A revolution is under way! Soon we will all be thinking “GREEN” in nearly every material decision we make, hotel development included. If you don’t think your hotel guests are starting to evaluate your “shade of green” in making hotel selections, think again. The number of hospitality projects we are asked to review with an eye toward making them greener is growing daily, and more and more we are asked to analyze the rules and regulations of going green. With new laws and regulatory approaches cropping up everywhere as politicians worldwide jump on this politically correct bandwagon, navigating some of the more stringent requirements is becoming increasingly complex. Even “hiccups” in the financial markets won’t be able to slow this inevitable sea change, and lawyers as well as their clients had better learn to see the benefits of compliance rather than the headaches.
Soon every lender and capital provider will have a checklist item for a hotel’s “green” quotient; that is, the specific costs of complying with climate change regulations and requirements. Hard evidence of this can be found in the petition filed on September 18, 2007 by an impressive list of governmental and institutional investors with the Securities & Exchange Commission. That petition called for a more full disclosure of all material information on the costs of compliance with environmental legislation. To be sure, no capital source wants to get stuck with a portfolio that has a non-green asset, one which will bring with it the future obligation to make the asset “green” in order to comply with laws or to make the asset marketable in the future.
Yes, just as it has become socially unacceptable to litter, it will soon be socially unacceptable to have a non-green hotel. This paradigm shift in green thinking will impact every aspect of our lives, where we will consciously or unconsciously consider the environment in every act we take. Hotel patrons will consider turning their lights off when they leave their rooms, stop demanding fresh towels when they return, want natural fiber bedding, non-toxic soaps, and so on. In essence, consumers may very well decide to stay at a particular hotel simply by the “color” of it, and the deeper shade of green an establishment is, the greener that hotel developer’s bank account will become.
So, is it worth the economic burden to go green? Yes. Is it challenging? Yes. Are there resources out there to help developers ride the green wave without drowning in it? Yes. Still, there is no doubt the process will be complicated, especially in light of the difficult economic cycle our country is in. Nevertheless, this is also a time in which only the most creative, savvy and practical hospitality professionals will win. It does not appear, at least in the short to mid term, that any rise in the real estate tide will save the inexperienced investor or developer who isn’t wise enough to capitalize on the importance of branding themselves “GREEN” — now!
Guy Maisnik is a partner and senior member in Jeffer, Mangels, Butler & Marmaro LLP, one of California’s foremost full-service law firms. A key player in the Firm’s Global Hospitality Group®, he specializes in representing hotel and mixed-use owners, developers, investors and lenders, and he works closely with the Firm’s environmental practice group to ensure his clients receive the best representation in light of the new complex climate change legislation. For more information on the firm, visit JMBM.com and HotelLawBlog.com. To reach Guy directly call 310.201.3588 or e-mail him at firstname.lastname@example.org.