Nov. 21, 2013

Hotels' green efforts don’t affect revenues

An analysis of sales and rates for 9,000 hotels shows a net neutral effect for the hotel industry’s efforts to implement sustainability. The Cornell study concluded that the hotel industry’s fears of losing business due to implementing “green” operations is unfounded. However, on average, hotels also don’t see a revenue boost – or loss – from going green.

The study, “Hotel Sustainability: Financial Analysis Shines a Cautious Green Light,” by Howard G. Chong, assistant professor of economics and sustainability, and Rohit Verma, professor of service operations management, both in Cornell’s School of Hotel Administration (SHA). The study was published by the Cornell Center for Hospitality Research and presented Oct. 18 at the 2013 Sustainability Roundtable at the SHA.

Sabre has created an innovative green “Eco-Certified Hotel” label for hotels that have earned any of a dozen international sustainability certifications. This green flag appears both on Travelocity.com search results and in the Sabre Global Distribution System. Chong and Verma compared the revenue results of millions of bookings at more than 3,000 green-label hotels with 6,000 noncertified hotels.

“The hotel industry has moved ahead with sustainability,” said Chong, “but there’s a nagging question about whether installing green programs interferes with the hotel’s quality standards and its ability to provide guest luxury. Some hotels have been reluctant to go green because they might lose business. This study shows that, on average, the hotel industry doesn’t lose sales or rate from sustainability.”

In other words, the researchers concluded “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.”

The analysis was made possible by a massive database maintained by Sabre Holdings, including Travelocity.