Hotel Lawyer: How to build, operate and finance GREEN hotels now
By Jim Butler, Hotel Lawyer | Author of www.HotelLawBlog.com
By Jim Butler, Chairman, JMBM’s Global Hospitality Group
Hotel Lawyer on The Hotel Developers Conference™ 2008. Here at
The Hotel Developers Conference™ even had a great panel on the unique aspects of financing and underwriting the green hotel premium, but of course hotel finance – green or otherwise – is the entire subject of JMBM's industrial strength event – Meet the Money®, which will be held May 6-8, 2008 – see )
In any event, here is the scoop on the great panels of the second day from The Hotel Developers Conference™ the 2008 annual edition – Rule #1, "Living" buildings, financing the green premium, and more . . .
Rule #1: Get the best consultants and advisors early.
As I noted in the last posting, the Who's Who of the Hotel World was at the UNLV-JMBM Hotel Developers Conference, sharing thoughts and insights. If you are going to get serious about GREENING your hotel future, the first thing you need to do is tap some of the best GREEN resources you can find, and do it from the outset.
A good starting point is the list of speakers at The Hotel Developers Conference™ 2008. You will find them discussed in prior posting at and on the conference website (). In fact, the entire program, conference faculty and program materials are available on the website.
For more discussion about GREEN resources, including many of The Hotel Developers Conference™ speakers and a rich library of reading, please see the rich assortment of articles in the Green Hotels topic at , particularly, "Green Hotel Lawyer: Why should you do GREEN hotel development, and HOW do you do it?"
The first day's events were described in the last two postings under Green Hotels, and here is how Glenn Hasek, publisher of Green Lodging News and a sponsor of the program described the second day's proceedings. This excerpt is reprinted with Glenn's kind permission, and we suggest you check out his site if you are interested in anything having to do with Green Lodging. (See Green Lodging News) Glenn Hasek can be reached at [email protected]
Living buildings that produce more power than they consume - sustainable design
Kip Richardson, Director of Business Development for Ankrom Moisan Associated Architects, kicked off the day of educational sessions with a presentation entitled, "Beyond LEED: The Cutting Edge of Sustainable Design." Richardson described some of the reasons why it is important to take a sustainable approach to hotel design and construction. By some accounts, we have just 10 years to get our environment turned around, he said.
Richardson provided a glimpse into the future of hotel design, saying that within five years, hotel buildings may produce more energy than they consume and consume more waste than they produce. These "living" buildings will capture and treat rainwater and have zero net impact on the environment.
"We need to stop thinking about buildings as machines and start thinking about them as living parts of the ecosystem," Richardson said.
Hotel Financing for Green Hotels
In a session on "Underwriting and Financing the 'Green Value' Premium," panel participants addressed the current lending environment and whether or not lenders favor green developments in any way.
"There has been a huge change in investor interest," said Scott Muldavin, President, Muldavin Company, Inc. "Investors have gone from being barely interested to very interested."
Jim O'Shaughnessy, Senior Vice President, Acquisitions & Development Hotel Group for Cornerstone Real Estate Advisors LLC, said, however, that a building's green attributes has not come up for discussion in transactions with which he has been involved. That said, there is increasing awareness that sustainability is important, he added.While "green" may be the current hot trend, it will not trump other value-determining business fundamentals such as location and brand identity, panelists said. Being a green hotel developer does not necessarily guarantee funding success.
"Before you can be a green hotel developer, you have to be a hotel developer who knows how to get a deal done," Muldavin said.
If hotel financing is your main concern right now, please don't miss our annual Meet the Money® conference. See to register, or for information on other conference resources.
The Upside to Green Mixed-Use Projects
In a session entitled, "Bringing Green Technologies, Concepts and Approaches to Resort and Mixed Use, panelists summarized their current projects and generally agreed that mixed-use developments offer more income potential to developers because more dollars can be gained per square foot for the residential component.
"A green strategy works much better in mixed-use," said Russell Dazzio, Co-Chairman, R&R Global Hospitality Group. "You get the same benefits of other green projects--e.g., lower operating costs and improved employee productivity--but you also benefit from the higher value per square foot."
Experts in climate change and government regulations and programs addressed some of the current trends. Catherine Holmes, Partner, Corporate Department with Jeffer, Mangels, Butler & Marmaro LLP (JMBM), said a number of cities have adopted building codes that in some cases include limits on greenhouse gas emissions.
"There are a number of calls for greater transparency in tracking the energy efficiency of existing buildings," added Stuart Brodsky, National Program Manager for Commercial Properties for the EPA's Energy Star program.
