Journal of Hospitality and Tourism Management 29 (2016) 135e142

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Journal of Hospitality and Tourism Management

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A qualitative study of urbanization effects on hotel development

Jian Ming Luo a, Chi Fung Lam b, *
a
Faculty of International Tourism and Management, City University of Macau, Avenida Xian Xing Hai, Ed.Golden Dragon Centre, 4º andar, Macau
b
Department of Finance, The Chinese University of Hong Kong, Hong Kong

a r t i c l e i n f o a b s t r a c t

Article history: This study examined the critical factors of urbanization on hotel development in China via qualitative
Received 11 November 2015 semi-structured interviews. Population, economic, geographical landscape and social cultural di-
Received in revised form mensions was identified as major connotations of urbanization impact on hotel development. This study
26 June 2016
suggested that urbanization possessed both positive and negative effects on hotel development.
Accepted 4 July 2016
Available online 3 August 2016
Therefore, to promote hospitality and tourism development, hotel stakeholders, including practitioners,
government officers and city planners, could provide corresponding tourism and hospitality products
according to the characteristics of the city, region or province.
Keywords:
Urbanization
© 2016 The Authors.
Hotel development
Guangdong
China

1. Introduction become financial and business service centers, while industrial

The world urban population was expected to increase from 3.6
billion in 2011 to 6.3 billion in 2050, a 75 percent increase. By 2050,
the world’s urban population would likely be the same as the
world’s total population in 2002 United Nations (UN) (2012).
Virtually all of the expected growth in the world population would
be concentrated in the urban areas of the less developed regions,
whose population was projected to increase from 2.7 billion in 2011
to 3.6 billion in 2025. In the more developed regions, the urban
population was projected to increase modestly, from 1 billion in
2011 to 1.05 billion in 2025. Fig. 1 showed the urban population of
the more developed region and less developed region from 1950 to
2025. As Fig. 1 showed, the urban population of more developed
regions was relatively stable from 1950 to 2010, while there was a
significant increase of urban population over the same period. This
increase was mainly driven by the increase of urban population in
the less developed regions. (see Fig. 1).
Urbanization was an integral element of industrialization and
rapid income growth in all countries (Henderson, Quigley, & Lim,
2009). As places where innovations were incubated and sophisti-
cated skills developed, cities became engines of growth. In the
course of economic development, the largest cities evolved to
production decentralized to small- and medium-sized cities which
tend to highly specialized in particular lines of activities such as
steel, autos, electronics, textiles, apparel, and wood products, as
well as specialized services such as entertainment, insurance,
certain forms of health care and tourism (Henderson et al., 2009).
Between the 19th and 20th centuries, urbanization was a
notable social appearance. It changed human societies’ spatial and
social configurations. However, this issue seldom appeared in
tourism and hospitality literature. Urbanization would bring certain
benefits to the society, but at the same time, it would bring social
and political problems. The goal was benefit and cost control
(Spence, Annez, & Buckley, 2009). Some Chinese scholars made
some systematic studies in this area, however, many questions
were unresolved (Qiu, 2007). The objective of this study was to
analyze and determine the nature of the relationship between hotel
development and urbanization in China. This study intended to
address the following questions:
(1) What are the urbanization factors that may influence hotel
development in China?
(2) What are the effects of urbanization toward hotel develop-
ment in China?

* Corresponding author.
E-mail addresses: kenny.luo@connect.polyu.hk, kennyluo@cityu.edu.mo
(J.M. Luo), b126097@cuhk.edu.hk (C.F. Lam).

