This year's International Hospitality Investment Forum, hosted in Berlin, placed a particular emphasis on the hot topic of environmental, social and governance in hotels, how it affects performance, the corresponding impact on attracting investment and unlocking the opportunities of green financing.
Understandably sustainability is and will indefinitely remain a key part of how the hospitality sector functions, both with regards to internal operations and external brand perception.
One such way hoteliers are working to ensure that their properties are viewed as sustainable by guests is through the adoption of accreditation schemes. There are several different programs open to hotels that showcase the degree to which they prioritize ESG, primarily in their commitments to the environmental field.
Many of the world’s leading travel platforms such as Google and TripAdvisor have rolled out their own accreditation schemes. However in this analysis we shall focus on the tiered structure offered by Booking.com, the world’s largest hotel booking site. The online travel agency, owned by the wider group of Booking Holdings, has four layers of green accreditation which can be attained by compliant hotels. Each require varying degrees of investment and commitment to reduce the impact on our environment.
The key questions at this stage in the industry's journey toward a more sustainable future are:
- Where do hotels currently sit on the sustainability scale?
- What property types are paying the most attention?
- And is there any noticeable difference in performance for those that invest more heavily into a greener way of operating?
In the case of the IHIF host city Berlin, we can observe a number of noteworthy trends. The majority of hotels in the market, currently providing data to CoStar hospitality analytics firm STR, hold some form of Booking.com accreditation with just 13% not displaying the green leaf next to their listing. Unsurprisingly the most common level of certification is 1, which showcases that the property has implemented some impactful sustainability practices. The top end of the spectrum, level 3 and plus, is currently sparser with only a combined 8% of hotels fitting into this category. To achieve these levels, suggests that the property has made large investments and efforts to implement impactful sustainability practices.
March 2023 monthly data indicates that hotels with one of the four available accreditations perform better across average daily rates and revenue per available room than those that do not. In part, this can be linked to the fact that hotels at the lower end of the class scale are less likely to be certified. However, much of this success can also be associated with the fact that many guests are willing to pay more for a hotel looking to reduce its impact upon the environment. Non-accredited hotels on the list averaged 68% occupancy in March, beaten only by plus-level properties which averaged 72%. This strong demand performance for plus-level properties could be suggestive of their greater appeal to guests, through a dedication to sustainable practices.
Broken down by class, it is possible to further understand the degree to which different property types are investing in a greener way of operating. Higher-end properties have the lowest number of level 1-accredited properties, with level 2 and upward being the more prominent. With typically larger development funds, this is somewhat to be expected for properties that sit at the top end of the class scale. Economy and midscale hotels in the market, meanwhile, are the most likely to hold no accreditation.
Intent among travelers appears to be strongly in favor of adopting a more environmentally friendly means of traveling. This can be observed through findings from the recently published annual Booking.com sustainability report, which indicated that 59% of users want to filter their hotel options for those with a sustainable certification. In addition, 65% would feel better about staying in a particular accommodation if they knew it had a sustainable certification or label.
However, intent and action are two very different realities and so it is only through the continued monitoring of these trends that we will be able to understand if the buyers’ behaviors are truly reflective of their intentions.
Cameron Spence is manager of data operations at STR.
This article represents an interpretation of data collected by STR, parent company of HNN. Please feel free to contact an editor with any questions or concerns. For more analysis of STR data, visit the data insights blog on STR.com.