Report: Eco-Certification isn't the 'Magic Bullet' for Hotel Revenue

Do eco-friendly strategies help hotels earn more money? Is the investment in an eco-certification worth the effort when it comes to profits?

The answer, says one Cornell University team, is somewhere between yes and no.

“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,” say Assistant Professor Howard G. Chong and Professor Rohit Verma, authors of Hotel Sustainability: Financial Analysis Shines a Cautious Green Light. Both are faculty at Cornell’s School of Hotel Administration.

“For marketers and brand managers, the key question is how [becoming eco-certified] affects customer purchasing,” explain the researchers.

To answer that question, the team looked at numbers from a Sabre, Inc. database of 9,000 hotels (3,000 eco-certified hotels and 6,000 non-certified hotels). Sabre owns the online travel booking service Travelocity, which runs a program that will highlight “eco-certified” businesses so that customers will know when a hotel offers certain “green” features, like LEED certification, smart energy conservation, improved indoor air quality systems, solid waste management programs, etc.

The study compared the two types of hotels (eco-certified vs. non-eco certified) in 20 large cities, with various controls in place to account for location and hotel/chain quality differences.

“Under the assumption that these hotel booking data are representative of the market, the advertising of eco-certification has statistically zero impact on revenue for the hotel industry overall,” says the report. “One silver lining from the study for environmental advocates is that, overall, going green has not hurt hotels.”

Most major media outlets that reported on this research promoted it as a critique of sustainable lodging concepts. But I wonder if Cornell’s study shouldn’t be viewed more as a hard analysis of whether the promotion of eco-certification programs really make a difference in booking services, rather than whether sustainable methods earn money for hotels.

There are vast differences between various eco-certification programs, just like there are huge differences between different companies’ interpretations of what it takes to be a sustainable enterprise. The report did not delve into the differences between say, Audubon International, Green Globe and LEED rating systems. It also did not take into account that some customers will seek out specific rating systems in their search for a hotel.

Despite the fact that the research didn’t distinguish between certification programs, the authors did touch upon this problem. “[Eco-certification] is a broad program that is easy to understand [with a simple logo], but does not signify any specific attributes. Some hotels may have rooftop gardens while others may just have better air conditioners on the roof and insulation in the walls. An advertising program that highlights different features, especially hotel-specific programs aimed at local clientele, would likely have different effects.”

The research also didn’t mention that, as a rule, almost all North American hotels now employ some sort of “eco-sustainable” methods, whether the facility is third-party certified or not. This is evident by the small plaques or cards in hotel rooms that suggest that guests reuse their towels and water-saving techniques that are employed either for sustainability reasons or just for saving on the power bill. Therefore, if a lodging facility doesn’t advertise its support for sustainable management, but is known by its regular customers for its eco-conscious approaches, does this mean that its efforts don’t matter in the scope of this report? I often stay at locations that promote eco-conscious business practices, but don’t seek out certification to prove the point.

Lastly, this study limited its examination only to facilities in the largest metropolitan areas. This would suggest that a large capture of the market it looked at could be from business trips – not necessarily vacation stays. Are all customers the same when it comes to what motivates their purchases? Will tourists choose eco-conscious accommodations, such as those heavily promoted and expanded by Disney World, more often than a business executive (whose bill is being paid for by his employer)? The survey didn’t appear to answer this question.

Most of the large media stories about this report captured one negative feature of their findings, which was that eco-certification didn’t bump up sales based on their data. But the report also disproved the running assumption that the hotel lost money from investing in sustainable methods.

“This suggests that sustainability managers in hotels have appropriately adopted sustainability practices without disappointing customers.”

Sustainability measures, in other words, work. When applied correctly, they work to cut overhead, and they don’t offend or scare away guests, even in hotels known for their luxury accommodations in every sense of the word. Maybe the next question that should be asked is how to standardize certification program criteria so that the customer will better know what he is paying for when he goes hunting for that hotel.

Image of hotel room courtesy of Grand Hotel du Lac, Vevey 

LEED Certification image courtesy of Carolina Braziel