The effects of selected macroeconomic variables on the presence of foreign hotels in Croatia

Abstract

While an increasing number of hotel firms expand their operations abroad, it is not always clear how hoteliers select one country over another. Thus, the purpose of this research is to investigate the influence of inward foreign direct investment, market interconnectedness, and tourist flows on the entrance of foreign hotels in Croatia. Research was carried out via time-series analyses of the secondary data to a sample of foreign hotels from 35 countries with operations in Croatia during the 1997-2007 period. Statistical analyses were performed by way of correlation and regression. Study findings suggest that inward foreign direct investment, market interconnectedness and tourist flows are highly positively correlated with the presence of foreign hotel companies in Croatia. Additional examination is performed separately on hotels in foreign ownership and hotels operating under foreign brand, producing different results. Namely, from the host country perspective, it is difficult to analyze in the same way hotels with foreign ownership share and hotels operating under a foreign brand. Therefore, a foreign hotel is defined as either a foreign-owned hotel (i.e., a hotel present in Croatia by share of ownership above 10%) or a foreign hotel brand (i.e., by franchise or management contract, lease agreement or consortium). This is one of the few studies to explore some important macroeconomic variables that have not been considered in previous research in the international lodging sector.