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Survival in the lodging sector: An analysis at the firm and location levels

•The tourist destinations where the hotels are located influence their survival.•The risk of hotel closure increases during the first fifteen years of activity.•A high occupancy rate of a tourist destination can reduce the risk of failure by up to 80%.•A low level of competition in a tourist destina...

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Bibliographic Details
Published in:International journal of hospitality management 2016-10, Vol.59, p.19-30
Main Authors: Lado-Sestayo, Rubén, Vivel-Búa, Milagros, Otero-González, Luis
Format: Article
Language:English
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Summary:•The tourist destinations where the hotels are located influence their survival.•The risk of hotel closure increases during the first fifteen years of activity.•A high occupancy rate of a tourist destination can reduce the risk of failure by up to 80%.•A low level of competition in a tourist destination reduces the expected survival.•The average profitability in a tourist destination can reduce the probability of failure by up to 10%. this paper studies the determinants of survival of 6494 Spanish hotel firms located in 97 national tourist destinations in the period 2005–2011. The characteristics of the firms and the tourist destinations where they are located have been studied through survival analysis techniques. This is relevant because the impact of the financial and economic crisis on the Spanish lodging sector has shown different effects among tourist destinations. The results confirm that the location significantly affects the probability of survival. In particular, the main determinant of firm survival is the level of occupancy in a tourist destination which has a positive effect. Also, we have found that a low level of competition reduces the average expected survival while the average profitability of a tourist destination has a positive effect on firm survival. Finally, the total effect related to destinations factors can reduce the expected survival by up to 90% (hazard ratio).
ISSN:0278-4319
1873-4693
DOI:10.1016/j.ijhm.2016.08.005