Payback Blues
PAYBACK BLUES
A hotel owner wants an LED upgrade for his parking lot pole lights. LEDs increase safety and customer satisfaction/impression, as well as greatly decrease the cost of maintenance. However, when he sees the costs and the projected payback time he has doubts on the benefits of this upgrade and is reluctant to move forward. You might think the same thing, $10,000 is a lot of money to spend on lighting two mid-size parking lots. Like him, you can probably come up with several other places that money could be used to benefit the business. However, would those areas put money back in your pocket without much effort from you? Let’s take a look at the numbers:
- Estimated annual lighting usage: 4380
- Expected LED life: 146,000 hours (25-30 years)
LED Upgrade Project #1
- $2963.23 total cost
- $509 annual energy savings
- 6 year conservative payback
- Even with all estimates made conservatively the LED upgrade will net the owner $10,000+ over the life the LED.
LED Upgrade Project #2
- $6219.11 total cost
- $1,120 annual energy savings
- 6 year conservative payback
- With all estimates made conservatively the LED upgrade will net the owner $21,000+ over the life the LED.
In total the hotel owner’s investment will pay him back 3x over in energy savings alone, not to mention the maintenance cost of changing the current metal halide bulbs every 5 years. Add to those numbers something you can’t accurately measure with numbers: customer safety and satisfaction/impression. In a challenged and saturated market like the hotel industry, never underestimate safety, satisfaction, and impression.
Don’t be afraid of large numbers for LED upgrade projects. In the long run the numbers make sense. In the present, the less tangible but ultimately more important issue addressed is increasing customer loyalty by creating a safe place that satisfies and contributes to a greater impression.