Stranded Hotels: A $140 Billion Wake-Up Call - Is Your Property at Risk?

As new environmental regulations emerge, up to 40% of hotels across the United States risk becoming stranded—losing value and profitability. CIRQ+ is here to help. With their ECOSENSE AI system, you can reduce energy consumption by up to 30%, avoid hefty fines, and future-proof your property today with no building integration!

The best part No CAPEX required—only a simple subscription. That means you don't have to wait until 2025 to start saving.

Don't wait until it's too late. Schedule a demo today and discover how CIRQ+ ECOSENSE AI can protect your hotel from financial risk while reducing your carbon emissions.

What Is a Stranded Property?

A stranded property is one that becomes economically obsolete due to failing to meet new regulatory or market expectations. For commercial real estate, this often means properties that don't comply with new energy efficiency and carbon emission standards. The scale of this issue is staggering: according to projections from the Carbon Risk Real Estate Monitor (CRREM), up to $9 trillion in US Commercial properties are expected to become stranded in the coming years.

Within this alarming trend, the hospitality sector faces a particularly acute challenge. Our analysis of data from industry leaders like the American Hotel & Lodging Association (AHLA), JLL, and methodologies from CRREM suggests that up to 40% of U.S. hotels could become stranded assets by 2030 if they fail to meet decarbonization benchmarks, potentially representing a stunning $140 billion in hotel real estate value at risk.

Key Factors Leading to Stranded Hotels

1. Stricter Regulations: State’s, cities and the Federal Government are enforcing tougher energy and carbon emissions standards, requiring significant operational upgrades. For example, New York City's Local Law 97 imposes fines of $268 per ton of CO2 emitted over the limit resulting in an estimated $230 million in fines alone in 2024!
2. Outdated Energy Systems: Inefficient systems lead to higher operational costs, making it challenging to remain competitive.
3. Changing Consumer Preferences: Travelers increasingly prefer environmentally sustainable accommodations. Hotels that don't meet these expectations risk losing market share.

Why You Should Act Now

The CRREM standard provides global decarbonisation roadmaps guiding the real estate sector as its strive to achieve Net Zero mandates. By 2027, properties that haven’t implemented sufficient decarbonization strategies risks significant financial consequences where these realities are on the horizon:

1. Higher Operational Costs

Energy costs can account for up to 6% of a hotel's operating costs, according to Energy Star. As energy prices rise, these costs will only increase for hotels that don't invest in efficiency.

2. Regulatory Penalties

Failing to comply with environmental regulations like New York City's Local Law 97 can result in fines of up to $268 per ton of carbon over the set limit. For large hotels, this could mean millions of dollars in annual penalties.

3. Decreased Market Value

Properties that don't modernize may see a decline in market value. JLL's Hotel Investment Outlook highlights that sustainability credentials are increasingly influencing property valuations in the hospitality sector. Non-compliance can make your hotel harder to sell or refinance and less attractive to eco-conscious guests.

4. Limited Financing Options

Banks and investors are increasingly considering Environmental, Social, and Governance (ESG) criteria. According to CBRE, ESG factors are becoming central to investment decisions in real estate. Hotels with poor energy performance may face challenges in obtaining funds for renovations or operations.

How to Protect Your Hotel from Becoming Stranded

The first step in protecting your hotel from becoming a stranded asset is to focus on reducing your energy demands. This approach not only lowers your operational costs but also makes the implementation of renewable and alternative energy solutions like solar more cost-effective, less complex and more practical. Here's how to get started:

1. Adopt Smart Technology: Implement intelligent automation systems like CIRQ+ ECOSENSE AI for real-time energy management and significant reductions in energy consumption that control guestrooms like microclimates.
2. Optimize Existing Systems: Fine-tune your current HVAC and lighting systems for improved efficiency.
3. Educate Staff and Guests: Promote energy-saving behaviors throughout your property and enhance loyalty programs to drive more customers while increasing revenue.
4. Consider Renewable Energy: Once you've reduced your energy demands, explore options like solar power to further decrease your carbon footprint and energy costs.

CIRQ+ ECOSENSE AI: Your Solution for Immediate Impact

CIRQ+ offers a complete plug-and-play energy management system with wireless sensors that can deliver up to 30% energy savings with no upfront capital expenditure—only a subscription. 

This means you don't have to wait until 2025 to start seeing savings. Every day matters, and every day you could be putting more profit back into your pocket.

Their rapid retrofit process in less than 60 minutes in a typical guestroom with no integration, ensures zero downtime, and their subscription model allows you to redirect capital to other key areas of your business. With ECOSENSE AI, you can:

• Comply with Regulations: Meet and exceed environmental standards to avoid fines.
• Achieve Immediate Energy Savings: Start reducing energy costs by up to 30% right away.
• Utilize Adaptive AI Technology: Manage each room as a microclimate for optimal comfort and efficiency.
• Enjoy Hassle-Free Installation: Our freestanding system installs quickly without disrupting operations—no integration required.
• Prepare for Renewable Energy: By significantly reducing your energy demands, ECOSENSE AI makes the integration of solar and other renewable energy solutions more cost-effective and easier to implement.

Take Action Today to Secure Your Hotel's Future

The risk of becoming part of the 40% of U.S. hotels—representing up to $140 billion in potentially stranded real estate—is real, but it's avoidable. With environmental regulations tightening and organizations like CRREM highlighting the financial risks, now is the time to act.

Don't let your hotel become obsolete. With no CAPEX and only a simple subscription, you can start saving immediately without waiting until 2025.

Take the first steps with CIRQ+ ECOSENSE AI to future-proof your property, reduce operating costs, and embrace a solid decarbonization strategy that will help your property become a leader in offering sustainable stays!

Schedule a demo today at Cirqplus.com/ecosense and discover how they can help your hotel thrive in a rapidly changing industry.

References

1. American Hotel & Lodging Association (AHLA): Data on the U.S. hotel industry's size and economic impact.
2. Carbon Risk Real Estate Monitor (CRREM): Methodology for assessing stranded asset risk due to decarbonization.
3. Jones Lang LaSalle (JLL): Hotel Investment Outlook discussing sustainability's influence on property valuations.
4. Energy Star - U.S. Environmental Protection Agency: Data on energy costs in hotel operations.
5. New York City's Local Law 97: Example of regulatory penalties for non-compliance with emissions standards.
6. CBRE: Analysis on the impact of ESG considerations in real estate investment decisions.
7. U.S. Energy Information Administration (EIA): Commercial Buildings Energy Consumption Survey data on hotel energy use.