How The Witness Group Uses LED Retrofits to Save on Operational Costs and Reduce Energy Consumption
Light-emitting diodes, or LEDs, are a type of low-energy lighting that have been commonly used as indicator lights in electronics but are now being used as interior and exterior lighting in homes and businesses due to the associated cost savings and the positive impact on the environment.
According to Energy.gov, “By 2027, widespread use of LEDs could save about 348 TWh (compared to no LED use) of electricity: This is the equivalent annual electrical output of 44 large electric power plants (1000 megawatts each), and a total savings of more than $30 billion at today's electricity prices.”
At Witness, we have begun retrofitting our hotel properties with LED lighting fixtures in an effort to enhance our operational cost efficiency. Not only do LED lights use less energy than incandescent and fluorescent bulbs, but the maintenance costs are lower because LED bulbs are solid-state and last longer than other types of lighting. This is especially beneficial in our hotels, where certain lights, such as in hallways, are used 24/7 throughout the year. Additionally, we reduce labor costs associated with constantly replacing incandescent or fluorescent bulbs throughout the hotel.
To date, we have retrofitted our Holiday Inn Express Polaris, Hampton Inn Dayton South and Holiday Inn Express Middletown properties with LED lighting, though we are currently in the process of completing four to seven more retrofits within the next year. All of our newer properties have been equipped with LED lighting from the very start--amounting to 30% of our portfolio. All future builds will come with LED lighting, and any already-existing hotels that we purchase will be evaluated for LED retrofits from the start.
Retrofitting begins with an energy assessment: an energy company does a usage analysis to understand the impact of kilowatt savings by switching to LEDs. This assessment breaks down the savings by type of lighting (exterior, guest room, hallway, pool, etc.). The business case and payback period for the investment is presented and analyzed by our team, and material specifications and budget are validated to ensure appropriate quality and standards for each brand. The cost savings from LED fixtures can vary based on the hotel and how old the lighting is, but the general savings is 25-30% within the first year.
Many counties, states, and energy companies are providing rebates to businesses for LED retrofits that will cover portions of the cost for materials and installation. We have heavily subsidized the cost on several of the retrofits that we are looking to do within the next 12 months through local and state programs.
A program called PACE (Property Assessed Clean Energy) financing that is done through a special assessment on the property’s real estate taxes can help fund a new development or renovation. This program is based on the premise that the improvements financed by PACE dollars add energy efficient improvements to an older building or a new development that were not originally planned. We are looking at this alternative form of financing for both our renovation projects and new developments to complement our traditional debt financing.
Click here to learn more ways hotels can have a positive impact on cost savings and the environment.