The two-way nature of learning through the summits became apparent almost immediately for Extended Stay America. Kurt Krummel, vice president of purchasing for ESA, and Larry Fichuk, director of energy and sustainability, found out at the Blackstone summits how much they knew and how much further they could go.
“There were things we were doing really, really well, and there were opportunities that probably existed but we didn’t really know how large they were,” Krummel says. “But in that first [summit], we found out there were things other companies were doing that we weren’t.” Krummel cites Motel 6’s work on PTAC settings as a significant gain for ESA.
“It was very easy for us to adopt, because they had already done the legwork,” Krummel says. “Through that information sharing, we had an opportunity to become more efficient.” ESA for its part returned the favor with its knowledge of PTAC maintenance. “We developed an entire plan around PTAC maintenance, which is now a whole standard operating procedure,” Krummel says. “We had been in the process of implementing it for a long time, and now other companies are adopting it.”
Fichuk estimates ESA’s PTAC maintenance program has saved ESA roughly between 3 and 4 percent in energy costs across the brand’s 74,000 hotel rooms. “PTAC consumption is 65 percent of our annual bill,” he says, adding that the maintenance program has saved ESA $50 in yearly energy costs per unit. “So, we’re doing more than the average bear.”
Krummel recalls that Blackstone’s efforts to leverage its size in purchasing came through casual conversation about a year and a half ago at a Sustainability Summit where several purchasing agents were gathered around a table. “I asked Tom Lusk of Motel 6, ‘Why aren’t we collaborating on purchasing? Especially in the area of products that consume a lot of electrical power?’” Krummel says. “There’s not just a cost play here but also a sustainability play.’”
“Tom looked at me and said, ‘Yeah, we should do more,’ and I looked at Don Anderson and said, ‘What about the other hospitality companies? La Quinta, Hilton, and the others should be at the table,’” Krummel says. “We brainstormed ideas to see where the opportunities for cost savings, efficiency, and sustainability were.
“We’ve actually started working with suppliers to prototype and develop product improvements, and those are things we are going to go after in the marketplace to determine whether suppliers are willing to make a better PTAC,” Krummel says. “And if so, how can we value-proposition that business by leveraging our size across the Blackstone portfolio of companies to make sure we are as efficient as we could be at buying them?”
Anderson and Hand currently are leveraging Blackstone’s purchasing clout for an LED program. Prices of LED lights have come down while quality has increased. “It’s now a proven technology,” Hand says.
“The nice thing about being Blackstone is we have a massive purchasing program where we help our companies buy what they need,” Anderson says. “We offer bulk discounting. In order to make LEDs happen fast, we have a portal through Procurement Advisors and Grainger, and we have G.E. as a participant, as well as Groom Energy doing design and installation.
“Boca [Raton Resort & Club] is now doing LEDs,” Anderson continues, “and it’s more than paid for itself with the half a million dollars per year that Jean brought earlier. We will take this LED model, and we will do variable-speed drives, occupancy sensors, and so on. It’s going to be the way we do business around these no-brainer technologies.”
Going Beyond the Brands
In December 2012, Blackstone’s real estate group acquired 13 hotels to launch a select-service platform, and it’s grown to over 120 branded hotels, primarily in the select-service sector. Mark Workman, Greg Juceam, and Jeremy Hart oversee these assets.
So many hotels flagged with different chains and having their own management contracts and assorted sustainability programs presented them with unique challenges the other Blackstone hotel companies don’t face. “Certainly, all the brands have various initiatives in sustainability that all properties are participating in—be it recycling or other things at the property level,” Workman says. “What the brands don’t necessarily dictate are the energy savings and sustainability efforts on electricity, water, and gas usage.”
