Hotels race to fill growing demand for electric car chargers

In 2016, Tesla approached Destination Hotels to participate in the lodging company’s Destination Charging program. Photo credit: Destination Hotels

Electric vehicles are rapidly growing from niche to normal. A Bloomberg New Energy Finance report, "Electric Vehicle Outlook 2018," predicts that sales of electric vehicles will increase from a record 1.1 million worldwide in 2017 to 11 million in 2025 and then to 30 million in 2030 as the price of manufacturing the vehicles falls. “China will lead this transition, with sales there accounting for almost 50 percent of the global EV market in 2025,” the report claimed.

That’s a lot of electric cars on the highway—and hotels are stepping up their efforts to cash in on the growing demand for charging stations. But if the decision to install a charger seems easy, choosing what kind of unit to install is much more complicated. Factors can include compatibility between charger and vehicle, different partnership models with the supplying company and different ways of sharing revenue.

Choosing a Charger

Companies like Hilton and Destination Hotels have partnered with Tesla (as some Tesla chargers only work on Tesla cars) or with other electronic businesses like General Electric or Kerbspace. These companies provide units that can charge every other kind of EV on the market, including the Nissan Leaf, the top-selling electric car in the world, according to CNN.

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Hotels under the Marriott International canopy have had EV charging stations for about a decade, said Denise Naguib, VP of sustainability & supplier diversity at Marriott. Today, Marriott properties have more than 1,700 charging stations at more than 600 hotels, ranging from one unit to as many as 15, depending on guest demand.

The decision to install the stations begins at the hotel level rather than with corporate, Naguib said. “Some markets have a lot of customers that have EVs and are looking for [chargers],” she said. “In other places, it’s just not there, and so the hotels determine that it’s not yet viable or necessary for that particular property.”  

Hilton, meanwhile, launched a dual partnership with both Tesla and General Electric nearly three years ago to include chargers for all kinds of EVs. Jonathan Wilson, VP of customer experience & innovation at Hilton, estimates that 300 properties in the U.S. and Canada now have stations, with more in the pipeline. 

In 2016, Tesla approached Destination Hotels to participate in the lodging company’s Destination Charging program. “It was an easy decision to opt in,” said Jamie Sabatier, CEO of Two Roads Hospitality, the parent company of Destination Hotels. The California-based automaker's reputation boosted the appeal, Sabatier added—and its cache with a certain demographic didn't hurt, either. “Its luxury clientele was appealing to Destination Hotels,” he said.

Today, more than half of all of Destination Hotels across the U.S. have charging stations, and Sabatier said that the initiative has expanded the company’s base of incoming clientele and potential guests. “We regularly receive positive reviews from incoming visitors that use the charging stations, whether it’s simply to dine at our restaurants or guests staying overnight.”

Smaller companies are working to gain a foothold in the market. Kerbspace, a Bozeman, Mont.-based startup, has installed its chargers at the RSVP Motel BZN in Bozeman, and is talking with other local properties about adding units. The company’s goal, said co-founder and CEO Bill Clem, is to make the charger part of the arrival experience for guests with customized design for each location, as well as security cameras so that users can keep an eye on their vehicles while they’re away. The Kerbspace units also can monitor the unit’s power, and upon the hotelier’s instructions, limit how much electricity each car gets depending on local regulations. “That way, you're not exceeding [energy] demand charges for the hotel,” he said.

Choosing a Revenue Model

The next decision, then, is who should pay how much for what. In some cases, said Naguib, a hotel simply provides the space and the partner provides the charger. “Then they get the revenue from the individuals as they charge their cars,” she said. Shared revenue models are another option, and hotels can always buy chargers outright and then determine what—if anything—they want to charge guests or passers-by to use the device.

As part of Hilton’s charging program, GE and Tesla paid for the installation of the stations. The only cost for the property, then, is the electricity usage, and each hotel decides what to charge each guest. “They need a system of chargers or they won't sell cars,” said Wilson about Tesla and their deals with hotels. “It's how we help each other, which is why it's a real partnership.”

Once a hotel has its EV charging partner—or partners—the next step is determining what kind of charger is right for the market. Depending on the model of the car and the charger, Naguib said, the charging process can take anywhere from 30 minutes to 12 hours. The slowest way to charge an EV is to hook it up to a building’s electrical grid like a wall outlet—an option if a guest is staying overnight and has time to spare, but not if they want to capture short-term visitors who are eager to get back on the road. After all, Naguib noted, someone stopping by for a 30-minute charge can spend money in the hotel’s coffee shop and gift shop, so choosing a fast charger can help drive ancillary revenue.  

As part of the Tesla Lifestyle Program at Destination hotels, some properties are providing benefits to visiting Tesla owners. These can include discounted or complimentary services, experiences, goods or access. “The objective for the program is to enhance the Tesla ownership experience and increase owner engagement with charging partners,” Sabatier said.

The Future of EVs in Hotels

Electric vehicles are increasingly popular, said Wilson, thanks to improved opportunities and improved technology. “The range has improved, which allows guests to travel more with them,” he said. And because many Hiltons do not charge guests for charging a vehicle, he expects that more road warriors will opt to stay where they know they can refuel for free. “Having the charging stations for that market drives demand for the property, and that, in turn, creates an improved business model,” he said. Naguib herself has an electric vehicle, and has not faced any problems when seeking a charge on the road thanks to apps that can tell drivers not only where they can charge their cars, but what kind of charger is available. (Tesla specifically lists Hilton properties on its app to guide drivers seeking a charge.)

In Bozeman, with its population of fewer than 50,000 people, Clem has seen EV usage grow significantly. “The Chinese market is driving automakers across the world to develop and build electric vehicle technology,” he said. Audi, Volkswagen, Jaguar and BMW are making an “onslaught” into the market, he said, estimating that almost 10 percent of BMW sales today are electric. Last fall, Volkswagen announced plans to build up to 3 million EVs annually by 2025. “What we're seeing is that even here in Bozeman, we are getting a doubling in electric vehicles every year,” Clem said.