The geographical concentration of hotels in Switzerland and the industry life cycle

Empirical studies of numerous products and industries have shown that the evolution of variables such as the market price of a product, output and the number of competitors in an industry are non-monotonic and follow a typical pattern over the life span of that industry. The Swiss hotel industry has been experiencing stagnation, even decline, for a period of over 20 years. This can be measured in terms of arrivals, overnight stays and, perhaps most importantly, the number of firms. Thus the number of hotels in Switzerland has declined by over 10 per cent in the past decade. This decline is forecast by the life-cycle model. These models, however, tell us little about where geographically the decline would take place. The aim of this paper is, first, to verify if the evolution of the Swiss hotel industry fits some of the stylized facts of the industry life cycle. The second aim is to verify if there is evidence of geographical clustering of the hotel industry, and, by extension, of tourism. The third aim is to verify a hypothesis that the decline or final phases of
the industry life cycle will lead to greater concentration of an industry; in other words that the decline manifests itself mainly in decentralized locations.

Pre refereed version as permitted by publisher.