IDEAS home Printed from https://ideas.repec.org/a/pes/ieroec/v14y2023i1p213-252.html
   My bibliography  Save this article

Dynamics of agglomeration and competition in the hotel industry: A geographically weighted regression analysis based on an analytical hierarchy process and geographic information systems (GIS) data

Author

Listed:
  • María D. Illescas-Manzano

    (Agrifood Campus of International Excellence (ceiA3), University of Almería, Spain)

  • Sergio Martínez-Puertas

    (Agrifood Campus of International Excellence (ceiA3), University of Almería, Spain)

  • Gema M. Marín-Carrillo

    (Agrifood Campus of International Excellence (ceiA3), University of Almería, Spain)

  • María B. Marín-Carrillo

    (Agrifood Campus of International Excellence (ceiA3), University of Almería, Spain)

Abstract

Research background: The effects of locating next to other establishments of equivalent activity is a decision with serious and far-reaching implications, not only from the point of view of location decisions but also with regard to competitive strategy, pricing, or promotion decisions. The literature provides evidence of the negative effects of being proximate to competitors (erosion of market share), but there are also benefits associated with the increased attraction of demand (attraction effect). This phenomenon is of particular interest in the case of hospitality, where hotel concentrations can be found around certain tourism resources, and is a crucial factor in hoteliers' decisions as they evaluate these contradictory effects. Purpose of the article: Drawing from the relevance that the confrontation between agglomeration and competition has in the hotel industry, our study aims to examine if this confrontation can be driven by geographical location and how both vertical and horizontal differentiation factors can unbalance it. Methods: Based on the use of geographical information systems and the estimation of a geographically weighted regression model with a wide dataset that includes 3,153 European hotels located in Spain, France and the United Kingdom. Findings & value added: We extend agglomeration and competition theoretical bodies related to location decisions by providing new findings about their simultaneous effect. Specifically, this study contributes to filling the gap regarding their combined effects on pricing and the conditions under which one prevails over the other. Results show that the role of geographical location and a hotel’s online reputation are more decisive differentiation factors than hotel category when explaining the asymmetry of the effects of agglomeration and competition.

