Philadelphia Marriott Downtown Turns to Transparent Energy’s Online Reverse Auctions for Successful Energy Procurement

Like many big hotels, the Philadelphia Marriott Downtown in Center City, Philadelphia – one of the largest hotels in the U.S. at a full-city-block long, 23-stories, 1,400 guest-rooms, and a 100,000 square-foot meeting-and-event space (and a prominent American Hotel & Lodging Association member) – faced an energy challenge hiding in plain sight.

Electricity (think lighting, outlets, and HVAC for all guest rooms and common spaces) and natural gas (for industrial laundry facilities and kitchens) consistently ranked as a major operational expense, but the hotel’s strategy for managing power and gas typically came down to choosing between a couple of prices – that of the incumbent, and perhaps those of an additional supplier or two – as each electricity and natural gas contract neared expiration.

Having seen the benefits of a more proactive and competitive process at other hotel and building assets, the owners of the Philadelphia Marriott Downtown engaged with Transparent Energy to elevate their energy-procurement process to the same high level as the hotel’s service and hospitality. With contract expirations pending in January 2023, Transparent Energy thoroughly reviewed the local electricity and natural gas dynamics and brought the contracts to market in late September 2021, a full 16-months before expiration, to take advantage of near-historic low energy prices and significant backwardation in the market (where future prices are less expensive than near-term prices).

To do so, Transparent Energy worked closely with the Marriott’s ownership to set pricing expectations, develop and market an RFP, and attract reputable suppliers to bid for the contracts/business. This tightly orchestrated process came to a head on September 29, 2021 when Transparent Energy ran a series of live online reverse auctions (a process where participating suppliers bid against each other online in real time, driving down the price offered for the contract).

The live auction events were a hit! The electricity auction alone attracted 11 suppliers, who placed a total of 120 bids over the course of 23 minutes on a “capacity and transmission pass- through” product, which fixed the price of the energy commodity but allowed other ancillary components of the electric bill to float with the market. Pursuing this particular energy product was important to helping the hotel capitalize on declining capacity and transmission costs, rather than locking them in at an inflated rate in a “fixed price” product.

The ultra-competitive process provided the hotel owners real-time, 20:20 visibility into how suppliers would price the hotel’s ~19 million kWh electric load for term lengths of 12, 24, 36, and 48 months – clarity found nowhere else in the market. With this data in hand, the hotel selected the winning supplier for the term that best fit its budget and risk-management goals, while locking in the market lows that were only available well before contract expiration.

That same morning, Transparent Energy also ran auctions for the hotel’s two natural gas accounts, 87,500s Dth in all, attracting a total of 10 suppliers, who logged 45 bids. Again, the auctions drove prices down, delivered transparent market pricing, and enabled the hotel to fix its energy costs at a very attractive rate.