International hotel groups and regional development in Central and Eastern Europe

Abstract

The influence of expanding hotel companies on economic development in host countries is one of the most under-researched aspects of the globalisation of the hotel industry. Aiming to contribute to this agenda this paper focuses on the expansion of international hotel groups into Central and Eastern Europe (CEE) after 1989 and enquires into their influence on economic upgrading in CEE following the fall of communism. The paper is grounded in the global production network (GPN) perspective and selected assumptions of evolutionary economic geography (EEG), a combination of which is argued here to be an effective theoretical platform from which the targeted set of processes can be addressed. The paper proposes a framework for analysing the influence of the hotel industry on regional development in host economies. Four areas of influence are distinguished: direct investment and infrastructure upgrading; employment creation; knowledge transfer; and forging local linkages. The first three of them are then analysed in more detail on the basis of Poland, Estonia and Bulgaria. It is demonstrated that the influence of hotel groups on regional development hinges upon the business model preferred by the group for a given hotel and, depending on various place-specific factors, it may have different manifestations in different markets. The paper also shows that it is often other actors from hotel groups’ GPNs, rather than hotel groups themselves, that play a key role in creating and enhancing the value which the region captures and in influencing the path of development which the region follows.