Ms. Maureen Herron

Although Americans have always been pragmatic, they have not been futuristic. Current natural weather disasters in the United States’ Southeast illustrate the necessity of anticipating/planning more than reacting. Crucial to America’s thriving economy is access to and utilization of alternative energy resources to insure continuity of service not only in the best of times, but also in potentially more difficult circumstances whether those be natural disaster or terrorism.
At the end of a three year utility contract, Hyatt opened up the bidding process between Hyatt® Regency Dallas at Reunion and Hyatt Regency DFW. In dialogue with Hyatt’s energy consultant, Hunt Power, Hyatt chose to offer bidders the opportunity to contract for both of Hyatt’s high-energy consumption hotels. Hyatt felt a bulk energy purchase would be cost effective for the corporation and consolidate the services of Hyatt’s energy provider.

"Timing is all it’s conjectured in many life situations," says Steve Vissotzky general manager for Hyatt Regency Dallas at Reunion. Having 26 years of service at Hyatt Hotels, he is well aware of the increasing costs of energy. Three years prior, he had felt pricing for his hotel’s contract had been high; however, ensuing dramatic price increases during that tenure illustrated Hyatt had made a wise choice on cost commitment at the time. Now, it was time to go a step further. It was time to go a step beyond managing the bottom line to building a relationship, which would produce top line results. Hyatt’s value proposition had to resonate with the business customer.

Interestingly, one of the contenders for the bid was a company called Green Mountain Energy®, an established vendor of renewable energy historically for residential customer service. The company originated in Burlington, Vermont in 1997 but chose to relocate its corporate headquarters to Austin, Texas in 2001 to pursue business in a deregulated market with strong energy resources, bolstered by the example of American corporate giants like Dell, Motorola and IBM whose historic success portended a stable climate for business.

Initially, Green Mountain Energy’s bid was not the inspiration for selecting their company as the contractor for services. It was the ensuing dialogue with them that convinced Hyatt’s management and owners to take the plunge into renewable energy. Green Mountain Energy places high value on educating the marketplace regarding the practice of renewable energy as an eco-friendly and affordable choice.

What follows is an accounting of the process, an inventory for colleagues in the hospitality industry to assess their potential to use this resource, and estimated values currently enjoyed or anticipated from this business partnership.

• Asset management: Enjoying a close, ongoing dialogue with Hyatt’s owners Hunt Realty and its asset managers/developers, Woodbine Development Corporation, the prospect of switching to renewable energy gave Hyatt a new level of fiscal exploration to pursue together. It was the first time the issue of renewable energy had been brought to the table. The risk had to be assessed; potential value had to be examined.
• Corporate support: Hyatt Hotels is fortunate to have the counsel of Brian Burke for energy-related service questions. Pursuing the advisability of renewable energy with Brian, it was evident Hyatt was on the right track.
• Staff involvement and support: At Hyatt Regency Dallas specifically, Vissotzky says that "I had never had such a detailed, in-depth and mutually informative dialogue with my staff, particularly director of engineering Pat Mitchell who leads the energy management on site." Complementing this knowledge base is the pride Hyatt’s entire staff feels, recognizing the stewardship Hyatt’s hotels exercise in this environmentally sensitive energy investment. Both Hyatt hotels had been mindful of careful use of linens, lighting and other conservation methods in the past. It was time for something more substantial. Green Mountain Energy has also provided an incentive for Hyatt staff to benefit personally at their residences through discounted offers for individual customer accounts.
• Marketing: Hyatt clients, as individuals and groups, align themselves with Hyatt’s choice to use 100% renewable energy. With Green Mountain Energy, Hyatt is in the process of assembling several informative marketing pieces to showcase Hyatt’s partnership: plaque in hotel lobbies featuring Clean Air Leader; occasional marquis signage outside the hotels, in-room table tent outlining recycling efforts; Green Mountain Energy® Wind Farm at Brazos-News article/hotel art work; possible restaurant table tents and guest key packets.

