Definitely Doug 1/27/23: Electric Vehicle Charging

In case you missed my last column from two weeks ago, it included a very short online poll to assess readers’ plans vis-à-vis the two competing technology-oriented trade shows scheduled for June 26-29. I will report the results in my next column, but if you haven’t taken the poll already, I’d really appreciate it if you could complete it now. The average respondent so far needed just over 90 seconds to complete it, and it will help a lot of people who are still undecided whether to head to Las Vegas or Toronto. Thank you!

Electric Vehicle Charging

This week’s topic is Electric Vehicle (EV) charging for hotels. Many luxury hotels have offered this for some time, but it is starting to go mainstream and is now coming onto the radar of many select service and even some economy hotels. But there is a lot of complexity to doing it well and getting business benefits.

I spoke with experts from several companies involved in different parts of the EV charging industry serving hotels and asked them how hotels should think about and evaluate EV charging solutions. There were many common threads and many insights, which I will share. I am indebted to senior executives from Cyber Switching, Evocharge, EVPassport, Stay-N-Charge, and R3charge and thank them for sharing their knowledge and advice. They are all companies I would check out if I were looking for an EV charging solution. These companies offer hardware, software, services, and/or consumer networks to support EV charging.

Why EV Charging for Hotels?

The trend away from Internal Combustion Engines toward electric vehicles is undeniable. EVs account for about 10% of new car sales in the U.S. and have been growing at 40% or more per year for the past six years. Car and Driver identified 43 electric vehicle models on sale in the US in 2023, and this number is roughly doubling every two years. To be sure, the number of EVs on the road is still only around 1% nationwide, although it is as high as 5% in some of the more densely populated areas.  Europe is further along, with CleanTechnica reporting that 27.7% of cars sold in Europe have a plug, and 17.3% are fully electric.

There was little hard data on the percentage of hotels that offer EV charging, although the consensus was that in the US it is probably still somewhat under, but possibly approaching, 10%. However, detailed analysis of hotel claims to offer “EV charging” suggests that many of them only offer charging “nearby” (whatever that means) rather than onsite.

For an EV driver, charging on a long overnight trip is not optional, and doing it at the hotel while they relax, eat, and sleep will be much simpler and less time consuming. While most hotel charging solutions are much slower than public fast chargers and will take overnight rather than 30-45 minutes, that is not an inconvenience to most hotel guests. Overnight charging eliminates the need to wait at or near the charger, as is typical for fast chargers. The cost for slow charging that is typically used in hotels is also much lower, often about 1/3 the cost of fast charging.

Because overnight charging is critical for many EV travelers, they book hotels where they know they can charge. Without overnight charging, they know that after a long day of driving, they may spend an hour or two searching for a public fast charger that is available and then sitting in the car waiting for it to charge. If you can promise and deliver overnight charging, and of your competitors cannot, you should get all or most of the EV business. The greater your ability to communicate and commit that at the time of booking, the greater the share of EV business you will get.

As long as four years ago, Forbes noted that “not getting a charger [at a hotel] if you are depending on it can be a problem,” going so far as to suggest that EV drivers might want to travel with a small folding scooter or bicycle to get to/from a local charger if the hotel charging isn’t available. While I suppose hotels could rent bicycles to support EV drivers, it’s probably better guest service to be able to both promise and deliver something that is about as important to an EV driver as a bed, shower, or Wi-Fi.

Overnight charging solutions are relatively inexpensive (up to a point) and may be eligible for tax credits, utility rebates, and other financial assistance. DC Fast charging (DCFC) is different; to fully charge an EV in 30-45 minutes will require a better electrical infrastructure than most hotels have, and much more expensive equipment. The experts agreed that most hotels do not need DCFC because most guests have no problem waiting 8-10 hours overnight for a charge. They did, however, identify some exceptions, which are likely to grow over time. Hotels that get a lot of daytime traffic for restaurants, meetings, or recreational facilities, particularly from customers who may have to drive some distance, may need fast charging especially if customers have driven some distance and may stay only a couple of hours. Brands who decide to standardize offerings might entice loyalty program members to make their mid-day stop at a hotel for lunch and a fast charge.

