ITHACA — As hotels around the world work to improve their sustainability and reduce their carbon footprint, those efforts don’t appear to have an effect, either way, on their sales and bookings. That’s according to a new study from two professors at Cornell University’s School of Hotel Administration (SHA). Howard Chong, assistant professor of economics […]
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ITHACA — As hotels around the world work to improve their sustainability and reduce their carbon footprint, those efforts don’t appear to have an effect, either way, on their sales and bookings.
That’s according to a new study from two professors at Cornell University’s School of Hotel Administration (SHA).
Howard Chong, assistant professor of economics and sustainability, and Rohit Verma, professor of service operations management, conducted the analysis for the study.
The Cornell Center for Hospitality Research published the study, entitled “Hotel Sustainability: Financial Analysis Shines a Cautious Green Light,” and presented the report on Oct. 18 at the 2013 Sustainability Roundtable at the SHA.
To conduct their analysis, Chong and Verma used a database that Sabre Holdings, including the website Travelocity.com, maintains.
Southlake, Texas–based Sabre Holdings is a global, travel-technology company serving the travel and tourism industry.
The report is part of a series of studies the school has been conducting over the last four years, says Verma, who worked with Chong on the analysis for much of 2013, he says.
To answer the question of whether implementing sustainable measures hurts or helps revenues, the study used data that Sabre provided to determine any effect widespread advertising of eco-certified hotels had on bookings, according to the report’s executive summary.
When Travelocity started including a “green leaf” insignia on its listings, Chong and Verma figured it represented a “great” opportunity to analyze the data as an experiment because the leaf meant “a new piece of information for the customers,” Verma says.
“They [customers] can get influenced by it either in a positive way or negative way,” he adds.
Sabre’s Travelocity site uses an eco-friendly hotel label to flag hotels that have earned any of a dozen environmental certifications, including Leadership in Energy & Environmental Design (LEED) and Energy Star, a voluntary program of the U.S. Environmental Protection Agency.
Based on an analysis of millions of individual bookings in more than 3,000 eco-certified hotels and a comparison group of 6,000 properties, the study found that, on average, booking revenue neither increased nor decreased for the certified hotels, says Verma.
The analysis doesn’t address the situation of any individual hotel, but the authors can conclude that going green is compatible with existing quality standards of hotel service, according to the report’s executive summary.
The authors also concluded 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 decline. In short, green is not a “silver bullet” strategy, according to the executive summary.
Finally, although the average effect is revenue neutral, individual properties have widely varied experiences with eco-certification, depending on their individual situation, according to the report summary.
The work of Chong and Verma was subject to blind-peer review, meaning their supervisor submitted the report to several people in industry and academia who review the work without knowing the identity of the authors.
The hotel industry has “moved ahead with sustainability,” Chong said in a news release on the website of the Cornell Chronicle, which publishes daily news about research, outreach, events, and the Cornell community.
“…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 … from sustainability,” Chong said.
Chong and Verma have also conducted a similar study using data from Westlake Village, Calif.–based J.D. Power and Associates, a global marketing-information services company that provides customer-satisfaction research.
In that study, they wanted to find out if sustainability measures had any impact on customer-satisfaction ratings, Verma says.
“And what we found again is that, on average, for some people maybe it goes up if they’re more sustainable, for some it goes down, but on average, the effect is neutral,” he adds.
Contact Reinhardt at ereinhardt@cnybj.com