With global warming gradually becoming a hotter topic – pardon the pun – focus is intensifying on the impacts and responsibilities of specific industries. Travel and the role that accommodations play are understandably under particular scrutiny. As a result, travellers are seeking ways to identify sustainable options. Hosts also wish to make better choices and be highlighted as such. Rises in energy/operational costs for property managers and owners – and in some cases charges passed on to guests – provide further motivation. So, how sustainable are short-term rentals? Do sustainable listing badges increase short-term rental occupancy?
As guests and hosts alike seek to make environmentally conscious choices, OTAs (online travel agencies such as Booking.com, Airbnb and Vrbo) are beginning to introduce badge schemes; also in an attempt to encourage both hosts and guests to reduce their carbon footprints. We have taken properties with and without Booking.com sustainable listing badges and their performance data to conduct an analysis of the benefits of the badges and answer the following questions:
- What are OTA sustainable listing badges?
- Which region’s vacation rentals are most eco-conscious?
- Which country has the most sustainable short-term rentals?
- Do short-term rental listings with sustainability badges charge higher rates?
- Do short-term rental sustainability badges increase occupancy?
What are OTA sustainable listing badges and how do they work?
Idealistically, the mission for everyone is to make greener choices (admittedly the truth varies somewhat). However, across most walks of life, this path can be littered with confusion, obstacles and greenwashing – and hospitality is no different. Several reports have suggested that consumer desire for sustainable options is there (even in the face of increased costs), but the ability to make those choices is hampered.
Back in November 2021, Booking.com announced ‘the inaugural launch of its Travel Sustainable badge, a credible, globally relevant sustainability measure that will provide highly coveted information to travellers all over the world looking to make more sustainable travel choices.’
In order to qualify for the badge, properties are required to meet a requisite impact threshold for their destination across a combination of sustainable practices. These practices comprise five key areas defined in conjunction with industry experts: waste, energy and greenhouse gases, water, supporting local communities and protecting nature. Once qualified, the intention is that the displaying of the badge will bring credibility to impactful sustainability efforts made by properties worldwide. This credibility in turn provides guests with a recognisable and consistent way of identifying more environmentally friendly stays.
The hope is that this will ultimately convert more owners and property managers to more sustainable practices as impact to occupancy and revenues are documented. Furthermore, paying towards a greener travel industry, and planet. Thankfully word is that Booking.com will not be the last OTA to implement such a system. However, since they are the first, we want to analyse the impact of Booking.com sustainable listing badges. And so, we begin with the uptake worldwide…
How much uptake have booking.com sustainable listing badges seen?
Over the past year that the program has been active, our sample of listings (156,000) indicated that 15% of properties had been awarded a badge. We will repeat this analysis in the future to monitor any change, especially once other OTAs begin to introduce similar systems.
Which region’s vacation rentals are most eco-conscious?
Perhaps unsurprisingly, North America has the lowest proportion of its properties enrolled in the sustainable listing badges program. At 8%, it comes in with more or less half the share of its counterparts and the 15% global average. Interestingly, Latin America, Middle East and Oceania top the pile with 19% of listings holding the badge. Asia pips Europe to 4th place. It is worth remembering the words above – required to meet a requisite impact threshold for their destination. Thresholds vary and geography may well skew the difficulty of becoming eligible at this early stage, so it is worth keeping an eye on this!
Which country has the most sustainable short-term rentals?
Next we drill down to country level. First, the US comes in with a measly 6%. This 6% clearly underpins the overall 8% level in North America above, indicating that Canada is doing better than south of the border! Next, Italy appears to be pulling the European average up, bettering Spain, the UK and France, which whilst not exceptionally low, are below average.
Australia and Mexico are the other stand out nations, with 18% and 17% of listings respectively upholding environmentally friendly practices and holding the sustainable listing badge.
Do sustainable listing badges increase short-term rental occupancy and ADR?
Here is where things get interesting.
The program may be in relative infancy, but with the idea spreading across other platforms and general consciousness, sustainable listings are already recording higher occupancy than their unbadged competition. You may well scoff at 2%, but that is equivalent to an extra week booked over the course of a year, which as we all know, adds up! We predict this chasm to grow further as the program and awareness mature.
Interestingly, ADR has not followed suit. In fact, ADR is actually lower for sustainable properties. The difference is 7 USD, so again not huge, but again adds up. There could be several reasons for this. Most notably, it is very likely that the majority of the badged listings are younger on average as new sign ups will have been confronted with the program upon set up, and prices tend to be proportionally less mature in fresh listings. Of course the other thing to say is that there is perhaps untapped potential in the prices of badged listings.
Increase short-term rental occupancy with sustainable listing badges
There are growing independent options outside of OTAs also, such as Sustonica:
The challenge for a sustainability certification that provides value for both travellers and providers, is that it needs to be independent, specific for vacation rentals and unique. There are around 200 hotel certifications and now OTAs are introducing badges. This is very confusing for travellers and a headache for providers.
Since the demand for sustainable travel options is growing rapidly, our vacation rental industry needs to rally under one certification banner – and not make the same mistake as hotels. This is why we created Sustonica. The more providers that subscribe this year, the faster we will get recognised as the unique and recognisable standard by investors, providers, OTAs and travellers.
And also help and resources to guide you – this month EnviroRental launches.
What is clear from OTA survey data and the introduction of eco badging is that sustainability in travel is here to stay. Travellers are increasingly seeking greener stays and hosts will need to respond to this shift. The problem is that vacation rental professionals are confused about what to do and where to start. This uncertainty creates delays that we can’t afford.
EnviroRental has launched to deal with that uncertainty. It is a one-stop-shop of free resources for short-term rentals including an eco roadmap, blogs, webinars, case studies, news podcasts and much more.
There is business in being sustainable. Switch to it before your competitor does!
Once again, it’s early days and as awareness grows and badges become more competitive amongst managers (think Airbnb Superhost), there will be a premium associated with them. Slight increases in occupancy are a good early sign, and we will review progress in the months to come. In the meantime, why not lead the charge? Chase the extra week of occupancy and why not try to lift those prices slightly with a badge? Most importantly, chase a more sustainable short-term rental option!
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