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Greener Is Not Always Pricier : Ecolabeling and Price Premium in the Tourism Industry

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  • Bello,Ridwan Bolaji
  • Kassim,Olanrewaju Malik
  • Bello,Sodiq Oladayo

Abstract

Voluntary ecolabeling programs have gained popularity in the tourism industry as initiatives for promoting ecofriendly practices among tourism firms. Yet, for these programs to appeal to firms, it is crucial that they generate positive market benefits for ecolabeled firms. This paper studies the effect of a sustainable tourism label on prices of hotel firms. It uses hotel listing data collected from Booking.com and covering more than 6,000 hotels across 10 popular European cities. The paper finds that the presence of the ecolabel is associated with a price premium of approximately 10 percent in the full sample. However, point estimates of this premium vary across cities, from a low of 1 percent in Venice to a high of 22 percent in London. As a novel contribution, the paper shows that the ecolabel delivers a quantitatively and statistically significant price premium only in cities where tourism (destination) competitiveness is high and ecolabel attainment is low. The paper discusses the implications of these findings for firms and policymakers in the industry.

Suggested Citation

  • Bello,Ridwan Bolaji & Kassim,Olanrewaju Malik & Bello,Sodiq Oladayo, 2023. "Greener Is Not Always Pricier : Ecolabeling and Price Premium in the Tourism Industry," Policy Research Working Paper Series 10552, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10552
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