Poor energy management costs UK hotels £250m

Figures show that as many as 70% of hotels could be paying too much for their gas and electricity. And the energy crisis, which is said to affect around 35,000 […]

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By Kelvin Ross

Figures show that as many as 70% of hotels could be paying too much for their gas and electricity.

And the energy crisis, which is said to affect around 35,000 hotels in the UK, is estimated to be costing the country’s hotel industry more than £250m a year.

Research shows that the average hotel with 50 or more rooms will use approximately 500,000 kWh of electricity and gas, which equates to roughly £50,000 on electricity and in the region of £15,000 on gas.

The study also reveals claims hotels that do not act promptly when they reach the end of their contract periods can face price hikes in the region of between 15% and 25% on new tariffs compared to their existing rates – or annual price increases of between £7,500 and £12,500 in real terms.

Jeremy Taylor, managing director of commercial energy consultants Power Solutions, which commissioned the research, said: “The economic climate remains challenging and hotels must work to ensure money is not wasted on over-the-top energy bills. Too many hotels are needlessly wasting money on their power provision, when in fact considerable savings can be achieved all of which contribute directly to the bottom line.”

One pitfall that has been identified in the study shows that hotels often unwittingly allow gas and electricity contracts to roll on without review. Suppliers may implement a ‘deemed’ rate at the end of the contract period which is often up to 100% higher than the previous rate, and will continue at that level until a new contract is agreed.

Other problems identified in the study show that businesses often get “rolled over” by their current supplier if they do not closely follow the provider’s terms and conditions.Most suppliers ask for 90 days’ notice prior to the contract’s expiry, although this does differ between suppliers. If this notice is not given in time, the supplier can initiate a clause in the contract which allows them to extend the contract for one or two years at a higher rate without need for a further contract of agreement.

Mr Taylor added: “Our study shows that large energy users, such as hotels, need to stay on their toes as they can get stung with very high costs for their energy if they are not careful. As UK hotels reach their quiet period we would suggest that they take the time to review their energy provision, know when their contract is due to end and find out what is the best power supply option available to them. Doing this can bring considerable savings to the bottom line and help hotels budget more effectively.”