Pinnacle Advisory Group


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What Does LEED Certification Mean to the Hotel Industry? Presented by: Christine Brown

Presented by Christine Brown

LEED certification is a growing trend and concern among hotel developers, architects, hotel brands and consumers. Developed by the United States Green Building Council (USGBC), the Leadership in Energy and Environmental Design (LEED) Green Building Rating System takes into consideration environmental and human health issues in determining hotels and other buildings to be environmentally-friendly. To earn LEED certification, a building is awarded points for satisfying certain green requirements in six categories- Sustainable Sites, Water Efficiency, Energy & Atmosphere, Materials & Resources, Indoor Environmental Quality and Innovation in Design. The number of points the building has earned then categorizes it as one of the following-Certified, Silver, Gold or Platinum.

According to the USGBC, LEED-certified buildings:

  • Lower operating costs and increase asset value;
  • Reduce waste sent to landfills;
  • Conserve energy and water;
  • Are healthier and safer for occupants;
  • Reduce harmful greenhouse gas emissions;
  • Qualify for tax rebates, zoning allowances and other incentives in hundreds of cities; and
  • Demonstrate an owner’s commitment to environmental stewardship and social responsibility.

Does it cost a premium to develop LEED hotels?

Historically it was believed that there is a cost associated in building a LEED-certified hotel; however, it is arguable if this cost differential exists in today’s construction market. The USGBC reports that as of 2007, the cost to develop a green hotel, if any, is only one to two percent above that of a conventional hotel’s cost. When developers begin the process of constructing or renovating a hotel using LEED designers and materials from the onset, costs can be minimized. Much of the initial premium on materials and labor can be recouped through incentive payments by the local government and higher room rates charged for the finished product, as guests who believe in environmental sustainability are often happy to pay a premium for a product that supports such beliefs. In addition to higher room rates, hotels are often able to gain a competitive advantage over other hotels by offering recycling, energy-saving measures, low-emission wallpaper, and the like to appeal to environmentally-conscious consumers.

In addition to selling more room nights at potentially higher rates, LEED-certified buildings typically save 30-50 percent in energy usage, 35 percent in carbon emissions, 40 percent in water emissions, and 70 percent in solid waste. Re-sale values for LEED-certified buildings are often higher than comparable buildings that are not green. Other benefits of LEED buildings are not as easy to measure; better air quality within buildings may lead to higher productivity levels for employees and happier guests of the hotel.

Although many hotels have not been built in accordance with LEED standards, there has been a conscious effort toward going “green” in hotels. Currently there are only eight hotels in the U.S. that are LEED-certified, but over 100 more hotels have made their intentions known to become LEED-certified. Green hotels offer recycling options, water-efficient toilets and faucets, energy-saving lighting, and recycled paper goods; many hotels have even begun to clean guestrooms and public space with non-toxic cleansers. But is this crucial to a hotel’s success? To have a competitive advantage in today’s lodging market, is it vital to build a hotel that is LEED-certified, or at the very least, environmentally “green”? Once guests and developers see that going green will not compromise design or comfort, we may see that this is a trend in the lodging industry that is here to stay.