Cornell Study Concludes LEED Certification Bolsters Hotel Revenue

ITHACA, NY—A study by Matthew Walsman, Rohit Verma and Suresh Muthulingam called “The Impact of LEED Certification on Hotel Performance” from Cornell University, located here, 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 rates and revenue per available room for those hotels that were LEED certified.

Verma, the Singapore Tourism Board Distinguished Professor at the School of Hotel Administration, stated: “The hotel industry has embraced environmental sustainability and several hotels have registered for or earned ‘green’ certification under the LEED program. 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.”

The study compared 93 LEED-certified U.S. hotels’ performance to 514 comparable competitors. The authors completed this report by analyzing comprehensive hotel performance data provided by STR, a partner of CHR. Walsman, a doctoral candidate in Service Operations Management at the School of Hotel Administration, pointed out that many of the hotels had been recently certified, so the study could compare their revenue experience for a period of only two years.

He stated, “We’ll have many more hotels to study in the future since companies like Marriott have now included LEED as part of their own design specifications for new constructions.”

The authors found that the revenue benefit applied to hotels of all types, though most hotels involved in the study were upscale or luxury properties in urban or suburban areas. Verma said, “This makes sense, because many of the LEED standards involve a hotel’s connection to public transit or other resources typical of urban areas.”

The study is available at no charge from the Cornell Center for Hospitality Research (CHR) at the School of Hotel Administration.