Suggested Citation

  • María D. Illescas-Manzano & Sergio Martínez-Puertas & Gema M. Marín-Carrillo & María B. Marín-Carrillo, 2023. "Dynamics of agglomeration and competition in the hotel industry: A geographically weighted regression analysis based on an analytical hierarchy process and geographic information systems (GIS) data," Oeconomia Copernicana, Institute of Economic Research, vol. 14(1), pages 213-252, March.
    • Handle: RePEc:pes:ieroec:v:14:y:2023:i:1:p:213-252
    DOI: 10.24136/oc.2023.006
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.24136/oc.2023.006
    Download Restriction: no
    File URL: https://libkey.io/10.24136/oc.2023.006?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Shawn Mankad & Hyunjeong Spring Han & Joel Goh & Srinagesh Gavirneni, 2016. "Understanding Online Hotel Reviews Through Automated Text Analysis," Post-Print hal-02311939, HAL.
    2. Woo Gon Kim & Jun (Justin) Li & Jin Soo Han & Yunkyong Kim, 2017. "The influence of recent hotel amenities and green practices on guests’ price premium and revisit intention," Tourism Economics, , vol. 23(3), pages 577-593, May.
    3. Wilbur Chung & Arturs Kalnins, 2001. "Agglomeration effects and performance: a test of the Texas lodging industry," Strategic Management Journal, Wiley Blackwell, vol. 22(10), pages 969-988, October.
    4. Becerra, Manuel & Santaló, Juan & Silva, Rosario, 2013. "Being better vs. being different: Differentiation, competition, and pricing strategies in the Spanish hotel industry," Tourism Management, Elsevier, vol. 34(C), pages 71-79.
    5. Silva, Rosario, 2015. "Multimarket contact, differentiation, and prices of chain hotels," Tourism Management, Elsevier, vol. 48(C), pages 305-315.
    6. Matthew L. Freedman & Renáta Kosová, 2012. "Agglomeration, product heterogeneity and firm entry," Journal of Economic Geography, Oxford University Press, vol. 12(3), pages 601-626, May.
    7. Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(1), pages 3-13.
    8. Núñez-Serrano, Juan A. & Turrión, Jaime & Velázquez, Francisco J., 2014. "Are stars a good indicator of hotel quality? Assymetric information and regulatory heterogeneity in Spain," Tourism Management, Elsevier, vol. 42(C), pages 77-87.
    9. Brian T. McCann & Govert Vroom, 2010. "Pricing response to entry and agglomeration effects," Strategic Management Journal, Wiley Blackwell, vol. 31(3), pages 284-305, March.
    10. Hollenbeck, Brett, 2018. "Online Reputation Mechanisms and the Decreasing Value of Chain Affliation," MPRA Paper 91573, University Library of Munich, Germany.
    11. Erfan Rezvani & Christian Rojas, 2020. "Spatial price competition in the Manhattan hotel market: The role of location, quality, and online reputation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(1), pages 49-63, January.
    12. Anindya Ghose & Panagiotis G. Ipeirotis & Beibei Li, 2012. "Designing Ranking Systems for Hotels on Travel Search Engines by Mining User-Generated and Crowdsourced Content," Marketing Science, INFORMS, vol. 31(3), pages 493-520, May.
    13. Abrate, Graziano & Capriello, Antonella & Fraquelli, Giovanni, 2011. "When quality signals talk: Evidence from the Turin hotel industry," Tourism Management, Elsevier, vol. 32(4), pages 912-921.
    14. Darlene Chisholm & Margaret McMillan & George Norman, 2010. "Product differentiation and film-programming choice: do first-run movie theatres show the same films?," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 34(2), pages 131-145, May.
    15. Rosario Silva, 2016. "Competition and demand effects of geographic distance to rivals," The Service Industries Journal, Taylor & Francis Journals, vol. 36(1-2), pages 37-57, January.
    16. Marco-Lajara, Bartolomé & Claver-Cortés, Enrique & Úbeda-García, Mercedes & Zaragoza-Sáez, Patrocinio del Carmen, 2016. "A dynamic analysis of the agglomeration and performance relationship," Journal of Business Research, Elsevier, vol. 69(5), pages 1874-1879.
    17. David Wheeler & Michael Tiefelsdorf, 2005. "Multicollinearity and correlation among local regression coefficients in geographically weighted regression," Journal of Geographical Systems, Springer, vol. 7(2), pages 161-187, June.
    18. Arturs Kalnins & Wilbur Chung, 2004. "Resource‐seeking agglomeration: a study of market entry in the lodging industry," Strategic Management Journal, Wiley Blackwell, vol. 25(7), pages 689-699, July.
    19. Marco-Lajara, Bartolomé & Zaragoza-Sáez, Patrocinio del Carmen & Claver-Cortés, Enrique & Úbeda-García, Mercedes & García-Lillo, Francisco, 2017. "Tourist districts and internationalization of hotel firms," Tourism Management, Elsevier, vol. 61(C), pages 451-464.
    20. Gollini, Isabella & Lu, Binbin & Charlton, Martin & Brunsdon, Christopher & Harris, Paul, 2015. "GWmodel: An R Package for Exploring Spatial Heterogeneity Using Geographically Weighted Models," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 63(i17).
    21. Yee Leung & Chang-Lin Mei & Wen-Xiu Zhang, 2000. "Statistical Tests for Spatial Nonstationarity Based on the Geographically Weighted Regression Model," Environment and Planning A, , vol. 32(1), pages 9-32, January.
