Hotel Casino Analysis

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CHP in the Hotel and Casino
Market Sectors

Prepared for: U.S. EPA
CHP Partnership
December 2005

Prepared by: Energy and Environmental Analysis, Inc.

For more information about the EPA CHP Partnership, please visit: or email: For more information about ENERGY STAR for the hospitality industry, please visit:

CHP in the Hotel and Casino Market Sectors

Note: This report was initially released in December 2005. In November 2007, EPA completed an addendum to this report containing updated market information. The 2007 addendum can be found on the CHP Partnership Web site at

Hotels and casinos have a number of characteristics that make them good targets for installing combined heat and power (CHP) systems. The facilities operate around the clock year-round; a portion of the industry has significant thermal and electric loads even at night: they have significant air conditioning requirements that could be met with thermally activated technologies running off the waste heat of an on-site generator; and there are establishments in every state in the U.S. Hotel and Casino Industry Structure The industry consists of nearly 48,000 establishments with over 4.4 million guest rooms. Table ES1 shows the breakdown by size. The industry revenues for 2004 were $113.7 billion, up 8% from the previous year.

Table ES1

Number of Hotels and Lodging Establishments by Size

Number of Rooms 500 Total

Property 27,464 14,326 4,235 1,070 503 47,598

Rooms 1,163,668 1,524,099 847,089 398,491 478,561 4,411,908

Average Rooms 42 106 200 372 951 93

Source: American Hotel & Lodging Industry Association, 2005 Lodging Industry Profile Casinos and gaming overlap in the hotel and lodging industry to the extent that there are nearly 300 land-based casinos with associated lodging. There are commercial gaming operations in 11 states. The two largest commercial gaming centers are in Nevada (Las Vegas, Reno) and New Jersey (Atlantic City.) The Midwest commercial gaming industry consists exclusively of riverboat and dockside casinos (Illinois, Indiana, Iowa, Missouri) except for 3 land based casinos in Michigan. The next biggest gaming center is in the South with casinos in Louisiana and Mississippi. The Southern commercial gaming market is primarily riverboat and dockside with one land-based casino in Louisiana. Colorado and South Dakota in the West both allow limited stakes gambling casinos. These facilities bring in much less revenue than the unrestricted casinos in the larger markets.

Energy and Environmental Analysis, Inc.


Hotel and Casino CHP Market Assessment

In addition to the commercial industry there are Tribal casinos in 28 states (Class III casinos relevant to this study in 21 states.) Figure ES1 shows the distribution of casino operations by state and type.

Figure ES1

Geographical Distribution of Casino Gaming by Type

Hotel Market Trends The hotel industry is finally breaking out of the disastrous recession that followed the 9/11/2001 terrorist attacks on the World Trade Center and the Pentagon. In the three years following 9/11 the hotel industry had a 36.2% decline in profits. In 2004, this declining trend has turned around with a 7.6% increase in revenues and an 11.4 % increase in profits compared with 2003. Resort hotels achieved the greatest increase in profitability in 2004 with operating profits growing by 17.2%. Limited service hotels gained the least with profits up only 6.2%. Full service, suite, and convention hotels all saw profits rise by over 10%. Luxury hotels (Four Seasons, Ritz Carlton, Fairmont) represent the fastest growing market segment. The worst performing segment is the economy segment (Motel 6, Red Roof, Days). Limited service hotels (Hampton Inn, Country Inns & Suites, HI Express) are gaining at the expense of full...
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