IDEAS home Printed from https://ideas.repec.org/p/arz/wpaper/eres2025_158.html

Green Premium? The Impact of Energy Efficiency on Hotel Transaction Values

Author

Listed:
  • Rene-Ojas Woltering
  • David Downs
  • Seong Wook Park

Abstract

As the real estate sector grapples with its substantial environmental footprint, quantifying the economic value of sustainability has become imperative. In fact, hospitality is the segment of the real estate industry with the highest carbon footprint. Yet, there is scant evidence assessing the presence of a “green premium” for hotels. Our paper is the first to address this shortcoming. Utilizing a dataset of 811 UK hotel transactions from 2007 to 2022, we estimate a hedonic regression model to quantify the price differentials attributed to Energy Performance Certificates (EPCs) ratings. We find a significant price premium for hotels with higher EPC ratings: a 16% premium for A and B ratings (i.e., the two highest ratings), and a 10% premium for C and above ratings, and a nearly 10% discount for D through G (i.e., the lowest ratings). These findings are indicative of the tangible economic value associated with higher degrees of energy efficiency and, perhaps more importantly, suggest increased investor attention to energy efficiency.

Suggested Citation

  • Rene-Ojas Woltering & David Downs & Seong Wook Park, 2025. "Green Premium? The Impact of Energy Efficiency on Hotel Transaction Values," ERES eres2025_158, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2025_158
    as

    Download full text from publisher

    File URL: https://eres.architexturez.net/doc/oai-eres-id-eres2025-158
    Download Restriction: no
    File URL: https://architexturez.net/system/files/eres2025_158_paper_P_20250115175530_0402.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arz:wpaper:eres2025_158. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Architexturez Imprints (email available below). General contact details of provider: https://edirc.repec.org/data/eressea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.