STEPS TO SUSTAINABILITY FOR PROFITABILITY IN THE UAE

Sustainability is becoming increasingly government driven, with the most recent example being the announcement that Dubai Municipality will implement the Al Saafat, new green building rating system in 2018. Such initiatives are resulting in a requirement for all those involved in the construction and operation of built assets to adopt best practice within their design and comply with certain sustainable criteria. This trend is leading to the design, construction, operations and maintenance of resourceefficient, high-performing, cost-effective buildings throughout the UAE.

The Al Saafat project, for example, aims to achieve a 20 percent reduction in electricity consumption, 15 percent reduction in water consumption, 50 percent reduction in waste and an overall 20 percent reduction in CO2 emissions. There is also a growing trend for guests’ expectations to act as a major driver for hotels introducing sustainability initiatives. A recent report by Greenview found, through a survey of 2,093 hotels across 46 countries, that 44 percent implemented sustainability improvements as a result of guest comments.

However, there is a practical challenge for many of our hospitality clients, which is the pressure that exists to minimize capital expenditure wherever possible. Hospitality businesses therefore need to look at the economic justification, in addition to the corporate social responsibility aspect of developing and operating their assets in a sustainable manner.

How to drive sustainable profitability

1. Through appropriate design, planning and procedural development, environmental sustainability can also contribute to financial sustainability for those in the hospitality industry. To achieve this, those leading the business need to drive these initiatives as comprehensive transformational programs that involve all aspects of the business and avoid the temptation to address such initiatives as corporate social responsibility (CSR) related side-programs. It is essential that the business case be developed and the correct analysis run, to establish the related internal rate of return on any additional expenditure required.

2. There are many examples of ongoing or long-term savings across operations being achieved from investing in sustainable best practice or related technology. Enhanced energy monitoring, which can be done as a standalone system or, ideally, integrated into the wider Building Management System, is being increasingly deployed to manage and control energy consumption within hospitality assets. With most energy monitoring platforms, the property management and engineering team can obtain real-time data relating to energy consumption and generate regular reports that detail how consumption compares to targets. While the specifics will vary depending on the many variables involved in the design and construction of a particular property, we have seen a return on investment (measured by IRR) of between 5-7 percent associated with this, when implementing such solutions on a retro-fit basis.

3. Other popular measures for existing buildings include the replacement of lighting with LED. This is a quickfire way to reduce energy consumption and related utility bills; for a 300-key property, the 20-25 percent difference in energy consumption can make a significant difference. Low-flow shower systems and flow restrictors on faucets can also result in significant water savings, with minimum capital investment required.

There is a general trend across the UAE hospitality sector towards giving sustainability greater levels of consideration.

partner at Thomas & Adamson, tells us how sustainable practices can add to the financial bottom line

Hospitality businesses need to look at the economic justification, in addition to the corporate social responsibility aspect of developing and operating their assets in a sustainable manner

4. However, the inclusion of good design practices prior to construction of the asset is where particularly attractive rates of return can be achieved. Simple design modifications, such as the use of solar water heaters, are now a given, and while the use of other renewable energy sources need careful consideration and project specific analysis of economic viability, clever design of building elements, such as ensuring appropriate shading to façades or refinement of the heating, ventilation and air-conditioning (HVAC) system design, can have significant long-term benefits.

As the importance of taking environmental considerations seriously within the hospitality industry is becoming increasingly well documented, it is for business leaders to drive the initiatives forward in a way that will ensure sustainability converts into profitability.