hotels and casinos

The Market

The hotel industry continues to grow throughout the United States in general and in California, Nevada, and Hawaii in particular. Currently construction of new rooms and facilities is progressing at a rapid pace; in fact, the development of new properties seemingly only experiencing a slight slow down in the early 2000’s.

Casinos are a relatively new sector for hotels. Once limited to Nevada and Atlantic City, the establishment of the autonomous Indian gambling has resulted in hotel/casino complexes that rival those found in Las Vegas. Casinos in general bring a different dimension to the hotel energy needs with a higher base load owing to the 24/7 nature of the gaming floor. HVAC, lighting, and kitchen/food service needs take on an even greater “round the clock” nature that non-casino hotels do not experience.

The continued competition amongst hotels for attracting customers mandates that operating costs, including energy, be held in check to the extent possible. Energy typically comprises 20% of the operating budget at a hotel. It is this intensity of load and the shear size of the energy demands that distributed generation and combined heat, cooling, and power (DG/CCHP) can provide some tremendous opportunities for the hotel owner/operator. DG/CCHP offers a prime opportunity to:

Reduce energy costs by reducing

  1. Reduce energy costs by reducing:
    1. Electric grid power consumption at peak times
    2. Co-generating electric power and useful waste heat that could be used for heating and chilling needs.
  2. Provide critical back-up for grid upsets.  This is particularly crucial for casinos where loss of power results in loss of gaming revenue.  Chilled and hot water for critical services can also be maintained.
  3. Establish a “green low reduced carbon-footprint” signature for the property and/or hotel chain
Rio Hotel and Casino, Las Vegas

Large hotels (i.e., those with 500 to 1,000 rooms or more) represent an important market segment of energy consumption and a prime opportunity for the application of DG/CHP. These huge facilities have more in common from an energy standpoint with a small university than with a small business hotel or roadside motel. For the casino and gaming sub-sector, facility load include the gaming floor itself plus multiple restaurants, nightclubs, spas, health clubs, movie theaters, and shops. These facilities occupy millions of square feet of building space, and their energy use intensity per square foot is much higher than that of a typical business hotel.

These same advantages of DG/CHP are also applicable to medium size hotels/casinos with as few as 100 rooms. However, more care is necessary to design and size the system to meet the facility needs and result in financial benefits.

Casino Morongo, Cabazon, Ca

Approximately 100 hotels in the United States currently have CHP systems, representing more than 63 MW of electricity capacity. Many of these systems were installed during the late 1980s and are continuing to operate reliably and efficiently today. Among these installations are the Rio Hotel in Las Vegas as well as the upcoming City Center Project in Las Vegas (combination of business, residence, casino, food services) , the Ritz Carlton in San Francisco, Numerous Embassy Suite Facilities throughout the State of California, The Radisson in Santa Maria, Casino Morongo in Cabazon, the Sheraton Mission Hills Resort in Palm Springs, and the Sheraton Mission Bay.

The market analysis for hotels and casinos developed by the U.S. EPA's Combined Heat and Power Partnership shows that more than 9,000 of the nearly 48,000 hotels in the United States have energy characteristics suitable for current CHP technology. More than 1,000 of these sites are likely to meet a simple payback on their investment within 5 years or less.

The total economic potential for hotels in the U.S. is 1,456 MW. The simple payback period for hotels with at least 1000 rooms is about 5 years or less in these two states.

Technical Fit

The ability of the specific installation to provide a benefit is dependent on many factors including the cost of electricity and size of the operation. Rules of thumb relative to the potential technical fit for CHP can be applied. As a first cut, the following questions can provide some guidance:

  1. Do you have more than 100 rooms?*
  2. Do you pay more than 7 cents per kWh for electricity on average or more that 14 cents per kWh on peak?*
  3. Do you demand electric charges?*
  4. Have you already implemented other energy efficiency measures?
  5. Are you concerned about rising utility costs?
  6. Do your guests complain of insufficient hot water?
  7. Has your hotel ever experienced a utility outage?
  8. Does your hotel have a central chilled water system?
  9. Are you planning to add new boilers or replace existing boilers?
  10. Does your hotel have onsite laundry facilities?
  11. Does you hotel have on-site food service/kitchen/restaurant facilities

If you answered "yes" to three or more of these questions, your hotel might be a good candidate for CHP.

If the answer to two of the of these first three questions is "no," CHP probably will not be a strong economic or technical fit for your hotel. Please consider the many other energy efficiency measures available to hotels to decrease energy costs and improve facility operations. The EPA ENERGY STAR website is good place begin your research: http://www.energystar.gov/hospitality

Strategic Issues

In California, a number of economic benefits may be available to assist you with your project. In particular, the Self Generation Incentive Program can provide rebates to offset the cost of the installation which can greatly accelerate the payback for the project. At the same time, the 2006-2008 time frame is one where technology choice within the state is being limited by emissions regulations as well as evolving policy relative to greenhouse gas emissions and incentives. As such, these details need to be examined frequently to make sure up to date information is used in the decision process.

Where to turn for additional information

A number of resources are available to assist in the process of evaluating the potential for CHP at your facility. Many of these are available through the Pacific Region CHP Application Center website (PRAC).

Case Studies. Case studies can be an effective manner by which to evaluate how your facility might benefit from CHP. They can also provide information on lessons learned and steps that can be taken to maximize the success of your application. The PRAC has produced project profiles for a typical hotels/casinos in California and Nevada (Nevada Casino, Ritz Carlton Hotel)

Other case studies can be found elsewhere:

Sheraton, San Diego

Examples of Case Studies for Casino Applications are also available:

Feasibility Studies/Project Assistance: A number of options are available for low cost or free feasibility assessments to help you understand how CHP might benefit your facility. The PRAC offers such assessments and more information (click here)

Additional Information: Additional information can be found on the California Energy Commission website and the Combined Heat and Power Partnership site.

There are a number of technical societies whose membership deals with hotels and their management:
Information relative to incentives and regulations are available for Nevada and Hawaii as well.