There is a general trend, particularly across the UAE hospitality sector, towards sustainability as a more prevalent consideration. In addition, sustainability is becoming increasingly government-driven, through programmes such as the Abu Dhabi Urban Planning Council’s Estidama accreditation, which is now mandatory, and the recently introduced Dubai Municipality Green Buildings Code.
All those involved in the construction and operation of built assets have had 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 more resource-efficient, high performing, healthy, cost-effective buildings throughout the UAE. That said, there is still a long way to go before those within this market move away from the historical belief that sustainable building is not cost-efficient, acting as a barrier to adoption beyond the minimum regulatory requirements.
The main challenge for many of our hospitality clients is the pressure on the initial capital expenditure and the challenges many face in raising funding for construction projects, which typically require relatively high levels of capital expenditure when compared to the other investments a hospitality business might make.
Businesses need to look at the economic justification in addition to the corporate social responsibility aspect of developing in a sustainable manner. If the design is developed in an appropriate way and the correct analysis is run to establish the related internal rate of return on any additional expenditure required, the business case for designing and constructing built assets in a ‘sustainable’ way can quickly be established. Clever design and the use of modern technology can result in little or no impact on initial capital cost and can return long-term financial benefits.
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Within hospitality, as with many other asset classes, we need to look at both build and operational cost implications of sustainability and all its elements. There are many examples of ongoing or long-term savings across operations being achieved from investing in sustainable best practice or related technology. One such example would be installing enhanced energy monitoring, which can be done as a standalone system or, ideally, integrated into the wider building management system. With most energy monitoring platforms, the property management team, in this case engineering, can obtain real-time data relating to energy consumption and generate regular reports that detail how consumption compares to targets. This allows the property management team to ensure use of the building’s plant and equipment is being fully optimised, which in hot climates can have a significant and positive impact on the energy consumption of the building. 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 internal rate of return) of between 5-7% associated with this when implementing such solutions on a retrofit basis. The returns become greater if this technology is ‘designed-in’ to the initial development. This is a longer-term cost saving plan but steps can be taken monthly to reduce outgoings. One of the major benefits to the executive committee team would be to remove the need to increase F&B or room prices, especially considering the shorter seasonality and competition in the UAE market.
Other popular cost cutting measures for existing buildings include the replacement of incandescent lamps to LED. This is a quick fire way to reduce bills, which would seemingly not account for much, but when you’re running a 300-1,000 room property the difference in energy consumption is significant. Changing lamps will reduce energy consumption, and therefore bills, by 15-25%. Low-flow shower systems and flow restrictors on faucets can also result in significant water savings with minimum capital investment required.
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 installation of solar water heaters are now commonplace and while the use of other renewable energy sources need careful consideration, clever design of building elements such as façades, to include appropriate shading, or selection and refinement of the heating, ventilation and air conditioning systems, can have significant long-term benefits.
Undertaking life cycle costing and whole life costing ensures any initial investment is recouped or provides a long-term return and can produce tangible benefits. One example from our experience has been the implementation of water recycling by collecting condensation drainage from the cooling system within the building and utilising this for the purpose of irrigation and toilets, reducing the water demand of the building. The implementation of this resulted in a 30% reduction in water consumption across the development and produced an internal rate of return of 12.5%.
Overall, while the market is moving in the right direction, we still need to pay more attention at the initial design stage and give more credence to cost analysis and the value of the data this can produce.
About the Author: Zander Muego is the director at project management and cost consultancy firm, Thomas & Adamson. Contact Zander.Muego@ThomasandAdamson.com.
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