The relative importance of sector and regional factors in the hotel industry: Evidence from the Italian market

Abstract

Purpose

The purpose of the paper is to compare the role of the sector and geographical features in explaining the performance of a hotel structure.

Design methodology/approach

The paper constructs a measure of net profit for available room (GOPPAR) for a representative sample of Italian hotels and uses a constrained linear regression model in order to identify the role of sectoral and geographical features. The analysis is released adopting a multiple cross sectional approach and considering not only the average role of sectoral and geographic characteristic, but also the time trend of relation inspected.

Findings

Results obtained show that the overall national trend is not significant for explaining the performance of each hotel. Considering geographical and sectoral features, the first of these explain better the disalignment of the performance respect to the national average.

Research limitations/implications

The paper proposes an analysis of the hotel industry using a standard geo‐sectoral classification. More data about the characteristics of the firms considered in the sample could allow to define a more detailed model that consider also other hotel features that could impact on the demand and supply of the service.

Practical implications

Results could be useful for the hotel chains and for institutional investors specialized in the hotel sector, in order to define a first guideline for the property selection process and diversification portfolio strategy.

Originality/value

The paper represents the first work that analyse the role of regional and sectoral factors in explaining the performance of the hotel industry and supports the thesis proposed with and empirical evidence on world leading market (Italy).

Citation

Giannotti, C., Mattarocci, G. and Spinelli, L. (2010), "The relative importance of sector and regional factors in the hotel industry: Evidence from the Italian market", Journal of Property Investment & Finance, Vol. 28 No. 3, pp. 162-180. https://doi.org/10.1108/14635781011048830