Hyatt’s renewable energy platform renders both hotels actual sites for association meetings or conventions for international, national or state energy-focused businesses or organizations. Hyatt has incorporated the quest for Texas energy resources into lobby exhibits, plasma screen reception area monitors, etc. A premium is associated with the use of renewable energy, but is not directly passed on to the Hyatt customer. Rather a value-add is implied providing the customer with the information on this type of energy option in the state of Texas.

Larry Daniels, general manager of Hyatt Regency DFW at D/FW International Airport, assessed the big marketing push was the ability to go into the staff general meeting this fall as the investor of clean energy within the hotel’s own environment. Coupled with artistically showcasing the Texas environmental theme in the pre-function area of the hotel, Daniels notes both clients and staff exude pride in their association with this win/win investment of Hyatt.
At this time, Hyatt’s combined two Dallas hotels project is the largest purchaser by a hotel of 100% electricity in the nation. Conversely, Green Mountain Energy offers both smaller hospitality venues as well as abundant residential customers the opportunity to tap into this resource for themselves.

It’s about futures, and Hyatt chose initially to commit to a one-year contract. June 2005 debuted the relationship. At present, Hyatt does not have numbers to demonstrate the economic viability of this choice; however, the contract is a commitment to futures, and Hyatt believes it was a wise commitment to tie in with what the market offered and how Hyatt’s provider was willing to step up to the plate. It’s a quick education in which a deregulated industry floats alarmingly different prices in the span of 15 minutes. Factors currently driving price didn’t exist years ago, and in Hyatt’s one-year contract commitment, Hyatt hopes for stability of pricing.

"Green Mountain Energy plans to expand its scope of commercial and residential service beyond Texas to include Pennsylvania and New Jersey in 2006," according to Scott Hart, president of Commercial Services for Green Mountain Energy. Hart explains potential clients need to assemble a 12-month pattern of historic consumption for his company to determine actual needs. They should also have a baseline of 2-3 years to determine the threshold of potential consumption Contracts can be assembled for a 3-6 month period or as long as a 12-24-month period. Market conditions are sometimes difficult to estimate, so Green Mountain Energy offers varying options based upon its view of the marketplace with costs of crude and natural gas and electricity. Tapping into a client’s energy consultant expertise is one way to take a temperature reading before initiating dialogue with Green Mountain Energy.
Scott Hart adds that Texas has the most wind potential in the country today: 2,000 GW. Solar energy is the second strongest renewable energy resource in Texas while low impact hydrogen is an emerging field. Biomass landfills are a final source of renewable energy.

Green Mountain Energy buys all the wind from the Brazos Wind Farm, the second largest in Texas. Hart comments: "Texas has taken a significant leading role in utilizing wind capital. On top of the old oil fields in West Texas (Midland, Odessa, "panhandle" area), Texas wind farms are the new spindle tops. Surface rights rather than mineral rights are now contracted and the environmental benefit of wind reduces the reliance on oil for energy consumption." "Wind is a low-impact way to meet the demands of the future," Hart concludes, "It’s good for the environment and offers Hyatt the chance to be innovative and create a new category of renewable energy."

The recent Kyoto summit highlighted the dangers of global warming from carbon dioxide in major population centers. By buying renewable energy, each of the two Hyatt hotels (using an average of 1,416 MWh per month) will help avoid as much air pollution as is generated annually by more than 4,400 cars—equivalent to not driving approximately 55 million miles.

It is crucial that consumers and businesses understand energy. "A disconnect exists between what consumers understand about electricity," notes Hart. "While renewable energy does have a small premium for usage, that price tag is very small relative to other resources."

As a potential contractor for renewable energy, Hart recommends the following assessment:

• Determine if your business is in a regulated or deregulated state for energy usage
• Understand what your current contract situation is: duration, penalty for altering halfway through execution, etc.
• Analyze potential vendors and their value propositions
• Collect data early in the process and hold face-to-face interviews
• Examine your existing contract’s terms and note if there is a provision to extend your contract
• Constantly monitor your contract during its term as a virtual exercise
• Monitor your power usage and conservation performance to insure they don’t work against each other

For further information, visit hyattregencydallas.com, hyattregencydfw.com and www.greenmountain.com.
   

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