwise would use.
It will ensure that instead of the usual energy dross that hotels seem to be happy to live with, relying instead on their veneer of glamour to win favour with their fly-in-fly- out customers, there will be some serious energy efficiency substance at the back end as well.
The developer is Pro-invest Group, “one of the largest hotel investment platforms in Australasia” which will soon be able to say it has a 5-star NABERS energy rated asset thanks to the help from the CEFC.
Good. But you have to wonder why the developers couldn’t do that all by themselves.
It turns out the hotel industry is notorious for being a no-go zone of sustainability. Apparently there just isn’t much motivation to reduce consumption when energy is such a small component of costs, far outweighed by staff and other luxury and service items.
There are not many drivers for improvement either. The customer is fleeting and not very engaged. The structure of long term leasehold for the operator and a typically disengaged freehold owner means the big cost of upgrading the kit makes the split incentives in offices look like a kindergarten tiff. The owners wonder why they should pay for expensive new equipment when the tenant gets the benefits through lower outgoings.
From our investigations in the past the plant room is typically a question of patch-up, and plug the leaks as best you can. As long as the front of house looks glam and spiffing. And the staff are charming.
Look at hotels in the harsh morning light and you can see their environmental profile is worse than even the retail sector five years ago when we were hammering the “landfill industry” for abnegating almost entirely on its obligations to our environment.
Today retail is stepping up. This week we brought you the proud news from Vicinity Centres of a dramatically large solar program: a $28 million investment in 11.2 megawatts of solar PV in South Australia and Western Australia, with the likelihood the entire national portfolio will soon be covered in solar as well.
The move means that Stockland has been knocked off its susty perch on solar and will no doubt be crunching numbers on how to climb back to the top. Isn’t competition a wonderful thing?
Especially today when corporate brands everywhere will be waking up to a hyper-sensitive new world that will be watching closely to see where the next royal commission will come from. Who’s next to be dragged through the streets, tarred and feathered.
The commercial property industry, at the top end anyhow, can be happy it’s ahead of the curve. But is that enough?
The message of the moment is that we can win favour by looking around and seeing if we can use our skills and know-how to help others make their way up the rungs on the ladder.
According to the noise on the street the City of Sydney is preparing a strategy to tackle the hotel industry, alongside stakeholders such as the Property Council of Australia and some of the big hotel chains. And no doubt central to the task will be NABERS with its hotel ratings.
Francesca Muscovic the Property Council’s Policy Manager – Sustainability and Regulatory Affairs imagines it will be a kind of “coalition of the willing” much like the Better Buildings Partnership.
It should be an interesting challenge to watch.
Hopefully it will be as effective as the shift in the retail property sector that likewise suffers from FIFO customers and split incentives.
But it might be even harder.
PC Thomas of Sydney based energy efficiency consultancy Team Catalyst says his company is working on one hotel energy upgrade but he doesn’t know of many others.
“It’s not really the NABERS target market. People come and buy a night. Energy costs are a very small fraction of the total operating budget by the time they pay staff and run events. And you don’t choose to stay in a hotel because it’s got a good NABERS rating.
“A lot of them are very old and to convince them to upgrade is an uphill battle.
“It’s not energy or price that will convince them, it has to be sustainability. The branding, beyond the economics.”
Jay Gualtieri of Melbourne based energy efficiency outfit Ausnviro has similar views. He says that though his company has a track record of having worked on “about 1000 commercial buildings” and has put a lot of effort into motivating the hotel sector, nothing much has come of it.
“There’s been a few inquiries over the years but they seem to hit a wall of disinterest.
“There’s nothing pushing hoteliers to push for efficiencies.”
Except perhaps corporate image, the sort that might propel big corporates to direct staff to stay at hotels with a high NABERS energy rating for instance.
The existing environmental standards for hotels are not strong and tend to be tokenistic, he says.
“They all hold themselves to environmental standards but to be honest, it’s lightweight BS. It’s not relevant to environmental performance but relevant to environmental image, more face saving than anything.”
He knows of just one hotel chain that rates its hotels.
“We tried to crack that market and see what was going on, but I gave up on that five years ago.”
“No-one is pushing anyone in the hotel game.
“You know what it’s like in a hotel – you take that extra minute in the shower; you’re not exactly prone to being environmentally efficient.
“However with corporate commitments to the environment and having a carbon neutral organisation I guess it’s going to get higher and higher on the agenda.”
Staff might be directed to stay only in rated hotels.
“That’s a signal thing.”
“The drive will come from corporate Australia.”
On the other hand there’s much better news and prospects on the apartments front.
More on that to come.