http://dx.doi.org/10.1016/j.jhtm.2016.07.001
1447-6770/© 2016 The Authors.
136 J.M. Luo, C.F. Lam / Journal of Hospitality and Tourism Management 29 (2016) 135e142
Urban Population (thousands)
5000000
4000000
3000000
2000000
1000000
0
World More developed regions Less developed regions
Fig. 1. Urban population from 1950 to 2025. (Sources: United Nations, 2012).
2. Literature review
2.1. Hotel development in China
China’s tourism has developed rapidly since its initiation of the
reform and opening up polices commencing in 1978. However,
most of its tourist activities were concentrated in the coastal re-
gions. Demurger (2000) believed that the implementation of the
reform policy was unbalanced. The policy was implemented
initially to several provinces near the coast. These provinces
became the driving force of economic growth. The pattern of
inequality was further enhanced by foreign direct investment (FDI).
Ninety-three percent of FDI were invested in the east coast region
of China in 1983 instead of the inland regions (Demurger, 2000).
The Chinese government was trying to accommodate the imbal-
ance in the mid-1990s through various development programs.
These development programs were considered to be effective. In
2000, the inland region achieved a double-digit growth. However,
due to the geographical factors, historical factors, and economic
conditions, the tourism in China showed the regional unbalance
(Zhu, Ding, & Han, 2001).
Hotel development was a very crucial part of the tourism system
in China. The Sixth National Development Plan gave priority for
hotel development (Yu, 1992). Before 2001, China’s enterprises,
both state-owned and collective-owned, tended to be “all in one” e
providing all the services for their employees by the enterprises
themselves (Luo, 2016). In 2002, there were 110 hotel management
companies with a variety in size in China and they managed more
than 700 hotels (Xu, 2003). The Twelfth National Development Plan
included tourism to be another pillar industry (Yang, 2011). Ac-
cording to Hotels Magazine (2011), 26 China-based companies
were listed on the top 300. Fifteen out of the top sixteen companies
included new inventories in the previous year and planned to have
new projects in the coming years.
2.2. Urbanization in China
As the largest developing nation in the world, with rapid eco-
nomic growth, China has undergone fast e paced urbanization
development since the 1990s (Li & Yao, 2009). China officials
adopted the urbanization definition from UN (Department of Urban
Socio-economic Surveys, National Bureau of Statistics (NBSC),
2009). The urbanization level rose from 26.4 percent in 1990 to
49.9 percent in 2010, with an average annual increase of 1 percent
in China. According to UN’s projections, more than half of the
world’s population lived in urban areas by the end of 2010. If cur-
rent trends continue, the urban share of the global population will
reach 68 percent by 2050. For instance, China’s urban population
was expected to increase from 636 million to 1037 million between
2010 and 2050 (UN, 2010). Fig. 2 showed the map of China with 31
provinces (municipalities and autonomous). Those provinces could
be further divided into 4 economic regions with 10 provinces in
Coastal Region, 6 provinces in Central Region, 3 provinces in
Northeastern Region and 12 provinces in the Western Region. (See
Fig. 2).
This study used Guangdong province to represent China.
Guangdong was the first province opened to the outside world. To
establish China’s and opening policy, China established Special
Economic Zones (SEZs) in Shantou, Shenzhen, and Zhuhai in
Guangdong Province from 1980 to 1984. After 1985, more eco-
nomics zones were created. These economics zones included
Shanghai, Tin Jing and Zhen Jiang. Guangdong was not only the
biggest export center in the world, but also the most popular tourist
destination in China. According to the Statistical Bureau of
Guangdong (SBG) (2015), Guangdong Province was a leading eco-
nomic powerhouse and consisted of 21 cities and 1134 towns. The
Pearl River Delta (PRD) region has been the pioneer in the economic
reform, economic development and urbanization in Guangdong
and China since 1978 (Weng, 1998; Wong & Shen, 2002). Therefore,
the hotel development of Guangdong cities would be a represen-
tative study toward the hotel development in China cities.
2.3. Urbanization and hotel development
Urbanization was recognized as fundamental to the multidi-
mensional structural transformation that low-income rural soci-
eties undergo to modernize and to join the ranks of middle and
high income. For example, rapid economic growth was accompa-
nied by significant structural changes in China’s economy. The
share of service industry in national GDP increased from 13 percent
in 1970 to 21 percent in 1980 and 48. percent in 2014 (NBSC, 2015).
Urbanization was one of the key factors to China’s structural
changes in terms of economic composition and employment
(Huang & Bouis, 1996).
Urbanization’s contribution to growth came from two sources:
