Hotel location in tourism cities -: Madrid 1936-1998

To determine how the positioning of new hotels is affected by the distribution of similar incumbent competitors, this paper investigates geographic location, price, size, and services. With data on all 240 hotels operating in the city of Madrid between 1936 and 1998, a model of geographic and product location at the time of the hotels' foundings is estimated based on the above mentioned variables. These are Simultaneously determined and contingent upon the changing socioeconomic and urban circumstances of the city. The findings suggest that agglomeration occurs only among differentiated establishments. In the balance between agglomeration and differentiation strategies, particularly significant is the trade-off between price and geographic dimensions.