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Why Can’t Hotel Operators See The Light?

Leanne Donovan 14 December 2017
Why Can’t Hotel Operators See The Light?

When it comes to specifying lighting for hotel rooms, many hoteliers just aren’t illuminated…

We’ve all done it.  Juggled with the desire to get something cheap in the short term, versus knowing that we will then pay more for it over time.

Be it a mobile phone upgrade, a new set-top-box for your TV or buying a car on a balloon-lease, as consumers we are all used to being offered heavily-discounted hardware, in return for higher monthly repayments and contractual obligations.  

Take the new iPhone X. In today’s phone market you could buy one for £1000 and then have tiny monthly payments with no contract; or you could pay nothing today, but tie yourself into contracted payments totalling £1400 over two years.

It’s pretty obvious which is the better deal, but if you’re short of cash and you want the latest equipment, it’s a way to do it.  If you were able to fork-out £1000 for the latest kit from Apple, then you probably would…because ultimately you’d save money.

That’s all well-and-good, but what’s this got to do with sophisticated, well-funded hotel operators? Well, when it comes to selecting hotel room lighting, rather a lot, so it would seem.

In the world of hospitality property development, we also all know that capital costs need to be very carefully managed and controlled.  Many projects commence with the best intentions, with early plans often encompassing somewhat of a “let’s do everything” approach.  However, ultimately it is an economic fact, that value-engineering is a necessary evil if operators are to bring projects in on time and on budget.  Thus, there are often substantial cost-driven differences between the look-and-feel of mock-up-rooms and their final roll-out iterations.

Choosing what to value-engineer as part of this process then becomes a critical element influencing the overall success of the hotel project.

When it comes to FF&E generally, operators are very adept at weighing up the various factors that relate to appearance, durability and functionality, to ensure that they launch hotel rooms that still look good 5 years later.  For them it’s also about juggling initial expenditure, against how much maintenance and replacement costs they might have to incur if they buy too cheap.

When it comes to lighting a hotel room, this principal remains very true, and in fact perhaps even more so, given the technological imperative.  It’s important for hoteliers to buy a robust, quality product that is easy to maintain and live with, and which will remain contemporary.

Unlike other FF&E elements however, with hotel room lighting there is an important additional factor that operators often overlook.

There is no doubt that a lighting control system is substantially more expensive than a room equipped with standard switches.  So, in a VE context, operators can absolutely be excused for dropping lighting control, and therefore saving that capital cost, right?

No, not right…it’s like a choosing the cheap-up-front iPhone deal, knowing that it will cost you much more over time.  In-fact it’s even worse than that, it’s like choosing a Blackberry Storm (one of the worst smart-phones ever built) and ultimately paying far more for it than the iPhone X.

Lighting control systems have three key benefits when compared to standard switches.  Firstly, they create a lovely guest experience, which is the number one criteria that guests use to select a hotel (source: Avaya).  Secondly, they future-proof a hotel development, by protecting against the need to upgrade lighting prior to the next refurbishment cycle.  

Lastly, and most importantly when it comes to assessing capital cost versus long-term cost, a good Guest Room Management System saves energy, and therefore money.  Typically, a hotel room specified with a GRMS will cost between 20% to 25% less to operate, than a room equipped with standard switches or a key-card switches.

We all have numerous anecdotal stories about guests overriding key-card “energy saving” systems, using everything from an old Blockbuster Video card to simply asking Reception for a second key.  In-fact 65% of hotel guests override those key-card systems, or just leave power on in standard rooms (source: The Architectural Energy Corporation).

For a typical 300 room hotel, with a total power load per room of 2kW for HVAC, and 150W for lighting, the annual electricity bill will be in-excess of £320K annually.  The Vivid GRMS would generate a 21.5% cost saving, representing a £70K bottom-line benefit every year.

Depending on interior design specifications, and including one-time installation costs, the Vivid System GRMS might cost £220K for this scale of project (factoring in the benefit of the government’s Enhanced Capital Allowance scheme).  Standard switch panels would total £80K.  The room control system therefore costs considerably more than standard switches, yet unlike standard switches the system immediately starts to pay for itself, in energy savings derived from accurately turning power off when a room is unoccupied.

Indeed, the Vivid System will have fully paid for itself in just over 4 years, and for a 5-year refurbishment cycle, will generate incremental profit of £130K.  The standard switches will still have negatively impacted the bottom-line by the original £80K capital costs.  That means that despite costing more to buy initially, over a five year term the GRMS will actually be a significant £210K cheaper…does that principal sound familiar?

Comparison Cost Summary – Standard switches and the Vivid System (300 room hotel)

In fact, the room control system is the rechargeable AA batteries, to standard switches’ alkaline equivalents.  

Today, a 4-pack of the rechargeables would cost you £8.49 from Amazon, the alkaline Duracell equivalents are £2.49 and therefore 70% cheaper.  However, whilst the rechargeable batteries will last for 1000 cycles, the standard Duracell equivalents will last just 1 cycle.

Both the rechargeable batteries and the room control system cost more to buy initially, but over time they are by far the cheaper solution.

There’s a common and obvious message, yet large hoteliers don’t seem to be seeing the light.  Often their organisational structures separate responsibility for capital budgets, from those divisions responsible for operating cost. Of course, both divisions work hard to individually reduce their costs, but no one is taking the holistic view.

As such, the wrong decisions are being made.  It isn’t that value-engineering isn’t a very valid approach to reducing capital cost, it is more that capital cost for lighting control shouldn’t be reduced at all.  Instead, the capital budget should be protected in order to generate far larger operational cost-savings.

Lighting control isn’t more expensive than standard switches, it’s much cheaper. Illuminating isn’t it?