Energy costs are rising dramatically all across North America and are having a negative effect on hotels profits. Some Canadian provinces, such as Alberta, have seen increases of as much as 100 percent in the price of natural gas alone. This price increase correlates to simple economics: demand is greater than supply. Major banks and the Canadian government are forecasting continued high-energy prices for at least the next year due to the high demand placed on reserves by the United States. Increases in hotel utility bills are being forecasted at different rates across the country, but with rising gas, oil, electricity, and water prices in most cities, owners and managers should brace for increased utilities.

Historically, the hotel industry has been complacent about energy costs, categorizing them as an uncontrollable operating expense, however, today, due to rising fuel costs and an increased environmental awareness, hotel operators need to take a closer look at energy management companies and the benefits they can provide.

What are hotels doing?

The Alberta Hotel Association signed an agreement with EPCOR Utilities Inc., one of Alberta�s largest energy companies. The agreement has allowed the association to purchase bulk power and pass it onto its members. The negotiated price of bulk power has meant a significant savings for those Alberta hotels that chose to sign into the deal with the association (approximately 75% of the association�s 430 members). According to Jim Hansen, President and CEO of the Alberta Hotel Association, the average power rate in Alberta is currently between 15.6 and 22.7 cents per Kwh of electricity, while the association�s members are paying less than 2 cents.

Other Canadian hoteliers are bracing for energy price increases, which could double or triple operating costs at some of the country�s largest properties. Danny Crowell, General Manager of the Hotel MacDonald in Edmonton, estimated higher energy bills will double the cost to his property this year.

Alberta seems to be the province that is going to be hit hardest by rising energy prices. Ron Sidnick, General Manager of the Coast Terrace Inn in Edmonton, believes that he could see an increase as high as 250 percent over last year�s rates. Grant McCurdy, General Manager of Edmonton�s Sheraton Grande, said the hotel�s natural gas bill more than doubled in December, to $27,000 from $13,000 a year ago. 

Glenn Squires, Vice President of Pacrim Developments based in Halifax, Nova Scotia, says that Atlantic Canada electricity prices are more stable than the west; however, he is predicting similar increases in oil, fuel, and gas. Pacrim manages 1,600 rooms across the country and is expecting an increase of $300,000 to $400,000 in 2001, with a 1% to 2% rise in overall utility expenses for Pacrim properties.

Where To Start?

The best opportunity areas for energy efficiency improvements in hotels are lighting, heating, and cooling systems, followed by refrigeration, motors, elevators, and laundry. Housekeeping practices are another way hotels can effectively start to reduce their energy costs. 

Hotel operators generally feel that the areas of the hotels that cost them the most money are the guestrooms. In limited-service properties, this may be the case, but full-service hotels with added meeting space need to focus on the larger rooms for big savings. According to Troy Hartmann, Manager of Sales and Field Operations for Smart Systems International, �Conference rooms and meeting rooms have 10 times the amount of heating and air conditioning needs of a typical hotel room. The savings offered in those large rooms is a huge opportunity.� A 300-room hotel with one large conference room can undo all of the savings achieved in guestrooms in a very short time by not minding the temperature in the larger room.

The first step in energy conservation is taking a close look at your property and working with your staff members on ways that they can help conserve energy. Then, contact an energy management company such as Energex, Johnson Controls, Honeywell, Embridge, Darmac Resource Group, Hotelite, or one of the many others. The adage, �Time is Money,� has never been more applicable�the longer hotels wait, the more money they lose. The energy crisis may pass this year, but due to the high-energy consumption society we live in, energy shortages will inevitably continue to be an issue in the future.