February 16, 2021 — In this week’s Two-Minute Tuesday, Strategic Energy Advisor Sam Greenberg tackles the FAQ he’s received the most from our hospitality clients: “What are other people doing to stay in business during COVID?”
Over the past 12 months, one could argue that the industry most negatively impacted by the COVID-19 pandemic has been the hospitality industry. In this week’s Two-Minute Tuesday, we’ll be tackling the number one question we were asked by our hospitality clients during this past year: “What are other companies doing to stay in business?”
Two ways hospitality companies used energy to their advantage during COVID.
2020 was painful for almost all businesses, but the hospitality industry was one of the hardest hit. Revenue plummeted due to both shutdowns and lack of demand from people traveling. Many of these businesses had to get creative in order to save money.
Specific to energy, the two opportunities that ultimately provided the biggest return for our hospitality clients were demand response and electricity agreements.
Let’s take a deeper dive into how these two strategies supported our hospitality clients in 2020.
1) Demand Response + Hospitality
As a hotel owner, if you haven’t looked into signing up for a demand response program, I highly recommend doing so now. Depending on the area of the country and your utility, demand response programs can pay you money for curtailing your usage in a planned one-hour test event.
We’ve seen annual payments to our hotel clients between $5,000 and $30,000 for participating in this program.
2) Long-term energy agreements
Along with demand response, the past 12 months have put an extra focus on electricity and gas agreements. Several months of 2020 saw natural gas rates fall to their lowest levels in 20 years.
Our hospitality clients took advantage of that market opportunity and were locking in these lower rates for longer terms — some up to 48 months. This was helping them reduce their energy cost, creating budget stability regardless of increases in the market, and ultimately ensuring that their rate was going to be lower than most of their competing hotels who were not taking the same approach.
Even if you missed out on the low prices of 2020, there are still opportunities in the current market to fix either natural gas or electricity rates. There is consensus forming around a bullish energy market in 2021, so being proactive and fixing rates now can protect your budget from these possible increasing costs.
If you’d like to hear more about the topics we covered today or ideas on saving money on your energy, please contact me or any of our Nania Energy Advisors today. Thanks for watching!
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