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

Jacint Balaguer and José C. Pernías

Tourism Management, 2013, vol. 36, issue C, 391-400

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.

Keywords: Spatial agglomeration; Price level; Price dispersion; Hotel industry; Tourism consumers (search for similar items in EconPapers)
JEL-codes: D43 L11 L83 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:touman:v:36:y:2013:i:c:p:391-400

DOI: 10.1016/j.tourman.2012.10.004

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