Critical External Factors behind Hotels' Investments in Innovation and Technology in Emerging Urban Destinations

Abstract

The decision-making processes of tourism firms are being conditioned by the profound transformations taking place in both client demand and destination dynamics. This new scenario requires an increased level of information, innovation and technology if tourism firms are to remain competitive. In particular, information and communication technologies (ICTs) can provide competitive advantages by improving a firm's knowledge of its own internal structures and of the milieu in which it is operating. This study therefore identifies and analyses the critical external factors that influence innovation and ICT investment in hotel businesses by evaluating the impact of hotel investment strategies. The methodological approach taken is an adaptation of the PESTEL model to the particular case of hotel management. This model identifies the factors (political, economic, social, environmental, technological and legal) that affect any given organization. The authors also apply Porter's ‘five forces model’, which assesses the competitive environment in which firms act, taking into account the power of buyers, intermediaries, current and potential competitors and substitutive products. The study area is the region of Madrid (MAC), since this has only lately emerged as a major tourist destination and its hotel market is recent and of medium to high quality.

Keywords

critical external factors ICT hospitality sector innovation impacts PESTEL model Porter's five forces model

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