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Profitability in the hotel sector: a PLS approach

Profitability in the hotel sector: a PLS approach The purpose of this paper is to analyse the determinants of hotel profitability through the application of a least squares path modelling (PLS) and to deepen the study of their heterogeneity through clustering techniques.Design/methodology/approachAn eclectic model that incorporates the dimensions identified as determinants of profitability in the previous literature is estimated by means of PLS. Subsequently, in a second stage the hotels are classified using clustering techniques to study which combination of hotel characteristics, location, competitive environment and tourist destination achieve higher profitability.FindingsThe results show that hotel characteristics, hotel location, competitive environments and tourist destination factors impact on the hotel performance. Also, the results highlight that the eclectic model proposed have to be further developed in future studies, incorporating more theoretical constructs and variables.Research limitations/implicationsThe results contribute to identify and quantify the determinants of profitability in the hotel sector and which combination of them achieve higher profitability. Moreover, this paper provides new evidence to support an eclectic theory of profitability determinants in the hotel sector. Consequently, this paper claims the need of a deeper integration of different areas of expertise to analyse hotel profitability.Originality/valueThis research is the first empirical evidence that proposes an eclectic model and uses clustering techniques in the study of profitability differences considering simultaneously hotel characteristics and its location. The variables used allow to measure different aspects of the attributes of the hotel and its location. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Hospitality and Tourism Technology Emerald Publishing

Profitability in the hotel sector: a PLS approach

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1757-9880
DOI
10.1108/jhtt-10-2017-0118
Publisher site
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Abstract

The purpose of this paper is to analyse the determinants of hotel profitability through the application of a least squares path modelling (PLS) and to deepen the study of their heterogeneity through clustering techniques.Design/methodology/approachAn eclectic model that incorporates the dimensions identified as determinants of profitability in the previous literature is estimated by means of PLS. Subsequently, in a second stage the hotels are classified using clustering techniques to study which combination of hotel characteristics, location, competitive environment and tourist destination achieve higher profitability.FindingsThe results show that hotel characteristics, hotel location, competitive environments and tourist destination factors impact on the hotel performance. Also, the results highlight that the eclectic model proposed have to be further developed in future studies, incorporating more theoretical constructs and variables.Research limitations/implicationsThe results contribute to identify and quantify the determinants of profitability in the hotel sector and which combination of them achieve higher profitability. Moreover, this paper provides new evidence to support an eclectic theory of profitability determinants in the hotel sector. Consequently, this paper claims the need of a deeper integration of different areas of expertise to analyse hotel profitability.Originality/valueThis research is the first empirical evidence that proposes an eclectic model and uses clustering techniques in the study of profitability differences considering simultaneously hotel characteristics and its location. The variables used allow to measure different aspects of the attributes of the hotel and its location.

Journal

Journal of Hospitality and Tourism Technology – Emerald Publishing

Published: Dec 6, 2018

Keywords: Location; Partial least squares; Hotel; Profitability

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