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Does LEED Certification Improve Hotel Revenue?

October 7, 2014 | 5 comments

A new study from Cornell University’s School of Hotel Administration – The Impact of LEED Certification on Hotel Performance – supports what some sustainability professionals have been saying for years about LEED’s effect on commercial buildings (including increased revenue).

In hotels with LEED certification from the USGBC, Cornell’s study found increases in average daily room rates, as well as in revenue per available room. Ninety-three LEED-certified hotels were compared to a group of 514 comparable (but non-certified) hotels. These hotels had similar structure, size, and environmental parameters.

The comparisons were made using 2007 to 2012 data gathered by STR (a firm that records average daily room rates, occupancy levels, and revenue for most U.S. hotel chains). Once this information was gathered, then the revenue, occupancy rates, and daily room rates for the two sets of buildings were compared.

According to Cornell University, this study was the first in a series of two projects. The purpose of this initial research was to test the impact of LEED on hotels; the second project will involve possible explanations as to why LEED certification is impacting average daily room rates and revenue per available room.

A few interesting notes about the study’s findings:

  • The LEED-certified hotels involved in this analysis included 65 new buildings and 28 renovated buildings
  • While the occupancy rate for LEED-certified hotels was slightly under the occupancy rate for non-LEED hotels, the average daily room rate and revenue per average room were both higher
  • On average, the average daily room rate for LEED hotels was $10 higher than non-LEED hotels; the revenue gained per average room was $20
  • Revenue benefit applied to hotels of all types, but most hotels involved in the study were upscale or luxury properties in urban or suburban settings
  • LEED hotels outperformed their competitors in the study for two years following certification (the survey only measured the first two years after certification)

What do you think about the results of this study? Why are LEED-certified hotels earning higher average daily room rates?


  1. AHMED
    October 11, 2014

    Better indoor environmental condition and people environmental awareness and desire for sustainability has a lot to do with it.
    Also reduction in consuming supplies and energy in LEED hotels help in revenue increase overall.

  2. Larry Weber
    October 12, 2014

    I doubt the finding. Comparing 93 LEED hotels (65 of which are new) to 537 non LEED I doubt that 2/3 of the non LEED hotels are new. To me the study shows that new properties trend to generate higher REV PAR. The study said LEED hotels are built in higher price markets which again naturally garnish a higher REV PAR.
    LEED is expensive to build and the justification to commit to LEED has to be based on the local energy cost. Many markets in US the additional construction cost cannot be justified.

  3. Vista
    October 13, 2014

    Thanks, Larry. You make some valid points. Anxious to see some follow-up from them on this.

  4. Mike W
    October 14, 2014

    Hmm… maybe. It depends on numerous variables. Let me give an example via a first hand experience I had several years ago attending a conference at Univ. Maryland. When I arrived at the LEED rated hotel adjacent to the UM the A/C was blasting it was ~68 degF outside in felt like < 58 degF inside. Thought I had walked into a meat locker. Being a former energy manager I took action by turn off the energy wasting through the wall PTAC unit and opened the window slightly. Soooooo, every owner (decision maker) has to grapple with the value equation and should make some estimation of the advantages and disadvantages of any decision. And, of course, the implementation of those decisions may or may not workout as intended (designed). Sooooo, as is often said, "The devil is in the details." however since I am trying harder to be positive I will rephrase the quote, "The value/benefits (i.e. energy savings, cost avoidance, other tangibles, intangibles, etc.) are in the design, construction, operation and maintenance (a.k.a. DETAILS)"

  5. Vista
    October 14, 2014

    Mike, great perspective! Estimation is one thing, but following through with correct design, construction, operation, and maintenance is critical. Thanks for your input!

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