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Cornell Eco-Certified hotel study

Going Green Doesn’t Boost Hotel Revenue

Cornell Eco-Certified hotel studyHotels, on average, don’t see a revenue boost from going green, according to the Cornell Center for Hospitality Research.

The Cornell study analyzed sales and rates for 9,000 hotels and found a net-neutral effect for the hotel industry’s sustainability efforts. While green certification doesn’t improve a hotel’s bottom line, it also doesn’t result in lost revenue, the report concludes.

Hotel Sustainability: Financial Analysis Shines a Cautious Green Light, by professors Howard G. Chong and Rohit Verma, examined a massive database maintained by Sabre Holdings, including Travelocity.

Sabre’s Eco-Certified Hotel label flags hotels that have earned any of a dozen international sustainability certifications, including LEED and Energy Star. This green flag appears both on Travelocity.com search results and in the Sabre Global Distribution System. About 9,000 hotels in the database are eco-certified. Chong and Verma compared the revenue results for each of 3,000 green-label hotels to a comparison set of hotels drawn from 6,000 non-certified hotels.

The study’s main results (see charts) compared the eco-certified hotels in the sample’s largest 20 cities to the non-eco-certified, analyzing both average daily rates (ADR) and booking counts. In one number (Exhibit 5), -$3.50 is on a base of $208.58 in average ADR. The authors say this 1.7 percent reduction is “not a strong statistical signal,” meaning it has statistically zero impact.

The second main result (Exhibit 6) only analyzed bookings made through Travelocity and also finds eco-certifications have statistically zero impact.

The study concludes that going green hasn’t hurt hotels and says revenue impacts may increase as hotel customers gain experience with sustainability. “The pragmatist should see this as a green light to continue measured improvements in hotel environmental performance,” the authors say.

Last month, TripAdvisor announced its GreenLeaders program has doubled its hotel participation, from 1,000 to more than 2,000 participating properties, since its launch in April. Participating brands include Best Western, Carlson Rezidor Hotel Group, Fairmont Hotels & Resorts, Marriott International and Select Registry, as well as numerous independent hotels.

 

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5 thoughts on “Going Green Doesn’t Boost Hotel Revenue

  1. The green certifications have the biggest impact on group business. A more interesting study should focus on the top line impact of group business, specificlly corporate, association and government conventions. The criteria for selecting a venue for group business of these types are putting more and more weight on the sustainability efforts of the properties.

  2. This only tells one side of the story. Do the hotels save money with green practices such as energy efficiency and waste management? I presume they do, so that would reduce operating expenses even if revenue remains neutral. That is why looking at life cycle costs and analyzing the whole picture is important.

  3. ‘Going green’ should enhance the bottom line, whether that be through increased occupancy and/or reduction in operational costs. The above comments are very relevant – taking a holistic approach. In our group we refer to this as the triple bottom line.

  4. We are currently benchmarking about publicly traded hotel organizations. We analyze what the organization reports re: ESG performance data with long term financial data. Unfortunately, many traded hotel organizations that have sustainable practices are not reporting in a way that is understandable to financial and investment analysts. So they don’t get credit for that work. What a company does to measure performance and what it reports matters when benchmarking an industry.

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