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Marriott to Save in Deal with PG&E Energy

Marriott to Save in Deal with PG&E Energy

In the first of its kind for the hotel industry, PG&E Energy Services has signed a five-year, $165 million deal with the procurement arm of Marriott International to provide natural gas, electricity and various energy services to 130 properties in California. As other states open their energy markets, PG&E hopes to do other deals with the huge Bethesda, MD-based hotel operator, which has 1,800 properties worldwide.

"This is the first alliance we're aware of in the hotel industry that involves a broad base of lodging properties," said a San Francisco-based spokesperson for PG&E Energy Services. "Ultimately, we are very hopeful of expanding this deal to go beyond the California boundaries. This contract also is a comprehensive energy services deal that goes well beyond commodities. It is significant because the potential savings is really very significant because of the combination of commodity and energy services."

The energy commodity discounts and anticipated facility improvements combined are expected to lower each participating property's energy costs by as much as 30%, according to PG&E. For the five-year contract period, the deal will involve an estimated $100 million in energy and another $65 million in energy services, such as energy efficiency measures like new lighting or energy delivery systems, and energy management.

"I've seen the numbers, and in some cases it looks like potential savings even greater than 30%," the PG&E Energy Services spokesperson said. PG&E Energy Services, which now claims to have contracts in hand totaling more than $3 billion in revenues over the lives of various multi-year deals, negotiated a contract with The Marketplace by Marriott, a year-old operation providing one-stop shopping for commodities and services for both Marriott and non-Marriott businesses. Marketplace offers Marriott's worldwide procurement expertise and buying leverage. "This is an excellent opportunity to offer energy savings for our current and potential Marketplace customers throughout California," said Dennis Baker, executive vice president and general manager for Marketplace.

Under the deal, PG&E Energy Services will work with each of the California properties to determine what combination of commodity and related services each individual complex needs. For some properties, electric or gas commodity services will not be an option because they are located within a municipal utility's service area, which so far are not covered in the state's energy restructuring.

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