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Business agglomeration in tourist districts and hotel performance

Bartolomé Marco-Lajara (Department of Business Management, University of Alicante, Alicante, Spain)
Enrique Claver-Cortés (Department of Business Management, University of Alicante, Alicante, Spain)
Mercedes Úbeda-García (Department of Business Management, University of Alicante, Alicante, Spain)

International Journal of Contemporary Hospitality Management

ISSN: 0959-6119

Article publication date: 4 November 2014

Abstract

Purpose

The present paper aims to analyze how the performance of hotels located on the Spanish Mediterranean coast (peninsular and Balearic) and Canary coast is affected by the degree of business agglomeration in tourist districts. If agglomeration affects hotels positively, then the externalities generated in tourist districts will be relevant when locating an establishment. Otherwise, the reason why hotels group together geographically would be more related to the suitability of beaches as a tourist destination. The study also analyzes the impact that regions or autonomous communities have on hotel performance.

Design/methodology/approach

The hypotheses are tested by multiple linear regression in which hotel profitability acts as the dependent variable which can be explained by independent variables such as the greater or lesser agglomeration of tourist companies at the destination and the autonomous region where the hotel is located.

Findings

The results show that hotels situated at destinations with a higher degree of agglomeration are less profitable, probably due to the greater rivalry that exists among nearby competitors. However, in accordance with the theory of tourist districts, one could expect hotels located at destinations with a higher degree of agglomeration to be more profitable because of the greater externalities generated within the district. In this sense, it is possible that hotel location decisions were based more on the natural advantage model, where firms look for specialized inputs like beach or climate, than on production externalities models.

Research limitations/implications

It was necessary to work with secondary information sources which contain no data about RevPar (revenue per available room) or GopPar (gross operating profit per available room), the hotel profitability measures most often used in research studies.

Practical implications

The paper could be useful for hotel companies, when they are deciding on a location, and for public administrations.

Originality/value

The present paper is original for several reasons. First, it is one of the first studies which applies the theory of industrial districts to the tourism sector, a line of research which is still in its early stages of development. Furthermore, the ISTAT methodology is applied for the first time to the identification of Spanish tourist districts. Also, various studies relate the degree of agglomeration to hotel profitability, but none so far have used the degree of company agglomeration within a tourist district, linking it to profitability.

Keywords

Acknowledgements

The authors wish to express their enormous gratitude for the support received from the Spanish Ministry of Industry and Competitiveness to write this paper within the framework of the project TRACE2009_0200. That project had as its aim to design and implement a system of strategic indicators for the tourism industry in the Valencian Region (Spain).The authors would like to equally acknowledge the collaboration provided by all the members of the research team that was in charge of the project, whose ideas turned out to be highly useful to carry out and complete this study.

Citation

Marco-Lajara, B., Claver-Cortés, E. and Úbeda-García, M. (2014), "Business agglomeration in tourist districts and hotel performance", International Journal of Contemporary Hospitality Management, Vol. 26 No. 8, pp. 1312-1340. https://doi.org/10.1108/IJCHM-07-2013-0319

Publisher

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Emerald Group Publishing Limited

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