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Hotels Are Harnessing the Power of PACE to Meet Sustainability Goals

Amid widespread demand for sustainability and low-cost debt, one asset type is leading the charge for Texas’ Commercial Property Assessed Clean Energy program. 

Hospitality groups are increasingly turning to C-PACE to help finance new and existing projects, with half of loans administered by Lone Star PACE so far this year tied to hotels. Owners are harnessing the tool not only to offset rising insurance, construction, maintenance and utility costs but also to meet their sustainability goals. 

Nearly 250 C-PACE loans totaling more than $2B were issued across the U.S. last year. PACE can be implemented at any part of the development process to retire construction debt or fill the capital stack.  

Eligible improvements include solar power systems, LED lighting and electric systems, upgrades to building envelope and windows, HVAC and associated mechanical systems, and water conservation measures, such as low-flow plumbing. 

The program is proving to be a game-changer by allowing projects to pencil without owners having to sacrifice energy-efficient upgrades. Many of the world’s largest hotel companies have recently adopted environmental mandates, making C-PACE the perfect tool to achieve their goals. 

MGM Resorts saved nearly 14 billion gallons of water through its conservation efforts in 2023, 70 million gallons of which were saved through HVAC optimization.  

Hilton, which has laid out a plan to significantly reduce its environmental footprint by 2030, cut its carbon emissions intensity at managed hotels by 45% and franchised hotels by 25%. It also reduced its water intensity by 26.5%.  

As of 2023, 32 states plus the District of Columbia have active C-PACE programs, while 40 states and D.C. have PACE-enabling legislation. Texas’ program is rapidly growing, but much runway remains. Lone Star PACE is here to help municipalities, lenders and developers put the program’s myriad benefits to use. For more information on how PACE can lower project costs, contact us here.