Location of hotel groups’

headquarters

Stanislav Ivanov

Email: stanislav.ivanov@vumk.eu

Web: http://stanislavivanov.com

Maya Ivanova

Email: maya.Ivanova@vumk.eu

INVTUR Conference, 17-19 May 2017, Aveiro, Portugal

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Dr. Maya Ivanova

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• Assistant Professor, Varna University of Management, Bulgaria

(http://vum.bg)

• CEO of Zangador Ltd. (http://www.zangador.eu)

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Dr. Stanislav Ivanov

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• Professor and Vice Rector (Research), Varna University of Management, Bulgaria (http://www.vum.bg)

• Editor-in-chief of the European Journal of Tourism Research (http://ejtr.vumk.eu)

• CEO of Zangador Ltd. (http://www.zangador.eu)

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Why do some countries have numerous local hotel groups, some of which have grown into global market leaders, while other countries do not?

Which factors influence the concentration of hotel groups’

headquarters in a few countries?

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The location of hotel groups’ headquarters is important, because:

a. It determines the applicable law in the relationship between the hotel group and the affiliated hotels

b. Cultural environment and acceptable business practices of the hotel group

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Country Hotel groups head-quartered in the country

Hotels, controlled by the hotel groups head-quartered in the country

Rooms, controlled by the hotel groups head-quartered in the country

Number Share Number Share Number Share

USA 129 39.69% 44671 47.37% 5835998 48.93%

China 32 9.85% 15252 16.17% 1776271 14.89%

Spain 30 9.23% 6151 6.52% 837066 7.02%

UK 19 5.85% 9303 9.87% 1207607 10.12%

Germany 14 4.31% 1445 1.53% 231846 1.94%

France 12 3.69% 9148 9.70% 693444 5.81%

Japan 12 3.69% 828 0.88% 187857 1.57%

Canada 5 1.54% 433 0.46% 86681 0.73%

Singapore 5 1.54% 432 0.46% 58800 0.49%

Thailand 5 1.54% 296 0.31% 45375 0.38%

Distribution of hotel groups’ headquarters by country

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Research background

• Various factors influence the location of corporate headquarters – geographic proximity to customers, suppliers, competitors, R&D centres, tax levels, favourable regulations, transportation accessibility of the site, etc (Brauerhjelm, 2004; Egger, Radulescu, & Strecker, 2013; Klier & Testa, 2002)

• In this paper we group the factors into 3 groups: hotel industry specific, tourism industry and general business environment factors (Ivanov and Ivanova, 2017)

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Research hypothesis (1)

Hotel industry specific factors:H1.1: The size of the local hotel industry is positively related to the concentration of hotel groups’ headquarters in the country.H1.2: The share of affiliated properties in the local hotel industry is positively related to the concentration of hotel groups’ headquarters in the country.H1.3: The average size of hotel in the local hotel industry is positively related to the concentration of hotel groups’ headquarters in the country.

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Research hypothesis (2)

Tourism industry specific factors:H2.1: The size of tourism industry is positively related to the concentration of hotel groups’ headquarters in the country.H2.2: The importance of tourism for the economy is positively related to the concentration of hotel groups’ headquarters in the country.H2.3: Destination’s competitiveness is positively related to the concentration of hotel groups’ headquarters in the country.

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Research hypothesis (3)

General business environment factors:H3.1: Population size is positively related to the concentration of hotel groups’ headquarters in the country.H3.2: Economy size is positively related to the concentration of hotel groups’ headquarters in the country.H3.3: Economic wealth of local population is positively related to the concentration of hotel groups’ headquarters in the country.H3.4: Level of globalisation is positively related to the concentration of hotel groups’ headquarters in the country.H3.5: Level of human development is positively related to the concentration of hotel groups’ headquarters in the country.H3.6: Level of corruption is positively related to the concentration of hotel groups’ headquarters in the country.H3.7: The concentration of hotel groups’ headquarters in the USA is much higher than in the rest of the world.

