The Geography of Hotels in Cities: An Empirical Validation of a Forgotten Model

Abstract

ABSTRACT In 1968, Yokeno published a model of intra-urban location of hotels; he did not validate the model empirically. This paper argues that a hotel located in the centre of the city will charge more for a room than a hotel of the same category that is situated in the periphery. In addition to other indicators, this hypothesis was tested using the Average Room Rate (ARR), which is the average annual price paid for a room in a hotel (excluding breakfast and extras). The empirical investigation was carried out in Jerusalem and revealed that the ARR of hotels in the centre of a city's Main Tourist District is significantly higher than that of hotels located in more distant areas. The principal reason for this is that centrally located hotels cater to a higher percentage of individual tourists, who are willing to pay more for a central location. Hotels on the periphery, on the other hand, tend to cater to organized tour groups, for whom location is less of an issue. As individual tourists are charged more per room than tour operators the result is a considerable disparity in the hotels' ARR.