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Relationship between spatial agglomeration and hotel prices. Evidence from business and tourism consumers

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  • Balaguer, Jacint
  • Pernías, José C.

Abstract

In this paper we examine the relationship between number of local competitors and both the average and the dispersion of retail prices in urban hotels using a dataset from the metropolitan area of Madrid (Spain). By controlling for hotel characteristics and spatial factors, we obtained results for each of the days in one week. In line with predictions derived from the traditional monopolistic approach, empirical results consistently indicate that a greater density of competitors implies a lower average and less dispersion of local prices. Moreover, we found evidence which supports the idea that the effect of local agglomeration on average prices is particularly weaker at weekends. This, in turn, indirectly suggests that within the metropolitan area there is a greater degree of substitution in hotel locations for tourism consumers than for business consumers.

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  • Balaguer, Jacint & Pernías, José C., 2013. "Relationship between spatial agglomeration and hotel prices. Evidence from business and tourism consumers," Tourism Management, Elsevier, vol. 36(C), pages 391-400.
  • Handle: RePEc:eee:touman:v:36:y:2013:i:c:p:391-400
    DOI: 10.1016/j.tourman.2012.10.004
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    15. Balaguer, Jacint & Ripollés, Jordi, 2020. "Do classes of gas stations contribute differently to fuel prices? Evidence to foster effective competition in Spain," Energy Policy, Elsevier, vol. 139(C).
    16. Alemayehu, Fikru K. & Kumbhakar, Subal C. & Landazuri Tveteraas, Sigbjørn, 2022. "Estimation of staff use efficiency: Evidence from the hospitality industry," Technological Forecasting and Social Change, Elsevier, vol. 178(C).
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    More about this item

    Keywords

    Spatial agglomeration; Price level; Price dispersion; Hotel industry; Tourism consumers;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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