Does Green Matter for Hotels?

This is an excerpt from our recent report on the German hotel market.

Over the last few years, hotel companies have made a determined effort to deal with the impact their business activities have on the environment. Hoteliers recognise the tangible benefits in being proactive in mitigating environmental impacts including real efficiency gains and an enhanced corporate reputation. And in the hospitality industry, as in all industries, a good reputation cannot be bought, it must be earned.

Several studies have demonstrated that a hotel’s commitment to sustainability is one of the ways to increase visibility – for example via certification like Green Globe, Green Key, LEED and ISO14001. Although, according to the Greendex Survey, consumers’ value environmentally-friendly products, the links between a hotel’s sustainability measures and guests’ satisfaction are not so clear. The hotel room, facilities and food and beverage offers are still the traditional and stronger drivers of satisfaction according to the Cornell Research.

Data from Revinate pinpoints the current challenges in the continuum:

a hotel’s green initiatives -> guest engagement -> guest satisfaction -> the hotel’s reputation

Reviews including mentions such as ‘green’, ‘sustainable’ or ‘environment’ (or other similar words in various languages) represented less than a quarter percent (0.25%) of the two million guests’ reviews of German hotels over the past 12 months .

However, the hotels that either (1) actively engage in customer communication or (2) are entirely based on sustainability principles, from design to delivery, have a greater profit potential to reap the benefits of positive reviews. In the first category, hotels that promote their food options as local, organic or Fairtrade-certified tend to obtain positive reviews from their guests (“…I liked very much the topic of sustainability, which again can be found throughout the hotel.”) . Similarly, a hotel which is built with sustainability in mind such as a passive-house hotel or designed with locally-made construction material tends to be reviewed positively by guests (“…enjoy the focus of sustainability, quality of wood design, environmentally-friendly). , Fairtrade and everything for the welfare of the guest without compromise…”)

On the other hand, hotels that have an established communication on their sustainability initiatives but don’t live up to their promise in the operations are more likely to receive negative reviews on their sustainability performance. Most commonly cited: towels are replaced even when they are hung on the rack despite the info cards placed in the bathroom inviting customers to participate in the towel program (“…and even though we hung up our towels for reuse, they were replaced with new ones”). Similar negative reviews occur when breakfast items such as butter or jam are individually packed, thus creating both food and solid waste (“…too much packaging at breakfast… can be easily served without the mini pre-packed portions, prevents food waste and garbage” ).

German hotels listed as TripAdvisor’s GreenLeaders (Oko-Spitzenreiter) repeatedly outperform their competitors’ review and recommendation rates. The Green Leaders achieved an average review score of 4.47 (out of 5) over the past 12 months compared to an average of 4.06 for all German hotels. With 85% positive reviews and a 97% recommendation rate compared to 64% of positive reviews and an 88% recommendation rate, the GreenLeaders clearly surpass the average German hotels in terms of performance ratings.

While this shows overall greater performance of German GreenLeaders, it is worthwhile to mention that most of those hotels are classified as four or five star properties which tend to achieve better ratings compared to the average. The average performance ratings include all hotels, from budget to luxury properties.

We can conclude that hotels’ sustainability initiatives do not automatically translate into positive guest reviews. Hotels that communicate green initiatives without fully integrating those into daily practice risk receiving negative reviews on their sustainability performance. However, however hotels that are deeply committed to sustainability, either in terms of construction, design or operations (or all) reap the benefits of positive reviews.

Finally, the data gathered on the GreenLeaders’ performance shows a continuous above average performance in review ratings, recommendation and positive review percentages. Previous studies by David Casey and Sebastian Sieber have demonstrated that properties committed to sustainability tend to be more attentive to details with clear operational processes and motivated employees. The Revinate data for the past 12 months further support this working hypothesis that a management and team committed to sustainability at the property achieve overall greater guest satisfaction.

So, does green matter?

About the Author

Dr. Willy Legrand is Professor of Hospitality Management at the IUBH School of Business and Management in Bad Honnef – Bonn, Germany. He combines undergraduate studies in Geography and Hospitality Management followed by an MBA with a specialization in Corporate Environmental Management. Professor Legrand obtained his PhD from Manchester Metropolitan University, UK. He worked in the hospitality industry in Canada and Germany, before accepting a position at the International University Bad Honnef (IUBH) in Germany. He currently holds lectures on sustainable hospitality development and management, hospitality management and marketing at undergraduate and graduate facilities levels in Germany but also as a visiting professor at reputable universities in Singapore, India, Dubai, France, Peru and the United States.

Professor Legrand chaired sessions at the 2016 Sustainable and Social Entrepreneurship Enterprises Roundtable and the 2016 Entrepreneurship is Global Roundtable at Cornell University (presented by The Pillsbury Institute for Hospitality Entrepreneurship). He regularly participates at the Cornell Center for Hospitality Research (CHR) Sustainability Roundtables. Prof. Legrand is the lead author of Sustainability in the Hospitality Industry: Principles of Sustainable Operations (textbook’s 3rd edition released in 2016). He is the co-editor of Sustainable Hospitality and Tourism as Motors for Development: Case Studies from Developing Regions of the World and the co-editor of the Routledge Handbook of Sustainable Food and Gastronomy released in 2015. He is also a guest editor for a special issue on Social Entrepreneurship in Hospitality from the International Journal of Contemporary Hospitality Management. He recently took part at the COP21 Climate Conference in Paris in December 2015 and regularly shares his views and findings via keynote speeches on the subject of sustainability management in the hospitality industry at international conferences.

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