The global stock of air conditioners in buildings is expected to grow to 5.6 billion in 2050, up from 1.6 billion today, according to the International Energy Agency.
That increase coincides with expected rising temperatures and for the heating, ventilation and air conditioning service industry, it means potential for a boost in service calls.
One brand tracking impacts of climate change on the industry is Aire Serv. Part of the company Neighborly, which has several franchise brands in its portfolio, Aire Serv has 215 units in the U.S. and 228 total.
Aire Serv Vice President of Operations Lane Dixon
“Aire Serv closely monitors climate trends as part of its long-term business planning,” said Lane Dixon, Aire Serv’s vice president of operations. “Warmer temperatures have a direct impact on cooling system demand, especially in regions prone to heatwaves.
“As these weather patterns become more common, the company anticipates increased service requests and has adjusted its sales growth projections accordingly,” said Dixon. “Expectations are that overall global warming may impact winter weather as well, causing more severe cold weather patterns to dip further south in the immediate future.”
Warmer temperatures have already been recorded in the last several years, with the National Oceanic and Atmospheric Administration finding 2023 to be the world’s hottest year on record. Aire Serv’s systemwide sales have steadily increased as well, increasing from $164 million in 2018 to $186 million in 2020 and to $262 million in 2022.
At 1-800-Plumber+Air, CEO Mark Collins said the brand doesn’t incorporate climate impacts into its planning, but the warming weather has opened the door to new markets.
“The biggest shifts we’re seeing is in the Northwest with the Portland and Seattle markets,” Collins said. “There are a lot of homes there that don’t have air conditioning now and we’re starting to go in and install them.
“They’re having warmer and longer summers and it’s not necessarily as rainy. So the climate is shifting in those markets and customer behavior is following that,” said Collins. “There are a lot of other open markets that we think are more advantageous and we’re going to go after them, versus just trying to predict the weather.”
1-800-Plumber+Air is growing in new markets as air conditioning demand increases
Founded in 1983, 1-800-Plumber+Air has 77 locations with 39 franchisees. The brand is headquartered in Texas and a large concentration of its units is in the state. It’s still back-filling the area, too, building up its presence in San Antonio.
“The areas that are hot are still going to be hot,” Collins said. “If it’s a couple degrees warmer, that’s not making as much of a difference there. But in Texas we know we can have extreme weather, too. We had a really bad freeze a couple years ago that drove far more calls for us than hot weather. But it’s still hard to know what you’ll have one year to the next, so it’s more about seeing where there are strong markets that we want to pursue.”
Managing seasonality and technology
While climate change impacts are being noticed and could drive brands to higher sales and new markets in the future, brand representatives said they remain focused on the present. For HVAC businesses, that means adjusting for the seasonal changes.
“Seasonality plays a significant role in Aire Serv’s business,” Dixon said. “HVAC services see the highest demand during extreme temperature periods, particularly in the summer when cooling needs spike and in the winter when heating systems are essential. The fall and spring seasons typically see a decrease in demand.”
Those downtimes offer an opportunity, though, for franchisees to take on maintenance service and system upgrade projects to balance their workload over the year. Dixon said the brand also puts a big emphasis on its marketing strategy to leveling the peaks and valleys of the industry year-round.
For 1-800-Plumber+Air, meanwhile, the brand’s additional services provide it with something else to fall back on during leaner months.
“Our model is a little bit unique because we have multiple streams of revenue coming in,” Collins said. “On the HVAC side, seasonality does come into play, while plumbing is a lot more stable. In the spring and the fall, the temperatures are in a place where you don’t need as much HVAC work.”
That varies from market to market.
“Our southern markets usually have shorter springs and falls. It’s the same up north, too. We do really well with the longer winters,” Collins said. “So we adjust our marketing and staffing accordingly, depending on where they’re at in the country.”
1-800-Plumber+Air CEO Mark Collins
Cooling systems in general, though, drive more of a demand in the industry. Benchmark International found that 60 percent of the HVAC industry revenue is tied to cooling and air conditioning, while the remaining 40 percent if for other service. It’s something Dixon has found at Aire Serv, too.
“States like Arizona do tend to have higher average business volumes for air conditioning services due to the consistent demand,” Dixon said. “Cooling systems operate for longer durations throughout the year, leading to increased maintenance, repairs and replacements.”
In addition to that work, Dixon said improving technology factors in to the work the brand is doing.
“The rise of smart homes and advanced HVAC systems has created new opportunities for franchise owners to offer upgraded services, including smart thermostats, energy-efficient systems and indoor air quality systems,” Dixon said. “Also, monitoring capabilities that offer both homeowners and HVAC companies access real-time data from HVAC equipment, alerting to potential issues that can be addressed before unexpected and expensive breakdowns occur.”
In addition to the changing technology, Collins said the brand also has to contend with stronger regulations on the equipment.
“There continues to be more strict government regulations around HVAC to increase efficiency ratings while trying to reduce the electrical demand that the units are putting on homes,” said Collins, who added that new types of refrigerants are also being required.
“I think with all of that, on our side, it’s important to have our franchisees along with their employees have education about these changes that are happening from a manufacturing standpoint and a technology standpoint,” Collins said. “We also stay in tune with the manufacturers and get that information down to the franchise owners and make sure they’re doing the best they can to stay up to date with that and things like smart home integration.”