The need for DCFC in hotels may change over time. Several of the experts expect that as EVs replace gasoline powered vehicles, the nature of the refueling industry will change in ways that could benefit hotels. Most EV charging occurs at home, so unlike with gasoline, most EV owners need refueling stops only when traveling longer distances. And whereas refilling a gasoline tank takes just a few minutes, recharging an EV takes 30 to 45 minutes even with fast charging. Today’s gas stations are located close to people’s homes and cater to short stops. Tomorrow’s EV charging stations will more likely cluster near long-distance highways and provide both fast and overnight charges. The concept of waiting lounges with food and beverage, game rooms, Wi-Fi, gyms, and swimming pools makes a lot of sense. Some are already starting to appear along UK motorways.

Does that concept sound like any business you know, such as perhaps a typical highway hotel? If you were driving your family on your summer vacation and your charging level starts to get low around mid-day, would you rather stop at a convenience store and sit in the car for 45 minutes, or relax in the lobby or restaurant of a hotel, work out in the gym, or maybe let the kids take a swim in the pool after? This could be a generational opportunity for hotels to rethink what business they are in and improve daytime utilization of common areas and generate additional revenue.

A final comment on why hotels should consider EV charging is the financial incentives that are available now. Many utilities, states, and municipalities are offering credits, special rates, or rebates for installing EV chargers. The Bipartisan Infrastructure Law of 2021 also allocated $5 billion over five years to the National Electric Vehicle Infrastructure program to support EV charging stations, although this is focused more on fast charging.

Stay-N-Charge publishes a summary covering many state and local rebate programs that are available to hotels. They and several of the other vendors I spoke with said that the financial incentives could sometimes cover the entire fixed cost of EV charging. While this will not be the norm, hotels should not put off exploring EV charging without at least checking on financial incentives available today that might be gone in a year. Projections by McKinsey suggest that the number of charging stations needed within the next several years will be more than current financial incentives will cover, meaning that the rebates and credits that are available now may not last.

Trends in EV Charging

‍There are a few trends in the broader EV charging industry that hotels should consider. First, EV charging is becoming fully networked. There are about 25 EV charging networks in the US (and similar options in other countries). EV drivers join one and get the ability to easily find charging stations and pay. As with the early days of mobile phones, though, their provider does not have chargers everywhere. Roaming networks such as ChargeHub have emerged to tie together the various networks and allow users of one app to use chargers associated with a different one.

Roaming networks are a work in progress, however, and it’s still possible to buy charging stations that will not be accessible to some or all of these networks. This may not matter too much if you plan to only offer charging to hotel guests who pay through their room rate or guest folio (private charging), but public charging options can help draw more people to the hotel and earn additional revenue. Some number of public charging stations may also be required for eligibility for certain tax credits or other financial incentives.

Second, building codes in some areas are now being updated to require EV charging in some types of facilities, which can include hotels (or most any facility with a parking lot).

Finally, some utilities are now offering special pricing for electricity used for EV charging. When doing your financial analysis, it can pay to ask rather than assuming the same rates you are paying today.

What Hotels Need to Understand about EV Charging

Types of Chargers. Most chargers sold to hotels now support the main common connector types (Tesla and CCS) and fast chargers usually also support CHAdeMO connectors. There are several levels of EV charging that vary primarily in cost, speed, and electrical requirements. The two that are relevant to hotels are Level 2 and DC Fast Charging, or DCFC. Level 2 is by far the most common in hotels; it runs on 240v or 208v power and will (at a typical 48 amps) charge a typical EV enough in one hour to drive about 25 miles. DCFC, on the other hand, will add 100 to 200 miles of range in about 30 minutes, but requires 480v 3 phase power, which few hotels have.

