Owner’s Funding Portfolio Assessment Project
Project: Starwood had always assumed the 30/20 by 20 goals would be achieved in 1/3 increments with the first third coming from low to no cost operational changes, the second third coming from capital improvements, and the last third coming through new technology and innovation. The company had achieved the first third goals through its Foundational Initiatives & Programs, but over the past two years, they had realized that technology had moved at a greater than anticipated rate, allowing for additional capital investment to be made for equipment that normally was utilized until the end of its useful life. However, Starwood only owned about 5% of its global properties and relied on property owners to make energy and water efficiency projects come to fruition. Unfortunately, the typical owner’s ROI threshold of 3-5 years was significantly shorter than the 7-15 years required for energy and water efficiency investments. The SGE Immersion evaluated mechanisms that might alleviate the initial capital investment and compel property owners to make the energy/water efficiency investments Starwood sought. The team analyzed a range of options, including a sustainability fund, green hedge or investment funds, investment partners, and revolving funds.