2014 Report

Cadillac Courtyard Miami Beach Oceanfront, Miami Beach

A Message from the CEO

Our unique approach to lodging extends to how we view the importance of sustainability, as demonstrated by our award-winning EarthView® program. EarthView was created as a strategic initiative to create value through a comprehensive and analytically-based program focused on positive investments that reduce our environmental impact and enhance our community engagement.

In this way, EarthView complements Hersha's broader business strategy and also ensures that as environmental and social initiatives move from electives to mandates, Hersha is well positioned. Furthermore, EarthView provides Hersha competitive advantages given the program's superior portfolio-wide energy, water and waste practices that have lowered the Company's environmental impact, while producing property-level savings.

In lodging, we open the doors of our properties to customers every day. For this reason, we continuously seek to enhance the quality of our assets and service to our guests. EarthView resonates well with our stakeholders' growing interest in sustainability. In its four years of existence, EarthView has strengthened Hersha's position as an industry leader, winning NAREIT's prestigious Leader In The Light award for our sector on two occasions.

I am proud to present Hersha's first Sustainability Report, which details our achievements to date. I look forward to sharing our future accomplishments as we strive to be a leader for all of our stakeholders, our communities, and our planet.

Jay H. Shah,
Chief Executive Officer, Hersha Hospitality Trust

Our Mission:

Hersha Hospitality is committed to implementing sustainable and innovative practices that will benefit the environment, our local & global communities, and the performance of our business.

EarthView has helped to place Hersha as the Global Leader in the Hotel Sector as recognized by the Global Real Estate Sustainability Benchmark (GRESB), which is utilized by institutional investors to evaluate the sustainability performance of their investment portfolios.

Hersha Hospitality Trust embraces environmental and community stewardship as an integral part of maintaining and building a successful business. For that reason, we created and branded the EarthView program in 2010 with a cross-functional team from our properties and our corporate offices.

Through EarthView, we deliver environmental and conservation programs that positively impact a hotel operation's financial performance while simultaneously improving the well-being of our guests, our associates, our communities, and our planet.

Our approach to sustainability is thoughtful and pragmatic, meaning we apply a rigorous analytical methodology to measure our financial impact, as well as our environmental and community impact. We are pleased with our results and EarthView's recognition as an award winning program, recognized for its innovative and strong commitment to sustainability practices.

2014 at a Glance

Financial
Impact:

$3.2 Million Net

EarthView's recorded savings since inception from sustainability initiatives implemented across our portfolio.

2,600 hours volunteered by our associates. Over 14,000 hours since the start of the program.

215 local and global organizations supported by EarthView's philanthropic initiatives.

23,000 pounds of soap donated to Clean the World creating 63,000 new bars sent to developing nations.

Community
Engagement:

2,600 Volunteer Hours

Environmental
Performance:

13% Carbon Reduction
8% Water Reduction
42% Waste Reduction

13% Carbon Reduction - Reduced energy consumption across our portfolio resulted in a decrease in carbon emissions per occupied room versus our baseline year of 2010.

8% Water Reduction - Reduced water consumption across our portfolio versus our baseline year of 2010.

42% Waste Reduction - Reduced waste sent to landfills across our portfolio versus our baseline year of 2010.

Support for clean water projects around the world through the EarthView Water initiative which donates $1 for every EarthView bottle of water sold at our hotels.

Clean Water
Projects:

$1 from Every Bottle

Courtyard by Marriott, Downtown San Diego, California

FINANCIAL IMPACT
EARTHVIEW HAS CREATED $3.2 MILLION IN NET SAVINGS SINCE 2010

We know that by being socially and environmentally responsible, we can also create financial value for the company and our shareholders. Initiatives implemented as a part of the EarthView program are designed to achieve a positive cumulative financial return. To date, these initiatives have resulted in net savings of approximately $3.2 million since the inception of the program.

During the first two years of the EarthView program, we focused on operational improvements and implementing the systems needed to ensure we could access and study our utility data in an efficient manner. Over the last two years, we have focused on capital initiatives to target reductions in utility expenses with clear and timely returns on investment. While these efforts have resulted in expense reduction, they

have also had a positive impact on revenues. With regards to our business transient customers, our properties are well equipped to respond to Request for Proposals (RFPs) from corporate travel managers assessing our environmental impact. We have seen an overall increased interest in our program from our leisure transient customers as well. It is for this reason, we strive to increase transparency and provide information for our guests about the initiatives we have in place.

