Hoteliers rush to save energy to cut operating costs

Hoteliers rush to save energy to cut operating costs


Mumbai: Indian hotels are seeking to cut energy consumption through electricity, gas and water saving initiatives as costs rise in the energy hungry country.

Shortages, tariffs and the dependence on imported fuels plague the country whose energy demand is likely to nearly treble to 315-335 gigawatts by 2017, according to a McKinsey report.

A global slowdown and costlier aviation fuel combine to c ut travel spends and will slow tourist arrivals, more reason for hoteliers to protect margins.

“Energy costs were going up every quarter by a huge sum. The units were not going up so much but the rate was," Achintya Chakraborty, Chief Engineer at Hyatt Regency, Mumbai, which belongs to Asian Hotels Ltd.

Rising employee and energy costs increased Hotel Leelaventure’s operating expenses 43% to Rs2.8 billion last year. Power, fuel and water costs rose 54% to Rs414 million in the year.

Hotel Leelaventure put up 11 windmills in Tamil Nadu in FY08. They will provide a tax break and open up a potential revenue stream with carbon credits, which can be traded globally.

Last year Asian Hotels installed two windmills. It expects to save about Rs15.5 million a year through energy saving planned for 2008/09.

The Hyatt Regency, Mumbai, which brings over a third of the company’s revenue, now saves 8-9% of its energy costs through more efficient airconditioning, lighting and gas use, Chakraborty said.

The hotel expects to save 20% overall on energy use by next year through further measures, he added.

“They need to cut down on these costs because power costs are going up," Sreesankar R, head, research of IL&FS Investsmart said.

Mumbai, the financial hub of India, has seen power costs rise an average 15-20 percent a year, and this is a trend likely to continue for the next 2-3 years, said an analyst who declined to be named. Furnace oil doubled to Rs42 a litre to 2008 from 2006, while electricity rose to Rs8.83 a unit from Rs4.75, said Sanju Soni, general manager, Trident, Mumbai, owned by EIH Ltd.

Trident is changing its windows to more insulating double glaze at an estimated cost of Rs17.5 million, he said.

Maharashtra is India’s second most visited destination by foreign tourists, representing 2 million or 15% of arrivals and brought in 19.8 million domestic visitors in 2007, according to the ministry of tourism estimates.