Do regional factors matter? Determinants of hotel industry performance in China

The hotel industry is deeply embedded in local regional conditions, though the influence of regional factors is seldom investigated. Three key hotel industry metrics, Revenue per Available Room (RevPAR), Average Room Rate (ARR), and rooms rented, were examined for their determinants using ordinary least squares and negative binomial regression models on key endogenous and exogenous (regional) factors, including Destination Attractiveness and Capacity, Business and Commercial Environment, Image and Openness, and Tourism Professional Specialization. Using China as a case study, and at different hotel star designations (2- to 5-star hotels), the results show that RevPAR is determined mainly by labor quality and Tourism Professional Specialization. Particularly, regional factors significantly affect ARR and rooms rented. The influence and sophistication of regional factors increases with higher star designations. This paper highlights links between the hospitality industry and regional economic development, which should be considered by both the hotel industry and tourism policy makers.