Center for Hospitality Research

Hospitality Leadership Through Learning
Center for Hospitality Research

Hotel Sustainability: Financial Analysis Shines a Cautious Green Light


Vol 13 No 10
By: Howard Chong Ph.D. and Rohit Verma Ph.D.

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Executive Summary:

Hotels around the world have risen to the challenge of improving their sustainability and reducing their carbon footprint. Although many groups and customers are demanding sustainability, hotel operators are concerned about whether sustainable hotels increase or decrease their rates and bookings. To answer the question of whether going green hurts or helps revenues, this study used data provided by Sabre to determine the effect on bookings of widespread advertising of eco-certified hotels. Sabre’s Travelocity site uses an eco-friendly hotel label to flag hotels that have earned any of a dozen environmental certifications, including LEED and EnergyStar. Based on an analysis of millions of individual bookings in over 3,000 eco-certified hotels (and a comparison group of 6,000 properties), the study finds that, on average, booking revenue neither increased nor decreased for the certified hotels.

While this study doesn’t address the situation of any individual hotel, we can conclude that going green is compatible with existing quality standards of hotel service, and that advertising green status doesn’t hurt a hotel’s revenues. Earning a green certification does not automatically result in a large revenue bump nor a revenue fall. In short, green is not a “silver bullet” strategy. Finally, although the average effect is revenue neutral, individual properties have widely varied experiences with eco-certification, depending on their individual situation.

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