Both the charging equipment and the electrical infrastructure upgrades required for DCFC are more expensive than most hotels can justify. For example, the US Department of Energy estimates a cost of between $938 and $3,127 for Level 2 chargers, with installation costs in the range of $3,000. In contrast, they estimate DCFC chargers cost between $28,400 to $140,000 and $18,000 to $66,000 to install. Infrastructure upgrades can easily add to these costs, depending on the local power grid they will likely run at least into the tens of thousands of dollars and often into six figures. This may have a payback for some hotels at some point in the future, but not for many at today’s usage levels. Furthermore, some hotels in energy deserts may be simply unable to upgrade at all.

Informing Customers. There is a large gap today in the ability of EV drivers to find a hotel where they know they can reliably charge. While many hotel booking sites list “EV Charging” as an amenity, they rarely answer the important questions a driver may have, such as is it at the hotel, or a mile down the street? Is it Level 2 or DCFC? How much will it cost, and how can I pay? Can I drive up and use it or do I need to check in at the parking garage office or front desk? Do I need a reservation? And is it a dedicated electrical feed of 48 amps for me, or am I sharing that with other EVs charging at the same time (in which case a normal 10-hour charge might take 20, 30, or 40 hours)?

Some apps, such as Stay-N-Charge and R3charge, provide lists of charging locations to consumers, and hotels offering charging should consider registering so that their stations have visibility. More important for regular guests is that websites and brand mobile apps offer a clear explanation of the hotel’s charging facilities. Some brands now have brand standards for EV charging that will answer the common questions and even allow users to filter hotels based on EV charging. Online travel agencies (OTAs), however, lack the standards to guarantee that when they list EV charging as an amenity, it will be onsite and available to guests (often it is not). OTA bookers may still come to the brand website to check EV charging details for the specific hotel, so it’s important for that information to be easily accessible and comprehensive.

Public and Private, Reserved or Unreserved. Hotels may choose public, private, or a mixture of both types of charging stations. Private stations may be reserved for guests, employees, or fleet vehicles. Public stations can be used by anyone. Some hotels change this by time-of-day, making some or all chargers public during daytime hours but reserving them overnight for private use by  guests.

Many hotels have been asking for the ability for guests to reserve chargers, for those guests for whom an overnight charge is an absolute requirement. At least one vendor, EVConnect, has implemented a reservations capability, and several others said they were planning to do so. The general consensus was that reservations make sense for overnight Level 2 charging. Many hotels were handling charger reservations manually, which at small volume is reasonably practical. I would expect that over some period of time, reservations will get baked into hotel booking sites and brand apps, but this will take some time.

Networked vs. Non-Networked. Networked chargers can communicate with a service provider to facilitate monitoring, authentication, payment, reporting, and system updates. Most commonly, chargers are networked via the mobile phone network, but Wi-Fi or a wired Ethernet connection is also possible in some circumstances. The experts all agreed that cellular connections were more reliable as they are less susceptible to interruption due to hotel network reconfigurations, Wi-Fi password changes, and signal strength variability.

Networked chargers are essential if a hotel wants guests to be able to pay by credit card, room charge, or mobile app, and they also enable the provider to monitor the health of charging units that often require repair. The reliability of non-networked chargers can be much lower (multiple vendors said that only 65-70% are typically in service at any point in time). Networked charger reliability depends on the support vendor but is typically much higher, meaning fewer guest complaints and bad reviews.

Non-networked chargers are less expensive, and may be suitable for use by employees or fleet vehicles. They can also be used for guests if the hotel wants to distribute PIN codes, keycards, or fobs to activate the unit. Access control can even be managed through a simple on-off switch. Non-networked chargers will generally require that the hotel identify and deal with any necessary repairs.

Access, Authentication, and Payment. An important consideration is how hotels will enable access to charging stations, authenticate the person using them, and obtain payment. There is no single approach to this: some hotels may offer charging to overnight guests for free, in which case authentication is critical but access and payment are not. Others may charge different rates for guests vs. the public, in which case authentication and payment both matter. Still others may restrict physical access, as within a gated parking garage.

