Environmental certification and hotel market value

Shaniel Bernard,Juan Luis Nicolau

doi:10.1016/j.ijhm.2021.103129

Shaniel Bernard, Juan Luis Nicolau

Open Access

https://doi.org/10.1016/j.ijhm.2021.103129

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Abstract

To counteract the negative publicity derived from environmental impacts and avoid.potential “greenwashing” accusations, hotels resort to third-party entities to certify their commitment to the environment. The objective of this study is to analyze the effect of environmental certifications on hotels’ market value. To fill this gap in the literature, this empirical study detects all announcements of environmental awards ever made by major publicly traded hotels in the United States. The findings show that environmental certification has a positive effect on hotels’ market value (reducing the effects of the alluded negative publicity); that this positive effect is higher for first-time awards; and.that a U-shaped effect exists for subsequent awards. Managerial implications for.hotels’ engagement in environmental awards are described. • Environmental certification has a positive effect on hotels’ market value. • Environmental certification’s positive effect is higher for first-time awards. • A U-shaped effect exists for subsequent awards. • Hotel size and year of the announcement are influential variables.

Highlights

In contrast to oil, utility, and chemical companies, the hotel industry has not been traditionally labeled as a high-polluting industry; this view has changed over the years due to increased pressure from various stakeholder groups (Chan & Wong, 2006)
The results indicate that, on average, announcements of environmental awards generate positive abnormal returns two days before the official announcement
A typical environmental strategy adopted by hospitality firms is to accumulate several environmental awards to quell greenwashing allegations (Karlsson & Dolnicar, 2016) and improve their operational procedures (e.g., Chong & Verma, 2013)

Summary

Introduction

Utility, and chemical companies, the hotel industry has not been traditionally labeled as a high-polluting industry; this view has changed over the years due to increased pressure from various stakeholder groups (e.g., the public, customers, regulators, and non-governmental organizations) (Chan & Wong, 2006). Hotels consume up to 70% of their energy on heating, ventilation, and air conditioning (HVAC) operations (Goldstein & Primlani, 2012), and the average water use per guest night as discovered in Moroccan (Hadjikakou et al, 2013) and Spanish (Tirado et al, 2019) locations ranges from 208 to 594 liters To counter these environmental impacts, some hotel operators have publicly self-declared their commitment to various environmental management initiatives (Lee, Hsu, Han, & Kim, 2008; Jauhari & Manaktola, 2007), while at the same time avoiding incurring the high operational costs to tangibly carry out their obligations (Stefan & Paul, 2008)

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