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LED Lighting Return On Investment

As many of you know, the big draw to LED lighting is the fact that they pay for themselves. By reducing energy consumption and lowering maintenance cost, an LED retrofit will save enough money that the job will be paid back in full. It’s always great when a customer can really see the benefits of making the change to LED lighting.

I got an email from a gentleman who was the chief engineer at a large hotel in South Florida. He was interested in landscape lighting for the front entrance and pool area. I called him up and scheduled a meeting, drove down to his hotel and started the survey. We walked around the hotel and discussed his options with landscape lights. I had a few samples I was able to show him. It was looking to be a big job.

As I walked through the lobby and hallways of the hotel, I noticed it was using only halogen MR16 Lamps. Up to this point, nothing had been mentioned about retrofitting the MR16s to LED. I told him about the saving he could achieve by switching to LED lighting and he had mentioned to me that he had never even thought LEDs were an option.  I was able to find out that he was using 350 35-watt halogen MR16s that were burning 24 hours a day. But at the end of the day, he made it very clear that the landscape lighting was the main focus. I finished the meeting and told him that I would get him the estimate.

With the MR16s still on my mind, I went back to the office and began working on the ROI for just the MR16s. This hotel’s ROI on only the MR16s was incredible. By switching to LEDs, they would pay for themselves in 4 only months. So I decided to do two separate estimates. The first one was with just the landscape lighting as requested by the engineer, and the second was the landscape and MR16s. By retrofitting both the landscape lighting and the MR16s, the ROI was about 9 months. I presented the estimates to him in this fashion. Needless to say the engineer was floored. It changed his whole outlook on the project. All of a sudden the job went from $9,000 to $20,000 and they get a far better Return On Investment.

Being able to show a customer the money-saving potential of LEDs along with the ROI is what makes the sale. With the massive energy reduction, virtually no heat output, and long life span, LEDs are the best return on investment.

For more information on LED lighting, contact the LED lighting experts at LED Source 866.900.4533.

How Hoteliers Are Using LED Lighting And Why?

More than any other large properties, hotels and resorts can take advantage of the great benefits offered by LED lighting because these facilities have a fixed operating cost for heating/cooling and lighting in all their common areas. While the facility may not always be operating at full occupancy, all the lighting in their lobbies, hallways and other common areas are operating 24 hours a day, seven days a week.  This makes these areas the best place to start either a retrofit or new installation project, as the Return on Investment (ROI) offers the quickest payback.

An LED lamp or fixture will last 50,000 hours – that’s more than five years operating 24 hours a day, seven days a week before it requires changing. On the other hand, an incandescent lamp may only run from to 2,000 hours, which is less than two  months operating 24 /7. This means the incandescent lamps would need to be changed at least 24  times in the same five years as the LEDs. It’s not difficult to see why the LED alternatives offer a very good ROI.

As nearly all hotels have felt the effects of the economic slowdown, it’s become common practice for them to look into ways they can reduce their operating costs.  By looking at these costs they need to become more efficient with their use of power and lighting, but many turn to the least costly fix in the short-term, which is shedding staff. In doing so, they’ve ended up with less maintenance staff to cover the everyday tasks, which include lamp changing. As the areas we are looking at are normally high ceilings or have high customer traffic, it makes the task of lamp replacement difficult. The task requires special lifts or towers, or may not be achievable until early morning hours when traffic is at a minimum. But staff or mainly contractors are on a higher hourly rate, which adds to the cost of lamp replacement but makes the ROI for LED even better.

What about fluorescent? Although they are more efficient than incandescent, they still are 50 percent less efficient than LED and the lamp life is five times less than LED. The other negative is they contain harmful mercury so must be disposed of properly and collected by a licensed company that – you guessed it – charge for their services. Though fluorescent lamps are more affordable and do last a decent amount of time, they have high color temperature, low Color Rendering Index (CRI), are only dimmable with expensive dimming ballasts, have limited lamp types and no spot light or MR16s – which are widely used and have LED alternates.

LED lighting is now a very attractive solution: Most products are dimmable using the systems already in place. They have a good range of color temperatures and high CRIs – which relates to how well colors are seen under the light used. To be able to see the real colors in fabrics and floor coverings, not to mention food and skin tones, a higher CRI is more desirable.

Lastly, with many government incentives available now is the best time to look at changing your lighting to a better quality, longer lasting and more energy-efficient system. And you may even qualify for a rebate, which makes the ROI all the better!

About the Author:

Gavin Cooper, Vice President and Partner at LED Source, is known as the “MacGyver of LED lighting” throughout the industry. A true Expert in LED Lighting, Gavin is responsible for the LED product lines and continues to find new groundbreaking technologies that keep LED Source® ahead of the wave. Through his varied background in lighting manufacturing in Europe, Gavin has helped to pioneer changes in LED lighting here in North America.