Kellee James, an economist with the Chicago Climate Exchange, explained how that organization's carbon credit trading program works. Simply put, those building owners who exceed efficiency targets can sell their carbon credits on an open market to those companies that have not been as successful in reducing their own greenhouse gas emissions.
James advised hotel owners to use programs like LEED or Energy Star to put themselves in a favorable position for the day when reporting carbon emissions becomes mandatory.
"We are all going to be required to reduce our energy consumption," JMBM's Holmes said. "Why wait for the regulations?"
War Stories from Veterans in the Trenches – Lessons Learned
During one of the conference's final sessions, several architects and one hotel manager shared the lessons they have learned in their pursuit of green hotel design and management.
LEED is not something you should jump into after a new project is already underway, said Lynn Simon, President, Simon & Associates, Inc.
"A decision needs to be made early on to get you to the higher levels of green," she said. "You have also got to find designers who are committed to sustainability and who are knowledgeable of green materials."
Gerry Link, general manager of the Hilton Vancouver Washington, said that before pursuing LEED certification, it is critical to get the backing of your hotel brand, as well as the hotel's owners. LEED is just the beginning, Link said. To ensure that his hotel operates in a green fashion over the long term, he is currently pursuing Green Seal certification. When the hotel reaches that goal, the Hilton Vancouver Washington will be the first hotel in the United States to be both LEED and Green Seal certified.
Even though getting LEED certification cost Hilton Vancouver Washington ownership more than $100,000, Link said the property's green efforts have resulted in $3 million in new meetings business.
Climate Change Regulation: Carrots and Sticks
Hotel owners and operators - whether or not they "choose" to go green - will be affected by the host of requirements that are currently being implemented or on the drawing boards of legislatures and regulatory bodies at every level of government. Some will take the carrots offered to be early adopters, such as tax incentives or fast tracked entitlement processes. Others will take the "wait and see" approach, when the cost of compliance is likely to be greater.
Check back with us soon, as I will devote a full entry to this important range of climate change issues and their impact on the industry – it will be interesting! (If you want to be notified when new entries are posted on the Hotel Law Blog, scroll to the top of this page and under the masthead, click on "Subscribe by Email" and enter your email address.)
This is Jim Butler, author of and hotel lawyer, signing off. We've done more than $50 billion of hotel transactions and more than 100 hotel mixed-used deals in the last 5 years alone. Who's your hotel lawyer?
Our Perspective. We represent developers, owners and lenders. We have helped our clients as business and legal advisors on more than $50 billion of hotel transactions, involving more than 1,000 properties all over the world. For more information, please contact Jim Butler at or 310.201.3526.
Jim Butler is one of the top hotel lawyers in the world. GOOGLE "hotel lawyer" or "hotel mixed-use" or "condo hotel lawyer" and you will see why.
Jim devotes 100% of his practice to hospitality, representing hotel owners, developers and lenders. Jim leads JMBM's Global Hospitality Group® – a team of 50 seasoned professionals with more than $50 billion of hotel transactional experience, involving more than 1,000 properties located around the globe. In the last 5 years alone, Jim and his team have assisted clients with more than 100 hotel mixed-use projects, all of which have involved at least some residential, and many have also involved significant spa, restaurant, retail, office, sports, and entertainment components – frequently integrated with energizing lifestyle elements.
Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them. They are a major gateway of hotel finance, facilitating the flow of capital with their legal skill, hospitality industry knowledge and ability to find the right "fit" for all parts of the capital stack. Because they are part of the very fabric of the hotel industry, they are able to help clients identify key business goals, assemble the right team, strategize the approach to optimize value and then get the deal done.
Jim is frequently quoted as an expert on hotel issues by national and industry publications such as The New York Times, The Wall Street Journal, Los Angeles Times, Forbes, BusinessWeek, and Hotel Business. A frequent author and speaker, Jim's books, articles and many expert panel presentations cover topics reflecting his practice, including hotel and hotel-mixed-use investment and development, negotiating, re-negotiating or terminating hotel management agreements, acquisition and sale of hospitality properties, hotel finance, complex joint venture and entity structure matters, workouts, as well as many operating and strategic issues.
Jim Butler is a Founding Partner of Jeffer, Mangels, Butler & Marmaro LLP and he is Chairman of the firm's Global Hospitality Group®. If you would like to discuss any hospitality or condo hotel matters, Jim would like to hear from you. Contact him at [email protected] or 310.201.3526.
Jim Butler is a founding partner of JMBM, and the founder and chairman of JMBM’s Global Hospitality Group® and Chinese Investment Group™. He is recognized as one of the top hotel lawyers in the world and has authored or co- authored The HMA & Franchise Agreement Handbook, How to Buy a Hotel Handbook, and The Lenders Handbook.More from Jim Butler