I tend to think of the US as ahead of most of the rest of the world when it comes to energy efficiency. Maybe not in the Germany or Japan league, but at least above the median. After all, our utilities are spending billions of dollars per year encouraging energy efficiency and our policy makers talk about it a lot.
But, I’ve stayed in hotels in France, Singapore and Kenya over the past six months and seen an energy-saving device that I’ve never seen in the US. Maybe you’ve seen them. It’s a simple fixture, pictured below, where you insert your key to activate the electricity in the room.
This doesn’t mean that you get charged for the electricity you consume while at the hotel. The device is basically a master switch that turns everything off as you take your key out and leave the room. (In my Singapore hotel, this worked with a lag, giving me a couple seconds to get out with the lights still on.)
To me, the energy savings to the hotel are ancillary and the main benefit is that there’s a single, default spot to leave my key. No more hunting through my purse and looking on every flat surface in a room as I rush out the door. The key is right there, on the wall next to the door, ready to go. I would pay extra for a room that had such a pocket even if it had nothing to do with electricity.
This is a clear example of what the energy efficiency community labels a “non-energy benefit.”
So, why don’t we see these in US hotels? It’s not because I’m staying at fancy new hotels in city centers in the other countries. Both my recent hotels in Western Kenya had the devices – in Kisumu and overlooking the Ugandan border in the town of Busia (population 52,000), where I took the photograph above, and pictured below.
But, maybe I stay at nicer hotels in the US than when I travel abroad? The device has a penny-pinching feel to it, and there are drawbacks. For example, you cannot leave your computer charging while you’re out of the room. I don’t think that’s the story, though, since at least the hotel in Singapore was quite nice, and I’ve stayed in some real dives in the US and still not seen a key pocket.
It’s also not the case that electricity is extraordinarily expensive in the countries where I’ve seen the key pockets. They all have commercial rates in the 14-20 cents per kWh range, which is higher than the US average, but no higher than California. So, the hotels outside the US are not facing larger monetary savings from installing the master switches. (See here for Singapore prices, and here for French prices. I got the Kenyan prices from a recent presentation I saw by a former regulator. Admittedly, the true costs in Kenya should average in the occasional cost of running the diesel generator when the grid goes out.)
We talk about an energy efficiency gap, meaning that consumers and firms may be failing to invest in energy efficient technologies even if the payback in terms of lower future energy bills clearly outweighs the upfront investment. The typical explanations for the energy efficiency gap are that there is a market failure at play, like a split-incentive problem or lack of information. Certainly, hotel guests do not think about the effects of their actions on the hotel owner’s energy bill, so there are elements of the split-incentive problem here. But, this device is explicitly designed to address that problem and force the guests to save energy for the owner.
I am also hard-pressed to see US hotels’ failure to adopt the key pockets as an example of the energy efficiency gap, since the devices have been adopted in other countries. I can’t see why market failures exist in the US that don’t in Singapore, France or Kenya.
So, is it possible that Hilton contemplated installing these in their US hotels, and decided that their guests would be turned off, meaning that lost business would outweigh any energy savings? I suspect that’s the case. Even Starwood’s new Element hotels, which are branded as green and use low-VOC paints and carpets made from recycled materials, opted not to use the “master switch.”
This article quotes an Element executive describing how they surveyed customers before deciding whether or not to use the switches. “’Some,’ he recalled, `said they would suffer discomfort because they would get back to their room and it would be extremely hot.’”
One lesson is that I am not a typical US hotel customer. I like having a place to keep my key, and I don’t like walking into what feels like a 65-degree hotel room, even if it’s 95 degrees outside. But, other US consumers apparently like a lot of AC.
This example highlights that saving energy can come at an economic cost. Sure, there may be energy-saving technologies – simple ones installed in remote Kenyan hotels – but if people like walking into 65-degree hotel rooms, businesses will be unwilling to adopt them. And, if a utility program or government standard pushed the hotels to adopt them, all those hotel guests with polar bear tastes would be less satisfied customers.
I am curious. Have you seen these devices in the US? If so, in which hotels? Where? If not, why is the US so different from other parts of the world? Do you agree that US consumers’ love of AC is part if the explanation? I, for one, would love to get to the bottom of this!
Catherine Wolfram is the Cora Jane Flood Professor of Business Administration at the Haas School of Business, Co-Director of the Energy Institute at Haas, and a Faculty Director of The E2e Project. Her research analyzes the impact of environmental regulation on energy markets and the effects of electricity industry privatization and restructuring around the world. She is currently implementing several randomized control trials to evaluate energy efficiency programs.