Public Subsidies and Development of Hotel Industry: Evidence from a Place-based Policy

Roberto Gabriele (), Enrico Tundis, () and Enrico Zaninotto ()

No 2015/10, DEM Discussion Papers from Department of Economics and Management

Abstract: This paper undertakes an ex-post evaluation of the impact of public subsidies on the performance of micro and small hotel businesses in a regional context. Several performance indicators, that cover relevant dimensions of hotel performance, were considered: the occupancy rate, the revenues per room, the degree of seasonality and the labour productivity. The empirical domain of analysis is the hotel industry in the Province of Trento (Italy) and the subsidies granted within the Provincial Law 6/99. The time window under scrutiny is 2002-2006. We use a matching approach to quantitatively assess the impacts of subsidies controlling for observable hotel characteristics, localization and intraregional touristic destination factors. In addition, we employ a Conditional Difference-in- Differences estimator to control for time invariant unobserved heterogeneity, e.g. managerial ability. Our results show that subsidized hotels compared to non subsidized ones received substantial benefit from public subsidies.

Keywords: public subsidies; regional policy; hotel industry; counterfactual models (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-ure
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