Location factors and agglomeration economies in the hotel industry: the case of Spain

Abstract

Purpose – This research investigates the effect of accessibility to points of tourist interest (buffer) and direct and indirect spatial spillover effects of agglomeration economies on tourism industry revenues in Spain. Design/methodology/approach – Data were collected from the Bureau van Dijk’s (BvD) Orbis global database. The data were analysed using a spatial econometric model and the Cobb–Douglas production function. Findings – This study reveals that hotels located inside the buffer zone of points of tourist interest achieve better economic outcomes than hotels located outside the buffer. Furthermore, the results show that there is a direct and indirect spatial spillover effect in the hotel industry. Practical implications – The results provide valuable information for identifying areaswhere the agglomeration of hotels will produce a spillover effect on hotel revenue and the area of influence of location characteristics. This information is relevant for hotels already established in a destination or when seeking a location for a new hotel. Social implications – The results of this study can help city planners in influencing the distribution of hotels to fit desired patterns and improve an area’s spatial beauty. Originality/value – The paper provides insights into how investment, structural characteristics, reputation and location affect hotel revenue.