The Rising Importance of Sustainability in Hotel Valuation - In 2023 and Beyond

In this article, CBRE's Alan Jutte provides insights on a study of hotel operating statements from CBRE's Trends in the Hotel Industry which showed that new properties with energy-efficient features resulted in substantial energy savings compared to older or less efficient properties. The study concluded that while sustainability efforts can lead to reduced costs, the extent of these savings may depend on various factors such as room size, building size, amenities, building materials, etc.

Sustainability is an increasingly crucial component across almost all industries. Embracing new and more efficient business models and technologies is expensive, and often developers and operators will not embrace them unless it results in a sufficient return. Indeed, developers may not have a choice as government officials have mandated increasingly stringent standards for any type of new development. These include anything from high efficiency toilets, guestroom automation systems, solar panels, and lighting control status systems.

Many cities across the country have already approved a natural gas ban in effort to lower emissions, forcing developers to consider other options. Government incentives will also play a role in sustainability, especially with the recent passage of the Inflation Reduction Act. The legislation includes billions of dollars in grants and loans to spur the development of clean energy technologies. Other measures are not as difficult to implement. One silver lining of the pandemic is daily maid service is not offered nearly as much as pre-pandemic. Guests often prefer hotel employees not enter their room to clean anyway, and can simply call the front desk when extra towels are needed. This has resulted in significant lower operational costs as the washers and dryers are not operating nearly as long.

Read the full article

The Hotel Yearbook 2023 - Annual Edition

As we have embarked on 2023, it is evident that the hotel industry has made a robust recovery from the pandemic. Occupancy and pricing have returned to their pre-pandemic levels. However, the future of our industry is contingent on how nimble the hospitality sector can be in adapting to ongoing innovation, changing market conditions, evolving consumer preferences, new staffing challenges, and sustainability realities. These uncertainties are the new normal in an unpredictable world.