We see this not only as a way to engage our customers, but also as a competitive advantage. One platform that we utilize to share the sustainability attributes of our hotels is the TripAdvisor GreenLeaders program in which we share each property's green practices with guests who are interested in booking a green stay.

"This is one of the bonus features to this property. I appreciate the effort…"

"Keep up the good work! We all need to protect the environment and CY is doing their part"

- Guests at Courtyard, San Diego, CA

In 2012, Hersha partnered with TripAdvisor to pilot their new GreenLeaders program.

  • Over 8,000 hotels in 21 countries are enrolled in the program
  • Nearly 1,000 comments on the EarthView program have been left by guests

Courtyard by Marriott
Downtown San Diego
San Diego, California

Parrot Key Hotel & Resort, Key West, Florida

ENVIRONMENTAL PERFORMANCE
THROUGH EARTHVIEW, HOTELS HAVE REDUCED ENERGY CONSUMPTION 13% SINCE 2010

Changes in the planet's climate have the potential to impact our business as well as the communities in which our hotels operate. Resources such as water and the fuels used to create energy are essential to every operation in a hotel. They provide light in our lobbies, and air conditioning and heating in our guestrooms. As a result, we have a direct interest in being able to understand and best utilize these resources –especially as our business continues to grow. The initiatives we implement across our portfolio aim to balance our conservation and preservation goals with our goal to reduce costs and add value for our shareholders.

In 2010, we began utilizing Energy Star Portfolio Manager, an online tool created by the Environmental Protection Agency, for every hotel in the portfolio. Since that time, we have been able to track and monitor many factors pertaining to the environmental impact of our hotels including energy use, water use, carbon emissions, and waste sent to landfills. This data has enabled us to focus our strategy around efficiency initiatives that are scalable across our portfolio. These initiatives range from lighting upgrades to the implementation of recycling programs to a sustainability-minded purchasing policy.

Guests

We recognize that our guests play an important role in creating an environmentally sustainable community and business. For this reason, we aim to offer our guests the opportunity to help us in our mission by providing them information and inviting them to participate in initiatives such as in-room recycling and towel and linen reuse programs.

Associates

The EarthView program is a culmination of efforts by individuals across Hersha that keep us innovative and ensure that we are leading the way in sustainable hospitality. From our associates' first days at our properties, they are provided information and training on EarthView's environmental initiatives. Each hotel also has a designated EcoLeader who helps engage fellow associates around practices and events pertaining to EarthView.

Supply Chain

We understand that our impact is not limited to our immediate location, but extends to the products we purchase, the operations of our suppliers, and the transportation of these products to our hotels. Therefore, we work to create a more sustainable supply chain. In doing so, we have:

  • converted to recycled materials in our paper products and keycards
  • established an energy and water efficient purchasing policy
  • converted to bio-based laundry and cleaning products.

Development & Renovations

We have also created a set of sustainability minded guidelines that inform our development and renovation processes. These guidelines focus on a variety of sustainability principles including materials, water, waste, energy, and environmental quality. For example, we use only low and no-VOC paints and ensure we work with our contractors to donate, reuse, or recycle any furniture, carpet, and other materials which would otherwise be discarded in a renovation.

Capturing Sun in the
Sunshine State

We recently installed 336 Solar PV panels on the roof of our Residence Inn Coconut Grove hotel in Florida. This system will capture renewable energy from the sun and generate over 150,000 kWh of electricity each year for the hotel.

New Courtyard Miami Beach
Tower is LEED Certified

The new 93 room tower built at the Courtyard Cadillac Miami Beach is now a LEED Certified addition to the hotel. As built, the tower will reduce energy use by 15% and water use by 30% compared to other hotels.

Guest Satisfaction Survey

In a survey of guests who have stayed at our Independent Collection of Hotels, 83% of guests participated in at least one sustainability-focused initiative during their stay.

When asked to rank how important a hotel's level of environmental and community engagement is when choosing a hotel, guests chose 8 out of 10 on average.

