Author of www.HotelLawBlog.com 12 April 2007
Hotel lawyer on a new hotel construction — now may be the time to build or convert green hotels. OK, now that we have solved all your hotel finance problems — or will soon at Meet the Money® 2007 (see “What are the secrets to financing a hotel project today? Who are the “active” hotel lenders and equity providers now?” and www.MeetTheMoney.com), let’s deal with some other critically important issues.
To be very candid, I am not a passionate “activist” on much of anything except my hotel law and advisory practice (I LOVE being a hotel lawyer and am very passionate about that.). But I must say that the “Green movement” on hotels has really caught my attention recently and I am getting on the bandwagon. I suppose it started with our most recent Hotel Developers Conference in March 2007. While I have a lot of articles about the Conference on www.HotelLawBlog.com, you should pay special attention to “Hotel Lawyer on Green Hotel Development: Green hotel development is profitable now! Inspirations from the pioneers make it dangerous NOT to be “green” and some of the exciting developments in hotel mixed-use, as reflected in “Hotel Lawyer Live from The Hotel Developers Conference ™ in Rancho Mirage” and “Hotel Mixed-Use” . . . pass key to unlocking new development and bigger profits?
One of the most exciting concepts presented at our hotel mixed-use conference in March was the Green Hotel panel. In fact, this idea may be so big, and the timing may be so right, that we may devote our entire Hotel Developers Conference to this subject in March 2008. Although I am fairly new to this whole green hotel and green building thing, you would not believe how many wonderful, generous, people have reached out to contact me in order to offer their support and services for the green movement in hotels. And although the concept may originally have seemed expensive, futuristic, and perhaps too idealistic, I think we may be at the “tipping point”. The time has come.
In other words, although I am an extremely pragmatic, business-oriented hotel advisor and hotel lawyer, I think we may have reached the point where you can’t afford to — literally cannot afford to — ignore making your hotel greener than you ever imagined, and maybe even LEED-certified. So what’s it take to build the green hotel today, and what does that mean anyway?
What’s a green hotel?
What’s a “green hotel”? It seems that nobody knows the answer to this question. There is no universal definition. Certainly, there are standards for LEED-certified hotels, but that does not begin to define the area. (By the way, “LEED” is the nationally accepted green building rating system of the U.S. Green Building Council. It is an acronym for Leadership in Energy and Environmental Design (LEED)).
Basically, there are two aspects to being a green building — hotel or otherwise. One involves the physical aspects of the building and site (such as water savings, energy efficiency, materials selection and indoor environmental quality). Are the paints nontoxic? Are the systems low energy and do they involve recyclable or reusable materials? The second aspect involves the actual operations of the physical plant. How is it run? Is it environmentally friendly? Is it carbon neutral? What are the soaps, shampoos and water heads? What kind of lighting products do you use? How do you run your operations to be environmentally friendly?
Maybe it is not that hard to build a green hotel (or any building).
Okay. I am not green expert (today, anyway, but I plan to change that very quickly) and I readily admit it. But many of our clients are very realistic businessmen (or women), and they tell me that they are going green — that they can’t afford not to … and it’s the right thing to do. You know what? That sounds great to me!
I think we all believe that being environmentally friendly is a great thing to do. We care about our planet. We care about our kids. We care about the quality of life and our future as a race. Some people are so devoted that they will do the “right” thing no matter what the cost. Others of us may think we are more “pragmatic” and see going green, or being green, as — significantly — affected by the cost and quality. If it’s economically feasible, we would love to do it. If it costs a premium of 10 times (instead of 10% more) the “regular” price, we will leave it to the dreamers.
But that’s the really cool thing. Some of the smartest business people we know are now going “green.” I put Marty Collins, CEO of Gatehouse in that category — going green with his $800 million hotel mixed-use project in Hollywood, California. I also put Barry Sternlicht in that same category with his “1” hotels. I think MGM with CityCenter in Las Vegas also deserves that recognition. And the list goes on… and on. So what is this all about?
It’s time to be green!
OK. I wasn’t the first pioneer on this bandwagon. I have not been suggesting going green for 10 or 20 years, but I am not ashamed to say this is the time to take a fresh look. Being environmentally friendly is the “right” thing to do. It’s really only a question of whether we can afford to do it and how smart we are in finding and applying the technology.
If other “smart guys” are going green, why aren’t you? Is it really that hard? Does it take a rocket scientist? Does it cost significantly more? What if it weren’t that hard, and didn’t cost that much? Would you build green if you could “afford” it? Let’s look at the facts…
Why it’s feasible now to be green… why you can’t afford not to be green…
At The Hotel Developers Conference™ in March, I was amazed to hear speaker after speaker explain that the costs of being green are now “negligible.” For years, many of us have thought that the cost of an environmentally friendly building was both a sacrifice of quality and experience and an exorbitant premium in cost. Now we are hearing that things have changed. This is like the cost of high definition television going from $10,000 a screen to less than $1,000. There is a tipping point. There is a time when the technology has arrived. It may be “NOW” for green hotels.
The time has either come for “green hotels” or is just around the corner. . .
