Location and business creation: An analysis of the lodging sector

Abstract

Location is a very important factor analyzed by firms on creation decisions. This paper analyzes the determinants of business creation in the Spanish hospitality industry. Spanish hotels have a relevant position in the global tourism context so it can generate relevant results to other countries. By means of different econometric models, we identify the effect over both the existence of creation and the intensity. The sample consists of 8992 hotel establishments during the period 2005–2011. We have also considered data of the 97 tourist destinations that exist in Spain according to the National Statistics Institute. The results obtained identify how different tourist destinations are accessible to the entry of new competitors. Also, they point the mechanisms through which the incumbent firms reduce the entry of competitors. Main contributions are related to measurement of anti-competitive practices effect on the entry of competitors and identification the factors that act as drivers and as entry barriers to business creation.