If EV charging is free for guests, access control may be validated by presentation of a room key to the charger. One vendor had implemented authentication by email address, based on a daily handoff of emails of arriving guests, although this would not work for the many guests who do not provide an email prior to arrival, or for walk-ins. Several providers had integrations with Property Management Systems (PMSs) on their roadmap, but no one was able to point to any actual implementations as yet. With a PMS integration would come the ability to authenticate by having the guest enter their name and room number, similar to Wi-Fi authentication in many hotels.

Where payment is required, most vendors of networked charging stations can process payment through their own app or networked third-party apps, and many can also process direct payment by credit card, Apple Pay, Google Pay, or Paypal. Some of the vendors have hotel folio charges on their roadmap and/or have been asked about integration with brand apps. Payment can also be collected manually by the front desk, with access granted via a PIN code, keycard, or similar.

Authentication needs to be as frictionless as possible given the hotel’s deployment choices. This means guests should not have to download a new app, create a new account, or enter a lot of information to start charging.

Power Management. Many of the software solutions provide the ability to share available electricity across multiple charging units, which can extend the number of charging units that can be supported by the hotel’s electrical infrastructure. However, this means less electricity flowing to each vehicle, and longer charging times. A driver who needs and expects a full overnight charge but wakes up to find only a 50%-charged battery is likely to be unhappy. Power management needs to be used with caution, or combined with a fee structure that accommodates it, such as a premium price for full amperage vs. a discounted or free price for “whatever is available.” This is similar to what many hotels do with standard vs. premium Wi-Fi.

An alternative to expensive infrastructure upgrades is to install a battery bank that can store electricity purchased during off-peak hours when rates are low and release it to chargers during peak hours. This option is not inexpensive, but may be a viable solution for some hotels.

Monitoring. Network monitoring can provide many useful features, but not all of them will necessarily be offered by every vendor. Many offer 24/7 equipment health monitoring and can automatically diagnose problems and initiate repairs when needed. They may also provide customer support for both hotel staff and EV drivers. Most brand standards require network monitoring for EV charging stations.

Networked devices can also provide much better reporting. Hotels that want detailed financial information on charging may be able to see both the electricity consumed and actual cost (considering time-of-day or demand pricing) for each charging session. This can help determine pricing and ensure that it meets the hotel’s profit objectives regardless of fluctuations in electricity costs.

Interoperability Standards. The Open Charge Point Protocol (OCPP) physically separates the charging devices from the network back-end, allowing the hotel to switch charging networks without replacing equipment. The Open Charge Point Interface further provides connectivity between eMobility service providers that serve drivers, and hotels and other charging station operators. This connectivity layer supports roaming, authentication, reservations, pricing and billing, session information, and remote control from mobile phones. Adherence to these standards is generally required by major hotel brands that have EV charging programs, and they are important considerations for customer usability.

Site Planning and Installation

The experts identified several key considerations to planning EV charging deployments. They included:

• Decide up front how you plan to manage access to the stations, now and in the future. Will it be first-come, first-served or will you take reservations? Will it be the same for overnight as for daytime use?

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• Consider the placement of units. Do you have visibility from the front desk, back office, or CCTV? Have you considered accessibility requirements? Are there any safety issues? Will snow removal be an issue?

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• Don’t overlook aesthetics. Do the units fit with the brand image your hotel wants to put forward? Will they be installed appropriately, without unsightly conduit?

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• Understand local regulations and incentives. Some of the vendors offer consultative services as part of the sales process to make sure you can take advantage of any financial incentives. They also may have networks of installers who are aware of local permitting and code requirements.

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• Have the vendor or an electrical contractor do a load study on the hotel’s power infrastructure. Many hotels can support two to four Level 2 chargers without an infrastructure upgrade, but some may not. As the number of stations increase, or if the hotel needs DCFC, the need for an upgrade becomes more likely. Few hotels, for example, could support eight Level 2 chargers without more electrical infrastructure. Many hotels will need eight (or more) at some point in the future, but there is no need to incur the expense of an upgrade until usage justifies it.

