Quantitative Approaches for Location Decision Strategies of a Hotel Chain Network

Abstract

Accommodation revenue and demand are affected by hotel location, leading a lot of research to perform theoretical, empirical and operational approaches to analyze and determine the ideal location of hotels. However, operational approaches such as mathematical modeling based optimization have not received sufficient interest in hotel location research while it has been widely used for various kinds of facility locations. Therefore, two mathematical models for opening of new hotels and the closing of existing hotels to a manage hotel chain network are developed using the demand estimation and existing hotel information. In this research, hotel demand is estimated based on the accessibilities to sightseeing, transportation, business points, and market share. Gaining and/or losing of demand and the agglomeration effect are introduced as the objective of two models. Proposed mathematical models are tested to design a hotel chain network with the real data in Seoul, Korea.