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Methodology

Dependent variables: • Share of Hotels 325 ranked hotel groups headquartered

in the country, • Share of hotels in Hotels 325 ranked groups

headquartered in the country• Share of rooms in Hotels 325 ranked hotel groups

headquartered in the country

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Methodology

Independent variables:• Hotel industry-specific factors

• Size• Characteristics

• Tourism-specific factors• Size• Importance for the economy• Destination competitiveness

• General business environment factors• Economy size• Population• Economic wealth• Level of globalisation• Human development• Corruption• Geographic region

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The six specific regression models are:

Share of hotel groups headquartered in the country:(1÷2) HotelGroupsShare=b0+b1.lnHotels+b2.lnAverage+b3.MShotels+b4.lnTourGDP+ +b5.TourGDP%+b6.TTCI+b7.lnGDP+b8.lnPPL+b9.lnGDPcapita+b10.KOF +b11.HDI+b12.CPI [+b13.USA]

Share of hotels in hotel groups headquartered in the country:(3÷4) HotelsShare=b0+b1.lnHotels+b2.lnAverage+b3.MShotels+b4.lnTourGDP+ +b5.TourGDP%+b6.TTCI+b7.lnGDP+b8.lnPPL+b9.lnGDPcapita+b10.KOF +b11.HDI+b12.CPI [+b13.USA]

Share of rooms in hotel groups headquartered in the country:(5÷6) RoomsShare=b0+b1.lnRooms+b2.lnAverage+b3.MSrooms+b4.lnTourGDP+ +b5.TourGDP%+b6.TTCI+b7.lnGDP+b8.lnPPL+b9.lnGDPcapita+b10.KOF +b11.HDI+b12.CPI [+b13.USA]

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Results (1)Outcome

Hotel industry-specific factors:

H1.1: The size of the local hotel industry is positively

related to the concentration of hotel groups’

headquarters in the country.

Supported

H1.2: The share of affiliated properties in the local

hotel industry is positively related to the

concentration of hotel groups’ headquarters in the

country.

Supported

H1.3: The average size of hotel in the local hotel

industry is positively related to the concentration of

hotel groups’ headquarters in the country.

Not

supported

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Results (2)Outcome

Tourism-specific factors:

H2.1: The size of tourism industry is positively related

to the concentration of hotel groups’ headquarters in

the country.

Not

supported

H2.2: The importance of tourism for the economy is

positively related to the concentration of hotel groups’

headquarters in the country.

Not

supported

H2.3: Destination’s competitiveness is positively

related to the concentration of hotel groups’

headquarters in the country.

Partially

supported

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Results (3)Outcome

General business environment:

H3.1: Population size is positively related to the concentration of

hotel groups’ headquarters in the country.

Not supported

H3.2: Economy size is positively related to the concentration of

hotel groups’ headquarters in the country.

Not supported

H3.3: Economic wealth of local population is positively related to

the concentration of hotel groups’ headquarters in the country.

Not supported

H3.4: Level of globalisation is positively related to the

concentration of hotel groups’ headquarters in the country.

Not supported

H3.5: Level of human development is positively related to the

concentration of hotel groups’ headquarters in the country.

Not supported

H3.6: Level of corruption is positively related to the concentration

of hotel groups’ headquarters in the country.

Not supported

H3.7: The concentration of hotel groups’ headquarters in the USA is

much higher than in the rest of the world.

Supported

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Conclusions

• Location of hotel groups’ headquarters depends on their home hotel industry size and characteristics, but is not affected by the size and importance of the tourism industry in their country

• General business environment factors do not have any impact on the location of hotel groups

• It is a matter of history, tradition and other non-specified factors why in some countries hotel groups are more concentrated (USA, Spain, China)

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Routledge Handbook of Hotel Chain Management

The most comprehensive source on hotel

chains:

46 Chapters 3 Editors 68 Contributors 18 countries 5 continents

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THANK YOU FOR THE ATTENTION!

QUESTIONS?

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