Your Room is Ready: Tourism and Urban Revival

61 Pages Posted: 30 Jan 2024 Last revised: 12 Nov 2024

See all articles by Alberto Hidalgo

Alberto Hidalgo

Scuola IMT Alti Studi Lucca; Universidad Complutense de Madrid (UCM)

Date Written: November 1, 2024

Abstract

Tourism is an essential sector of the global economy, contributing significantly to GDP and employment. Despite its importance, our understanding of its impact on urban economic activity remains limited. This paper aims to fill this gap by examining the impact of tourism on urban transformation using a dataset of hotel openings in Madrid from 2001-2010. I show that hotel openings positively impact the number of establishments and employment by using the number of protected buildings as an instrumental variable to account for the non-random distribution of hotel openings. Interestingly, hotel openings contribute to changes in the composition of the economic activities and the business structures, enhancing tourist-oriented corporate-owned businesses over other individual-owned companies. Finally, economic effects extend to the real estate market, increasing rental prices and residential investment.

Keywords: Tourism, Economic activity, Urban transformation, Cities

JEL Classification: R10, R23, Z32

Suggested Citation

Hidalgo, Alberto, Your Room is Ready: Tourism and Urban Revival (November 1, 2024). Available at SSRN: https://ssrn.com/abstract=4710769 or http://dx.doi.org/10.2139/ssrn.4710769

Alberto Hidalgo (Contact Author)

Scuola IMT Alti Studi Lucca ( email )

Piazza San Francesco, 19
Lucca, 55100
Italy

Universidad Complutense de Madrid (UCM) ( email )

Carretera de Humera s/n
Madrid, Madrid 28223
Spain

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