What did the leaders of the hotel industry tell us at The Hotel Developers Conference™? Marty Collins of Gatehouse told us that his $800 million W mixed-use project will probably cost an additional 1% to be LEED-certified gold. Can you believe that? Would you be LEED-certified gold if it only costs you 1% of your project cost? Do you think it is time to look into this?
Maybe some of Marty’s cost savings result from the huge scale of this project. But architect after developer, after visionary seemed to repeat a similar theme. Maybe it’s a little more than 1% of project cost. Maybe you don’t go LEED-certified gold. But it is absolutely clear that the cost of being environmentally friendly has plummeted. The importance of being environmentally friendly has skyrocketed. And, the consumer is finally appreciating those who benefit the environment with green-ness — more in Europe than the U.S. right now, but that is changing, too. As a consumer, would you rather patronize a “green” hotel or another, if all other factors were similar? And wouldn’t you even pay a little premium for it (as we all did for high speed internet — at least for a while … and then we wouldn’t stay at a place without it.)
I think being green will be like having the Internet. 10 years ago, only a few of us geeks knew what the Internet was. [Actually, in the early 1980s, we were on CompuServe or The Source without the Internet, using e-mail at 150 baud or 300 baud — not KB but baud — through acoustic couplers.] Do you remember only a few years ago when road warriors carried alligator clips to tap into telephone lines, had to scrape wiring off telephone lines to “clip in”, and worried about single line phones, call interrupt and the like? Then we worried about data access ports? Then we worried about “Internet”? And then it was “high speed” Internet? And now we worry about how high-speed the “high speed” Internet access is and whether or not it is wireless.
That’s the way it is with green! Today there’s no definition of it. We think we know it when we see it. We understand it when it is LEED-certified. But we’re beginning to have visionaries and leaders who helped us understand that there are both physical plant facility aspects to being green and operational aspects to it as well.
My friend, Ray Berger of Pineapple Hospitality, helped me understand that there are shades of being green. At the low end we have “green washing” where the mildest green thing is trumpeted as an innovation. As he so eloquently put it, “the environment doesn’t care what your motivation is.” So even if you “only” use an environmentally friendly soap in your laundry, that’s better than not doing anything. But obviously, it is much better if you can do a lot of environmentally friendly things from using non-toxic paints, better building materials, lower energy consuming utilities, friendlier soaps and shampoos and other operational aspects. And misleading people about how green you are may be a bottomless pit trap.
And you know what? It may not be that hard to go really green, really fast! How do you do it? As my new friend Ray Berger of Pineapple Hospitality, put it . . it is really not that hard. There are 3 easy steps to learning more about — and making your hotel green, or at least greener:
1. Learn more about the green building standards and LEED. There is a wealth of information available for free from the U.S. Green Building Council at www.usgbc.org, including a tremendous “Resources” page.
Another great resource is the Green Lodging News http://www.greenlodgingnews.com/ run by Glenn Hasek, Publisher & Editor
2. Hire an architect who understands green building. This is really not that hard. There are increasingly a large number of architects who are LEED-certified. They understand green. We are hearing them reinforce the statements from our developer clients who say that it doesn’t cost that much more to build green — and it’s the right thing to do. It will save you money in the long run. There are rebates and tax credits that can save you, now. And there are a lot of people who are increasingly learning to reward those who build green. Do you want to fight this trend? Why not look into it?
3. Make your operations green too. Green building is great, but that is only part of the picture. Hire a green consultant or a green operator or someone who sells green programs, products and services to make your operations environmentally friendly. Deirdre Wallace, Founder of The Ambrose Group with the Ambrose Hotel in Santa Monica, spoke at The Hotel Developers Conference™ last month — and she is expected to announce in the 3rd quarter of 2007 the launching of a green hotel operating company, available to do third party green management. And you should definitely talk to Ray Berger, President of Pineapple Hospitality
Ray is a very level-headed guy who provides a lot of free green consulting services if you buy his green programs, products or services, which all look pretty good — and they work for both EXISTING and new build hotels!
Ray’s group is a distribution and marketing company that focuses on products and services that deliver higher levels of guest satisfaction, increased profitability, while balancing environmental and social responsibility. They can 1) provide innovative and profit enhancing products; 2) propose, provide and execute energy and water efficient projects; 3) provide “Green” marketing programs and Environmental Marketing/Consulting.
What does it all mean?
I don’t think anybody can possibly know the real dimensions or timetable for the greening of the hotel industry. But I have now come to believe that the timing is imminent, the consequences are great and the opportunities will abound.
Let’s get into this green thing together! I invite your comments, corrections, resources, and assistance. I will endeavor to pass on all of what I think is the best I see.
Let me leave you with one of Ray Burger’s thoughts to me. Some people may help the environment because they care about it. Others may help it because it makes money for them or suits a public image purpose. Some people may care, but “the environment does not care about your motivations.” Just do something to make it better.
Please send me your thoughts at firstname.lastname@example.org.
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 email@example.com 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 90 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 firstname.lastname@example.org or 310.201.3526. For his views on current industry issues, visit www.HotelLawBlog.com.