Lighting the way with LEDs

From the magazine AAHOA Lodging Business

February 2011 – Volume 10, Issue 2

The environmental benefits are numerous and as costs continue to decline, hoteliers may come to understand how LED lighting can benefit their bottom line. ALB explore the market…

Before upgrading or replacing certain equipment, hoteliers always have to carefully weigh the positive and negative risks associated with such decisions.

When it comes to an already large expense like hotel lighting, owners have to weigh the front-end investment costs versus the back-end return on investment.

LED (light emitting diode) lighting has become an attractive alternative to the compact fluorescent lighting and incandescent bulbs that have been the industry standard for years.

The LED is the most energy-efficient lighting solution currently available on the market. LED lights do not contain mercury or other toxins, are 300 percent more energy-efficient than compact fluorescent lighting and around 1,000 times more efficient than incandescent bulbs.

Gavin Cooper, vice president and partner with LED Source, argues the environmental impact from LED lighting is the biggest argument for switching.

“Less energy means less carbon emissions from power plants, plus the reduced load to the grid allows expansion without the need to build new power plants,” he said. “There is no mercury content in LEDs like fluorescent lights, which means it doesn’t find its way into our rivers and streams. Also, at the end of the LED’s life, the lamp is recyclable.”

The U.S. Department of Energy estimates rapid adoption of LED lighting in the United States over the next 20 years would reduce electricity demands from lighting by one-third, eliminate 258 million metric tons of carbon emissions, eliminate the construction of 40 power plants and create financial savings that could exceed $200 billion.

While many hotel brands concur with Cooper’s assessment of the environmental benefits of LED, the prohibitive costs of purchasing and installing the lighting has prevented hotels from completely turning to the technology.

“LED lighting is being used in public area decorative lighting more and more but is still not being used for task or way finding lighting due to the expense of these types of fixtures.” Dennis McCarty, vice president of technical services for InterContinental Hotels Group (IHG) Americas, said. “As the cost comes down, J believe we will find their use start to take hold in these areas.”

As part of its $1 billion global rebranding program, Holiday Inn in 2009 began to incorporate the GE Tetra LED lighting system into exterior signage on over 3,200 hotels. Holiday Inn estimates the brand will save 53 million on maintenance costs and $1.4 million on energy savings every year.

“The up-front cost is more than signage with neon, but the long-term benefits far outweigh the initial investment,” McCarty said. “Over the life of the signs, hotels will save on energy consumption and maintenance as the LED lighting has a very long life, minimizing the need for service every couple of years.”

Cooper said the goal for LED manufacturers is to produce products that “look and behave like the ones they are designed to replace.”

“Take a PAR 38 light bulb, for example, used in a lot of hotel lobbies as a spot or general illumination lamp,” Cooper said. “Most are 75 or 90 walls and last on average 2,000 hours. The LED replacement is just as bright, produces very little heat and consumes around 18 to 20 watts.”

Cooper also noted that after 50,000 hours, an LED light is only down to 70 percent of its original light output. “‘That life is extended if the lamps are dimmed at any point during the hours of operation.”

For hotels that are curious about switching, LED Source can send experts to the property to examine the entire lighting system and produce a specification for the new lamps or fixtures calculate the return on investment (ROI) and research any rebates that may be available from government, state or utility companies, which Cooper said would offset the initial cost and reduce the ROI.

Cooper estimated an ROI could occur anywhere from between six months and two years but noted the issue is really how much hoteliers want to save month-to-month or year-to-year.

“Hotels would be wise to upgrade anything that is used for more than six hours per day,” Cooper said. “This is where the best ROI will be seen. The only circumstances where it may not make financial sense is if they have low energy fluorescent lamps in the guest rooms.”

Cooper cautions that no matter what hoteliers decide, they should always seek expert advice. “There are lots of products out there and like most things, cheap is never better. But you can also over pay for a product or use the wrong product for the application.”

Hotel brands have adopted LED lighting at varying rates but consumers may notice them more and more in the near future.

About 50 percent of Carlson’s Country Inns & Suites that opened in 2009 and 2010 used LED lighting for their exterior signage, according to Jim Grimshaw, senior director of brand program development and standards for Carlson & Park Inn Americas.

Richard Bennett, vice president of design and supply for Best Western, said there has been “an uptick” in the appearance of LED at Best Western properties and guests really enjoy them.

“Anecdotally, we are finding that guests are tempted to steal the bulbs like they did in the early days of compact fluorescent (light bulbs] due to the high cost,” Bennett said. “Pricing needs to come down more before they become common in hotel rooms.”

“While the current costs per unit are higher with LED lighting, the return on energy costs clearly benefits the hotel,” Paul Davis, senior vice president of strategic sourcing for Wyndham Worldwide, said. “The challenge is to convince owners to invest now for a future benefit. As with any new technology, we’ll begin to see higher adoption rates of LED lighting by hotel owners as the initial costs start to come down.”

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