Abstract
The greening of the hotel industry has been identified as important to the industry for a multitude of reasons. Most importantly, being identified as a green property may lead to enhanced profits. Milton Friedman’s 1962 property rights argument, the theoretical framework used in this study, stated the sole purpose of an organization such as a hotel is profit. Conveying a property’s green qualities is difficult though. Certification has been identified as one important method for conveying a property’s green attributes. Yet, the role green certification can play in a hotel’s profit is not known. This study seeks to identify the profits gained from earning a specific green certification: Green Key Global. This certification program is North America’s most popular with more than 3,000 participating hotels. The data used to make inferences regarding profitability stemming from Green Key certification has been gleamed from recent STR and HVS data. The data focuses on the largest hotel markets in Canada: Toronto, Montreal, and Vancouver. The upper upscale and luxury properties in this city are compared using STR metrics (e.g. occupancy, supply, demand, Rev PAR, and ADR).
Highlights
The greening of the hotel industry is important
The study focuses on financial attributes of earning certification rather than whether a hotel is green or not. This is because hoteliers are not focused on greening so much as return on investment (ROI) in relation to certification programs
This study identifies the correlation between achieving Green Key Global certification and ROI
Summary
The greening of the hotel industry is important. First, some studies have shown hotels accepting an environmental stewardship narrative have shown increased profitability; such studies include industry partners Travel Industry Association of America, Orbitz, Travelocity, and Cone Roper [1]. The study focuses on financial attributes of earning certification rather than whether a hotel is green or not This is because hoteliers are not focused on greening so much as return on investment (ROI) in relation to certification programs. The data used to identify the correlation, or lack thereof, between properties earning Green Key certification and properties not earning this certification comes from Smith Travel Research (STR), HVS Global Hospitality Services, and Green Key Global. The data from this unique partnership makes this study unique and provides insights that have not previously been published
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