Hedonic pricing analysis of the Norwegian hotel industry: consumers willingness to pay for environmentally certified hotels.

Abstract

With consumers becoming more environmentally conscious and governments implementing regulations to combat global warming, hotel owners need to consider making their practice more sustainable. By analyzing the Norwegian hotel industry, we estimate if the consumers are willing to pay more for a stay at an environmentally friendly hotel, than a hotel without sustainability measures. Collecting data on characteristics that influence the final price for a stay at 259 different hotels spread across Norway, we create a hedonic pricing model to calculate the implicit value of being certified as environmentally friendly. We find that consumers are willing to pay a premium of 80kr-161kr for hotels certified by Miljøfyrtårn but need 104kr-109kr in compensation to accept a hotel certified by Svanemerket.