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Energy Efficiency Checks In for Houston Hyatt

Energy is fundamental to the success of any real estate project and it plays a pivotal role in both cashflow and valuation. Too often, the focus is, first, on cost to the detriment of operations and life cycle analysis. In recent years, many hospitality clients seek help with the engineering and implementation of energy efficiency projects that not only lower operating costs but that also improve sustainability.

Often overlooked during initial design, and only addressed at the end of a project, energy and building systems can create hard and soft returns with significant impact on an asset perception and value. The right energy solution will not only lower operating cost, but improve RevPAR and guest perception.

When a Houston-based Hyatt was seeking a way to lower energy costs and improve the perception of the property, it reached out to Green Generation Solutions, a global energy solutions provider based in Washington, D.C. to develop the right approach for an energy strategy.
The first step, entailed Green Generation Solutions asking the Hyatt to answer a few key questions: How old is the hotel? How many rooms does it have? How much common area does it have? What cap rate would you use to value it today? What is the business plan and hold period?

The solutions team then began to address these issues and do so with a good return on investment. After speaking with various stakeholders, it was determined that the following were important:

* Lowering electricity costs throughout the property
* Creating a more efficient building control system
* Replacing older less efficient equipment including pumps and motors
* Improving the building envelope by reducing air infiltration and rejecting thermal loads

The engineering process started with a review of utility data to understand where costs were going, including consumption and demand charges. Next was the development of a phased solution that focused on prioritizing higher ROI projects that took advantage of the CenterPoint utility rebate program. This approach led to several phases including high-efficiency motors, variable frequency drives and window films. Each phase had the potential to greatly reduce the energy required to run the hotel and address site needs and objectives, albeit with different returns on investment.

The approach Green Generation Solutions took was designed to improve the building itself. It would replace older and less efficient equipment, add state-of-the-art controls that connected disparate building systems and data capabilities that would reduce engineering team time that had required manual readings in the past. Combined with a phased approach that maximized CenterPoint incentives, this approach reduced operating costs while improving the guest experience and making the onsite team more efficient. 

Strategic plan yields results
GreenGen oversaw each phase of the solution implementations that took place over 18 months. Breaking down the solutions into three phases, during the first stage, GreenGen implemented VFDs and high efficiency motors on 25 AHUs and parking garage exhaust fans.
This achieved a 50-70% reduction in energy consumption from AHU fans and a 99% reduction on parking garage exhaust fans.

The second phase included the installation of low-e high-performance solar film to reduce solar heat gain on southeastern/south/southwestern facing facades.  This yielded reduced energy consumption of the HVAC units by 25% on individual fan coil units.

The third and final phase addedlocal controls on AHUs to further reduce energy consumption of the AHUs. Reduction in run-times due to local controls surpassed 15%. This integrated the property’s two main building management systems into one user interface to increase operating efficiencies and time spent monitoring central plant set-points.

Together the overall solutions would provide the Houston Hyatt with: lowered operating costs through more efficient equipment and reduced operating costs from better scheduling and controls; tailored scheduling and automation control that better match energy usage with operations; and more comfortable room temperatures from the window film solution.

The hotel’s energy savings exceeded the final energy modeling GreenGen had presented. The combined phases reduced operating expenses collectively by more than $300,000 in utility costs and $51,263 in reduced O&M costs. Despite occupancy increasing by more than 8 points, operating costs were reduced by more than $350,000, creating nearly $5 mm of value for the opportunity fund in direct equity value. The overall project payback was only 2.64 years, taking into account the $84,670 in rebates received across all the phases.
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