Does LEED Certification Pay Off for Hotels?

Should new hotel construction focus on achieving LEED certification? Cornell University recently published the results of a new study, “The Impact of LEED Certification on Hotel Performance,” which found that hotels with LEED certification in the sustainable building program reap additional revenue when compared to non-certified hotels.

In researching how LEED certification impacts business and if it increases revenue benefits, the authors of the study compared 93 LEED-certified hotels with 514 comparable non-certified hotels. The findings include a significant “increase in average daily rates and revenue per available room for the LEED hotels.” More hotels could be included in future studies since many have only recently been certified, including Marriott, which uses LEED design in its new construction.

As a result of more high-end hotels having LEED certification, the study focused on upscale or luxury hotels; however, the increase in revenue was evident in all types of hotel properties. Common features of the hotels included in the study were their proximity to public transportation and urban-type resources.

LEED standards for green buildings started in 2000; however, hotels were not included as eligible to earn certification until 2004. Even though the number of LEED-certified hotels peaked in 2010, many construction companies are still aiming to meet the standards when building hotels.

The study was conducted because researchers found little evidence and few studies indicating a link between LEED certification and performance, especially in hotels. This study differs from others in that it focused on revenue performance rather than a cost perspective, namely reducing energy costs.

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Photo: The Aria Resort in Las Vegas, an example of a LEED-certified hotel. © Kobby Dagan/Shutterstock

One limitation of the study is that it only analyzed operating periods of two years. As a result, a question that researchers plan on exploring in the future is: Does the revenue advantage continue after two years? The answer could be the subject of future research. For now, this study represents one indicator that LEED certification is a smart move for hotel builders.

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