NATIONAL REPORT—Hotel developers who choose to acquire equipment and technologies to help them conserve energy and water often choose to purchase those outright. For large companies with deep pockets that may work best. For others, however, having to purchase hundreds of PTACs, all-new lighting, or roofing can be a financial burden and even an impediment to investing in another hotel property. In recent years suppliers have gotten creative with financing, and options such as leasing, performance contracts and energy-saving agreements (ESAs) have become more common—all geared toward eliminating upfront capital expenditures.
When Orlando, Fla.-based AD1 Global needed to upgrade lighting, thermostats, PTACs and more, it turned to Aventura, Fla.-based ONPEAK to provide a turnkey solution. ONPEAK specializes in handling the purchase of systems that ensure greater operational savings than the actual cost of the new equipment. ONPEAK manages the systems moving forward so that its clients do not have to focus their time or efforts on maintenance or upgrades.
“We are always looking for ways to save energy,” says Daniel Berman, President and CEO of AD1 Global, which currently owns and manages 20 hotels with six projects under construction.
ONPEAK connected AD1 Global with Sparkfund to finance its upgrades using a unique subscription-based model. With Sparkfund, an off-balance sheet, OpEx payment covers AD1 Global’s installation, repairs, monitoring, and ongoing service, with no upfront costs. Sparkfund removes the risk of having equipment fail by guaranteeing that it will function as promised through the entire contract term.
Easier Way to Invest in Clean Technology
“We are laser-focused on providing customers with better options to get new energy-efficient and clean technology into their buildings,” says Asher Burg, Chief Revenue Officer for Sparkfund. “The performance of the system is guaranteed. It allows us to address whole energy systems. We are able to go a lot broader.”
Sparkfund partners with companies like ONPEAK to offer its subscription services. “We believe at this point the market for contractors is very well established and we partner with the best ones,” Burg says. We become the cash customer for the contractor.”
Sparkfund has partnered with utilities to raise awareness of its unique payment model. In just five years the company has worked on projects in 46 states. “We earn a margin on the project—an origination fee,” Burg says. “From a customer standpoint it is a great model.”
Master Technology Subscription Document
Burg says his company will initially do a walk-through of a property, then bring in a partner such as ONPEAK, then put together a proposal. “We put together a master technology subscription document—terms of agreement,” he says. “They sign a statement of service—a flat monthly payment. We propose a term equal to the equipment life. At the end of the term they can upgrade, extend or take ownership of the equipment.” Customers can terminate the agreement at any time but there are fees for doing so.
Sparkfund has worked with companies on capital investments ranging from toilets to electric vehicle charging stations to cogeneration systems.
Burg says the biggest challenge his company faces is education regarding the subscription way of doing business. He encourages hoteliers to be open-minded about the new finance options brought to the market. “Fundamentally, it is a lower cost way of doing business,” Burg says.
Asked what advice he would give to any hotel owner considering the subscription model, AD1 Global’s Jon McMillian, Corporate Director of Marketing & Ecommerce says, “When you get into this type of program, know the people who are behind it. Make sure you will be saving money.”
Glenn Hasek can be reached at firstname.lastname@example.org.