Strategic responses of the Spanish hospitality sector to the financial crisis

The 2008 financial crisis weakened the hospitality sector severely, like other industries. This paper investigates the response of the Spanish hospitality sector to the crisis by analyzing a sample of almost 70% of Madrid hotels. In particular, this research focuses on the connection between the impacts of the crisis, the measures taken to alleviate the crisis and an individual hotel's performance. The study shows that hotels that focus on high quality, brand image and a loyal customer base are best equipped to handle the crisis. Increased spending on marketing also eases the impact of the crisis. Cost-cutting measures characterize the worst performers. Contrary to the results presented in the literature, the crisis had no immediately visible negative impact upon an individual hotel's performance. Therefore, hotels should focus on quality, branding, a reliance on loyal customers and increasing marketing to counteract the crisis.

► We examined the strategic reaction of Madrid hotels to the 2008 financial crisis.
► High quality, branded hotels with a loyal customer base perform better during the crisis.
► Reactive meaures (i.e. cost-cutting) characterize worst performers.