Hyatt Union Square
New York, NY

Guestroom Energy
Management Systems

At the end of 2013, Hersha began the installation of guestroom energy management systems across our portfolio. These systems are able to reduce guestroom heating and cooling costs by 25-35% by reducing energy use when guestrooms are unrented or unoccupied.

  • Total Capital Investment: $2.1 Million
  • Annual Savings: $1 Million
  • Payback Period: 2 Years

Hilton Garden Inn, Tribeca, NYC

COMMUNITY ENGAGEMENT
IN 2014, HERSHA SUPPORTED OVER 215 ORGANIZATIONS IN LOCAL AND GLOBAL COMMUNITIES

Hersha has a long tradition of social responsibility and community engagement. This tradition began with Hersha's founders, and continues today with the EarthView program. We believe this focus on community stewardship is important to our guests, investors, and business partners who would like to ensure they engage with corporate citizens that uphold ethical standards and values, and operate in a way that is beneficial to the communities in which they operate.

In 2012, we developed a corporate philanthropy program with a designated committee, including the Chief Executive Officer, that convenes on a monthly basis. Within this program, we strive to positively impact unique verticals of philanthropic interest including education, the arts, and community stewardship.

Within our philanthropic efforts, we embrace our ongoing corporate partnerships with various NGOs and Trade Organizations such as the United Way and the American Hotel & Lodging Association Educational Foundation.

One such partnership we are very proud of is with Cornell University's renowned Statler Hotel. Through this partnership, students and professional hotel associates from The Statler collaborate with Hersha's EarthView team to implement projects and initiatives as part of a comprehensive sustainability program. In this way we are helping to provide future hotel leaders the opportunity for a direct hands-on experience of integrating sustainability into the management responsibilities of a hotel.

Our engagement in our communities continues at the hotel level. Our hotels, with corporate support, are creative with how they support causes and organizations that are important to them. Over the past year, our hotels hosted hundreds of events in support of local charities and organizations.

As a tradition, each year we recognize the leadership of Hersha's founders by celebrating Founder's Day. This past year, Hersha held an Autism Awareness Campaign to help raise support for research and care of people with Autism. Through this campaign, supported by all of our hotels and corporate offices, we were able to collect over 2,000 books and toys, donate $3,500 to Autism Speaks, as well as to purchase five puppies to be trained as service dogs for children with Autism. Hotels also helped bring awareness to the cause by participating in the "Light it up Blue" campaign by adjusting their exterior and select lobby lights to a bright blue color.

We look forward to working with our partners, guests, and other industry peers to further improve on our guest experiences, lower our environmental impact, help create healthy communities to live and work, and increase value for our shareholders. We are excited about the opportunity to share our progress with you as we continue our pursuit towards sustainable hospitality.

In celebration of Earth Day, Hersha associates in New York City gathered to restore and revitalize Randall's Island.

780 Million People
Lack Access to Clean Water

EarthView launched a program to raise money for our global neighbors in need by creating a private label water bottle that is sold throughout the Independent Collection, "IC" hotels. The bottles are made from 100% recycled material and are 100% recyclable. For each bottle purchased by a guest, we donate $1 to clean water projects around the world. We are proud to be supporting Water.org.

Water.org has been at the forefront of developing and delivering solutions to the water crisis for over 20 years. In 2003, they developed a program called Water- Credit which provides micro-loans to families for toilets and household water connections. These loans allow families to take charge of their futures and break the cycle of poverty. As loans are repaid, funds can be loaned again. An investment in WaterCredit can reach 5-10 times as many people as a traditional grant over a 10-year period.

In our first year, through cooperation with our guests and Water.org, we will be able to provide safe water for 880 people for 21 years.

300,000 Bars of Soap
Distributed to Families in Need

Hersha has continued to strengthen its partnership with Clean the World, a non-profit that collects partially used soaps and other hygiene amenities. Clean the World then sanitizes these items, and distributes new bars of soap to communities around the world where the leading causes of death include hygiene related diseases. In 2014, we donated 23,000 lbs of soap and bottled amenities to Clean the World, which translates to over 63,000 new bars of life-saving soap distributed to children and families in need. Since 2011, we have been able to donate enough soap to produce over 300,000 new bars to families in need.

Light it up Blue – Autism Awareness Campaign

EarthView is a registered trademark of Hersha Hospitality Trust.