the difference between rural and urban productivity levels and
more rapid productivity change in cities (Spence et al., 2009). The
relationship between urbanization to level of economic growth was
universally accepted (Kasarda & Crenshaw, 1991). Landes (1969)
and Williamson (1987) situated urbanization as an essential
ingredient in modernization. Dutt (2001), for instance, showed that
areas experiencing a higher level of urbanization had a lower crude
birth rate in general, improved life expectancy and a higher level of
female participation in economic activities. Rostow (1990) indi-
cated in a study that birth and death rates were negatively corre-
lated with Gross National Product per capita. The argument here
was that as countries become more developed, they tended to
invest more in modern health care facilities to take care of the
health needs.
Davis and Henderson (2003) conducted a study to establish a
relationship between urbanization, development and agriculture.
In their study, development was seen as GDP per capita and they
were able to establish a positive correlation between the loga-
rithms of GDP per capita and level of urbanization expressed as
percentage of the total population between level of urbanization
and agriculture value added expressed as a percentage of GDP. This
indicated that as development took place, the contribution of
agriculture to the GDP decreased. Henderson (2003) indicated that
urbanization and development seem to be interconnected. The
author found a positive correlation coefficient of about 0.85 be-
tween urbanization and the log of GDP. This was an indication that
there was a relationship between urbanization and development.
Bertinelli and Black (2004) found that the process of urbaniza-
tion and the process of development were linked but the causality
 J.M. Luo, C.F. Lam / Journal of Hospitality and Tourism Management 29 (2016) 135e142
Fig. 2. Map of China, coastal region: Shanghai, Fujian, Jiangsu, Shandong, Zhejiang, Guangdong, Hainan, Beijing, Tianjin, Hebei. Central region: Shanxi, Henan, Anhui, Hubei, Jiangxi,
Hunan. Northeastern region: Heilongjiang, Jilin, Liaoning. Western region: Xinjiang, Gansu, Inner Mongolia, Qinghai, Ningxia, Tibet, Sichuan, Yunnan, Guizhou, Guangxi, Chongqing,
Shaanxi. (Source: National Bureau of Statistics of China, 2012).
link was not clear. They conducted a study based on migration as
the cause of urbanization and found out urban migration would
have the dynamic benefits due to the investment in human capital
by urban migrants. They found a negative correlation between
urbanization and health in terms of infant mortality.
Kastarlak (1971) pointed out that the degree of urbanization
apparently played a major role in creating a tourism center since
the attractions and facilities correlates with the population density.
The demand for food, shelter and transportation would increase as
the population density increases. The prototype of the city was then
developed as more and more of these facilities were developed to
enhance the convenience of tourists. McCroskey (1990) believed
that hotels were being constructed rapidly as tourism and urbani-
zation burgeoned in United States in 1910s and 1920s. The
McCroskey’s study found that the mobility of society, fueled by the
growing popularity of the automobile and the thousands of miles of
roadways under construction, provided fertile ground for the hotel
building industry. Similarly, in 1997, 9.81 percent of the urban
temporary population, who were people who did not live perma-
nently in the city, chose hotels as the type of accommodation in
China (Shen, 2000). Zhang, Luo, Xiao, and Guillet (2013) identified
the relationship with the level of urbanization and hotel growth
from level of urbanization, tourism demand, and policy. The results
showed a positive relationship between urbanization and hotel
growth.
Bradshaw and Fraser (1989) conducted a research in China to
establish the relationship between urbanization and development.
They established a positive relationship between level of urbani-
zation and income on one hand and quality of life on the other. They
found out urbanization facilitates, the development of certain at-
titudes and values were necessary for economic development. They
measured quality of life made up of infant mortality, death rate and
illiteracy. Their study contradicted the findings of Bertinelli and
Black (2004) that there was a negative relationship between level
of urbanization and health, but reaffirmed the findings of Davis and
Henderson (2003) that there was a positive relation between level
of urbanization and income.
Burgess and Venables (2004) noted that urbanization was one of
the clearest features of the development of manufacturing and
service activity. Similarly, Kasarda and Crenshaw (1991) pointed
out that as a society continued to generate surplus, it enhanced the
capability of shifting economic activities to technologically
advanced production techniques, which also necessitated spatial
137
concentration of consumer markets, labor, and related activities.
