Impacts of star-rated hotel expansion on inbound tourism development: evidence from China

ABSTRACT

This article applies heterogeneous firm trade theory, developed for the manufacturing sector, to the hotel and tourism industry to detect expansion among star-rated hotels in the context of inbound tourism development at the macro level. This article adopts both a traditional ordinary least squares (OLS) panel model and a threshold panel model using data from 31 administrative regions (provinces) in China during the 2004–2013 period. The results reveal remarkable and significant nonlinear relationships between star-rated hotel expansion and inbound tourism development, thereby offering sound evidence supporting the research hypotheses. Star-rated hotel expansion in most provinces clusters in the standardized threshold between 0.48 and 0.83, while only a few hotels have realized ‘leapfrog development’ thus far. In addition, as in the particular case of star-rated hotels, inbound tourism development should be promoted through investments in human resources rather than through the exploitation of natural tourism resource endowments. The implications of our results are that rational development plans can be made according to different expansion levels of star-rated hotels in corresponding regions, when both hotel labour productivity and macro tourism environment are considered.

KEYWORDS:

• Star-rated hotel expansion
• inbound tourism development
• heterogeneous characteristic
• China

JEL CLASSIFICATION:

• L83
• F23
• R58
• L88

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the High-level Papers Project of China University of Mining and Technology [grant number 2012LWB19]; Jiangsu Province Graduate Research & Innovation Project [grant number KYZZ_0383]; National Natural Sciences Fund Project [grant number 71273259], [grant number 71303234], [grant number 71403269]; China Humanities and Social Science Fund Project of Ministry of Education [grant number 13YJC630058]; China Post-doc Research Foundation [grant number 2012M510142].