    22. Shan Liu & Baojun Gao & Michael Gallivan & Yeming Gong, 2020. "Free add-on services and perceived value in competitive environments: Evidence from online hotel reviews," Post-Print hal-03188230, HAL.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dolores Gallardo-Vázquez, 2023. "Attributes influencing responsible tourism consumer choices: Sustainable local food and drink, health-related services, and entertainment," Oeconomia Copernicana, Institute of Economic Research, vol. 14(2), pages 645-686, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ibrahim Mohammed & Basak Denizci Guillet & Rob Law, 2019. "Modeling dynamic price dispersion of hotel rooms in a spatially agglomerated tourism city for weekend and midweek stays," Tourism Economics, , vol. 25(8), pages 1245-1264, December.
    2. Shih‐Chuan Lin & Yoo Ri Kim, 2021. "Heterogeneous effects of hotel ownership structure changes on localized market competition using multilevel mixed‐effect analyses," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(4), pages 808-820, June.
    3. Lee, Seul Ki, 2015. "Quality differentiation and conditional spatial price competition among hotels," Tourism Management, Elsevier, vol. 46(C), pages 114-122.
    4. Linda Woo & Sung Gyun Mun & Kwanglim Seo, 2023. "How do hotels expand into new markets? The relationship between hotel agglomeration and entry mode," Tourism Economics, , vol. 29(8), pages 2183-2199, December.
    5. Ibrahim Mohammed & Basak Denizci Guillet & Rob Law & Wassiuw Abdul Rahaman, 2021. "Predicting the direction of dynamic price adjustment in the Hong Kong hotel industry," Tourism Economics, , vol. 27(2), pages 346-364, March.
    6. Siddharth Sharma & Wilbur Chung, 2022. "Demand agglomeration economies, neighbor heterogeneity, and firm survival: The effect of HHGregg's bankruptcy," Strategic Management Journal, Wiley Blackwell, vol. 43(2), pages 370-401, February.
    7. Arbelo-Pérez, Marta & Arbelo, Antonio & Pérez-Gómez, Pilar, 2017. "Impact of quality on estimations of hotel efficiency," Tourism Management, Elsevier, vol. 61(C), pages 200-208.
    8. Silva, Rosario, 2015. "Multimarket contact, differentiation, and prices of chain hotels," Tourism Management, Elsevier, vol. 48(C), pages 305-315.
    9. Puciato, Daniel, 2016. "Attractiveness of municipalities in South-Western Poland as determinants for hotel chain investments," Tourism Management, Elsevier, vol. 57(C), pages 245-255.
    10. Hyun‐Soo Woo & Albert Cannella & Luiz Mesquita, 2019. "How intra‐ and interfirm agglomeration affect new‐unit geographic distance decisions of multiunit firms," Strategic Management Journal, Wiley Blackwell, vol. 40(11), pages 1757-1790, November.
    11. Beta Septi Iryani & Muhammad Halley Yudhistira & Khoirunurrofik Khoirunurrofik & Djoni Hartono, 2024. "Conformity or differentiation? The effect of competitive strategy on hotel performance," Tourism Economics, , vol. 30(2), pages 522-538, March.
    12. Augusto Voltes-Dorta & Federico Inchausti-Sintes, 2021. "The spatial and quality dimensions of Airbnb markets," Tourism Economics, , vol. 27(4), pages 688-702, June.
    13. Cirer-Costa, Joan Carles, 2017. "Estrategias de fijación y ofuscación de precios en los hoteles de sol y playa [Pricing and obfuscation strategies for sun and beach hotels]," MPRA Paper 81823, University Library of Munich, Germany.
    14. Richard D. Wang & J. Myles Shaver, 2014. "Competition-driven repositioning," Strategic Management Journal, Wiley Blackwell, vol. 35(11), pages 1585-1604, November.
    15. Aldric Vives & Marta Jacob & Marga Payeras, 2018. "Revenue management and price optimization techniques in the hotel sector," Tourism Economics, , vol. 24(6), pages 720-752, September.
    16. Wang, Liang & Tan, Justin & Li, Wan, 2018. "The impacts of spatial positioning on regional new venture creation and firm mortality over the industry life cycle," Journal of Business Research, Elsevier, vol. 86(C), pages 41-52.
    17. Diana Gutiérrez Posada & Fernando Rubiera Morollón & Ana Viñuela, 2018. "Ageing Places in an Ageing Country: The Local Dynamics of the Elderly Population in Spain," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 109(3), pages 332-349, July.
    18. Marco Helbich & Wolfgang Brunauer & Eric Vaz & Peter Nijkamp, 2014. "Spatial Heterogeneity in Hedonic House Price Models: The Case of Austria," Urban Studies, Urban Studies Journal Limited, vol. 51(2), pages 390-411, February.
    19. Alexis Comber & Paul Harris, 2018. "Geographically weighted elastic net logistic regression," Journal of Geographical Systems, Springer, vol. 20(4), pages 317-341, October.
    20. Erfan Rezvani & Christian Rojas, 2022. "Firm responsiveness to consumers' reviews: The effect on online reputation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(4), pages 898-922, November.

    More about this item

    Keywords

    agglomeration; competition; geographical information systems; geographically weighted regression; differentiation;
    All these keywords.

    JEL classification:

    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • Z33 - Other Special Topics - - Tourism Economics - - - Marketing and Finance

    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:pes:ieroec:v:14:y:2023:i:1:p:213-252. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Adam P. Balcerzak (email available below). General contact details of provider: https://edirc.repec.org/data/ibgtopl.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.