Furthermore, according to Burgess and Venables (2004), the dis-
cussion of urbanization was absent from economic analysis of
growth and development. Hotel development was influenced by
the role of urbanization since hotel industry is part of service ac-
tivity. Lu (2008) analyzed the factors of speeding up urbanization in
the sports business and the growth in the sport business by using
methods of econometric. The author pointed out that the growth of
sports business was the result of supply and demand, whilst gov-
ernment policies played an important role in the business of sports.
In evaluating the urbanization level in China, it should be borne in
mind that the central government of China took urbanization as a
strategic key in the country’s development, within which the hotel
industry as well as other service industry sectors contributed to the
economic growth in China.
2.4. Measurement of urbanization
Urbanization occurs naturally as a result of individual and
corporate efforts to reduce the time and expense of commuting and
transportation while improving opportunities for jobs, education,
housing, and transportation. Living in cities permitted individuals
and families to take advantage of the opportunities of proximity,
diversity, and marketplace competition. According to UN (2010),
different countries defined urbanization differently. Due to national
differences in the characteristics that distinguish urban from rural
areas, the distinction between the urban and the rural population
was not limited to a single definition that would be applicable to all
countries or, for the most part, even to the countries within a
region.
Despite the definition of the UN, different scholars provided
their own views of urbanization. Demographers believed that ur-
banization was an increase in the proportion of a population living
in urban areas. The term was sometimes referred to the level of
population concentration rather than its change. Pressat and
Wilson (1985) pointed out this definition was applicable only
when the urban population was growing more rapidly than the
population as a whole. In a country with rapid population growth,
cities could expand rapidly without urbanization in the strict sense.
Urbanization might be the result of migration from rural areas or
the result of differences in fertility and mortality between the
different areas. Urbanization was one of the most significant cur-
rent demographic phenomena.
138 J.M. Luo, C.F. Lam / Journal of Hospitality and Tourism Management 29 (2016) 135e142
Economists considered urbanization as increases in the per-
centage of the population living in urban areas and this was usually
considered to be a natural by-product of modernization and
industrialization (Bradshaw & Fraser, 1989). The wage of workers
would increase with the increase of modernization and industri-
alization. Population would move from rural to urban. When eco-
nomic activities were clustered in small geographic spaces, firms
had access to a larger labor pool and were in closer proximity to
customers and suppliers, with the benefit that intra-industry
specialization was encouraged (Becker, 2007; Ciccone & Hall,
1996). Urbanization was driven by the shift from agriculture to
industry and modern service. Development advanced technology
in agriculture and released labor from agriculture to work in ser-
vices and manufacturing. This sectoral shift in labor lead to ur-
banization as firms and workers became more clustered in cities
(Davis & Henderson, 2003).
Geographers were space-oriented and hence tended to link
urban with space and people that occupy the space. Geographers
defined an area was urban based upon a certain concentration of
population. Urban was settlement agglomeration with a certain
density of population and/or a minimum required population
threshold. Since there was no standard minimum threshold for
determining an area as urban, each country had its own definition
for urban when using demography as a means of definition. Ur-
banization as a process was understood primarily as population
movement towards densely populated and mainly non-agricultural
settlements. Smith (1992) stated urbanization involves much more
than a mere increase in the number of people living and working in
cities and metropolitan regions. Urbanization resulted in some
important changes in the characters and dynamics of the urban
system and with cities and metropolitan regions. It caused changes
in patterns of land use, in social ecology, in the built environment,
and in the nature of urbanism (Knox & McCarthy, 2012).
Sociologists and anthropologists linked urban with human
behavior and relations. Urbanization was the migration of people
from village to city and it affected migrants and their families.
Wirth (1938) argued that population alone did not make a place
urban but the influence that the urban areas exerted in the social
life of the people was more important. Sociologists used the
concept of rural-urban continuum to stress the idea that there were
no sharp breaking points in the degree or quantity of rural, urban
