ITHACA — A new study from Cornell University has found that hotels gain a revenue benefit when they are certified under the LEED sustainable-building program.
By comparing LEED-certified hotels with a competitive set of non-certified hotels, the study found substantial increases in average daily room rates and revenue per available room for the LEED hotels. The study, entitled “The Impact of LEED Certification on Hotel Performance,” was produced by Matthew Walsman, Rohit Verma, and Suresh Muthulingam of the Cornell Center for Hospitality Research (CHR) at the School of Hotel Administration.
“The hotel industry has embraced environmental sustainability and several hotels have registered for or earned ‘green’ certification under the LEED program,” Verma, a professor at the School of Hotel Administration, said in a news release. “But LEED, which stands for Leadership in Energy and Environmental Design, is really aimed at controlling costs by limiting resource use. So, the question was whether there also is a revenue benefit from LEED. We found that the answer is, absolutely yes.”
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The Cornell analysis compared the performance of 93 LEED-certified U.S. hotels (the number for which operating data were available) to the performance of 514 comparable competitors. And the study found that the certified hotels posted “superior financial performance,” according to Cornell. The authors completed this report by analyzing comprehensive hotel performance data provided by STR, a Partner of the Center for Hospitality Research.
Walsman, a doctoral candidate in service operations management at the School of Hotel Administration, noted that many of the hotels had only recently been LEED certified, so the study could compare their revenue experience for a period of just two years. “We’ll have many more hotels to study in the future,” he said in the release, “since companies like Marriott have now included LEED as part of their own design specifications for new constructions.”
The researchers found that the revenue benefit applied in hotels of all types, although most hotels in the study were upscale or luxury properties located in urban or suburban locations. “This makes sense, because many of the LEED standards involve a hotel’s connection to public transit or other resources typical of urban areas,” Verma said in the news release.
Developed by the United States Green Building Council in 2000, the LEED-certification process gives commercial buildings a scorecard for meeting standards relating to such areas as location and transportation, materials and resources, and water efficiency, among others. The more points under the program, the higher the certification level. Although the initial LEED standards were not directly aimed at hotels, numerous hotels have sought and earned certification, Cornell said. The most recent version of the LEED standards specifically includes hotels, along with other commercial buildings.
The Cornell CHR study on LEED-certified hotels is available online at no charge at: https://www.hotelschool.cornell.edu/research/chr/pubs/reports/abstract-18084.html
