Can nearby high-quality restaurants increase other tourism firms’ performance? Evidence from hotels

Abstract

Co-locating phenomena have been extensively observed in restaurants and hotels, but prior studies have failed to reflect the reality and nature of agglomerations. From a tourism perspective, this study clarifies how various types of agglomerations can affect hotels and demonstrates that agglomeration externalities can occur between different industries. Using combined data from restaurants (customer reviews) and hotels (hotel performance), this study proves that the quality of co-located restaurants significantly influences hotel performance in terms of occupancy, room rate, and revenue. Highquality restaurants are an essential pull factor for tourists and cause positive agglomeration effects to neighboring hotels. Furthermore, this study confirms that the positive impact of the quality of a restaurant cluster becomes stronger in full-service hotels than in limited-service hotels, as full-service hotels are more relevant as coopetitors to restaurants.