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• Infrastructure upgrades can take a year or more because of supply chain issues, utility work backlogs, permitting, and transformer and meter upgrades. Utilities may also add recurring capacity charges to cover the cost of upgrading the grid to support the hotel’s higher peak demand. This will be a monthly charge to the hotel that is independent of usage.

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• There are many choices for sourcing, including some of the national companies mentioned above, regional ESCOs (Energy Service Companies), and local electrical contractors for smaller jobs. If major upgrades are needed, an engineering firm may be required.

Cost

There are as many different cost models as there are vendors in the space, so it’s important to make sure you are considering all costs as you compare them. These should include equipment, installation, infrastructure upgrades if needed, power and capacity charges from the utility, subscription charges from the provider, and maintenance and repair costs. And you should not just look at the initial deployment cost for a couple of charging stations, but rather consider how costs will change as your requirements grow over time. Be careful of revenue-share schemes that pay the provider back too quickly – such as they get all the revenue until their costs have been covered – remember that the hotel is paying for the electricity in the meantime. On the other hand, be sure to subtract any available incentives and rebates!

If you are not sure how much usage your EV chargers will get, you may want to consider a usage-based model at the outset, then switch to owned equipment later on. Some vendors may offer buyout options.

Remember that the costs of EV charging stations may well drop over time, so be careful about locking into a pricing model that doesn’t give you the ability to benefit from potential future cost reductions. Many hotels made this mistake with high-speed internet in the early 2000s, entering into long-term contracts at prices that were far above market before the contract expired.

Deployment Considerations

While not an exhaustive list, following are a few issues that you may want to consider.

• Should your hotel manage EV charging itself, or outsource it, perhaps to a parking vendor? It’s certainly easier to outsource it, but you may have less control over pricing, charging capacity, priorities, and the like.

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• Who will own the equipment, and does it lock you in to a particular service provider?

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• What signs, markings, and accessibility will you need?

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• How can you make EV drivers aware of your specific charging setup, beyond the simple website filters that they have learned may be unreliable?

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• How will drivers get support if needed, and from whom? Does the charging station provide voice support, or is there a number to call? Or will the front desk to be the first line of support? If the latter, what training will they need?

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• How will units be serviced? Does the vendor have local technicians to send out, or will they send a replacement part that the hotel must swap in?

Pricing EV Charging for Customers

Many higher-end hotels offer EV charging as a free amenity for guests, and there is nothing wrong with this, but the model may become unsustainable over time as EV usage grows. It’s important to give some thought to pricing, particularly in the select-service or budget markets.

Remember that hotels have the advantage of being able to satisfy most guests’ needs with slow charging, which is much less expensive than the fast charging they may require if you don’t offer charging at all. A reasonable price, that produces some profit for the hotel, will still be cheaper than the next best alternative for many drivers. Common paid options include:

• Offering EV charging for a flat rate per day.

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• Offering packages that include EV charging.

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• Charging fees that cover costs, plus a profit margin.

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• Discounted fees for in-house guests or for some or all members of the hotel’s loyalty program.

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• Premium pricing for reservations or guaranteed capacity, free or lower-priced options for guests who are more flexible.

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• Time-of-day pricing based on demand and/or utility rates.

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• Free or reduced-price charging for day guests using the restaurant, meeting rooms, or other paid facilities.

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Decide what will work best for you and ask the vendors about their ability to support what you want. Each one has different capabilities for implementing fee structures and you may need to make tradeoffs.

However, you set your pricing, you should periodically compare it to other charging options available to your guests (especially at competing hotels). Some vendors may provide useful information to make this easier.

Conclusion

EV charging is here today, and the need is only going to grow. Hotels have a unique opportunity to benefit because of the long “dwell time” of driving guests as compared to restaurants and gas stations, and the ability to satisfy the needs of many with slow charging. And hotels near major long-distance highways have opportunities to monetize restaurants and other facilities that may be underutilized in the middle of the day.

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