Impact of location on profitability in the Spanish hotel sector

This paper analyzes the impact of market structure on hotel profitability in a sample of 8992 Spanish hotels in 2005-2011, using variables relating to the hotel and tourist destination in addition to structure-conduct-performance (SCP) and Chicago School frameworks simultaneously. The results show that profitability depends largely on the market structure and the level of demand of the tourist destination and we confirm the SCP proposals. Regarding characteristics of each hotel, there are unobservable characteristics which influence on profitability and we identify the existence of economies of scale.