differences, including occupational differences, environmental
differences, differences in the sizes of communities, differences in
the density of population, differences in social mobility and direc-
tion of migration, differences in social stratification and in the
systems of social interaction. Redfield (1941) argued the concept of
rural - urban continuum based on the study of Mexican peasants in
Tepoztlan. The rapid process of urbanization through the estab-
lishment of industries, urban traits and facilities decreased the
differences between villages and cities. Sorkin and Zimmerman
(1929) stated that the factors distinguishing rural from urban
communities, including occupation, size and density of population,
mobility, differentiation and stratification. Some sociologists used
the concept of rural-urban continuum to stress the idea that there
were no sharp breaking points to be found in the degree or quantity
of rural-urban differences.
According to the literature review and different definitions of
urbanization from different fields of scholars, urbanization could be
identified by four major dimensions and is summarised in Table 1.
3. Research design
This study aimed at understanding the factors of urbanization
that affects the hospitality industry. This study employed qualita-
tive method by using semi-structured interview. Eighteen personal
interviews were conducted in July 2014. The selections of the
samples were based on convenient samples and the interviewees
were all Guangdong’s government officers and hotel general
managers, who were considered as hotel stakeholders. For
example, one sample interviewee is a senior officer of Tourism
Bureau in Dongguan’s city, who has governance competencies for
hotel rating system from urbanization perspectives. Another sam-
ple interviewee is the general manager of Chinese state-owned
hotels who is also the asset manager and representative of the
hotel owner (government) (Xiao, O’Neill, & Wang, 2008). A semi-
structured questionnaire with open-ended questions was used to
assist the interviews. The questionnaire contained two sections and
was generated from the characteristics of the urbanization in
Guangdong. Section 1 involved the respondents’ demographic in-
formation. Section 2 assessed the urbanization impacts on hotel
development. Three open-ended questions in bilingual and semi-
structured format were prepared separately for the officers and
managers. The questions were formed based on the literature re-
view and were sent to professional experts and researchers of three
for review. The questions are then finalized when a common
consensus was reached. The interviews were conducted in Chinese.
After the interviews, the transcript was translated using back-to-
back translation technique. Data analysis was applied using the
constant comparison technique (Glaser & Strauss, 2009), which
was a systematic method for recording, coding, and analyzing data.
Qualitative data could help to explain the quantitative results and
provide the voices of participants, which were not directly heard in
quantitative research (Creswell, 2012). The purpose of the semi-
structured interviews was to solicit views on how urbanization
affects hotel development from the perspectives of government
officials and practitioners. The interviews were recorded, tran-
scribed, and entered into the NVIVO 10.0 for content analysis.
Content analysis allowed the researchers to investigate the texts
without any influences or directions from any ‘a priori’ theory or
concepts, and it was thus open to discussion regarding what was
revealed from this study (Jennings, 2001). A team of three worked
collaboratively. During the initial stage, the researchers worked on
the transcripts separately and built up a framework of categoriza-
tion. Discussions were held until a consensus was achieved. NVIVO
was a software package that facilitates qualitative data analysis.
4. Results
4.1. Demographic of interviewees
This study employed qualitative method using personal in-
terviews to identify the important factors of urbanization con-
structs. Eighteen interviews were conducted with extensive
working experience and senior position in the hospitality industry.
There were 83 percent of male respondents and there were 17
percent female respondents. Most of them were between 35e44
and 45e54. 39 percent of them were general managers and 11
percent of them were directors. The majority (33%) of the re-
spondents was from Guangzhou city and most of them (72%) had
more than 10 years of experience in the hospitality industry. This
sample should be representative for a group of senior and experi-
enced management in the hospitality industry. The demographic
information of the respondents and their characteristics were
summarized in Table 2.
4.2. Findings on interviews results
One question that was directed to interviewees was “What are
the urbanization factors that may influence hotel development in
China?” This question identified the critical urbanization factors
 J.M. Luo, C.F. Lam / Journal of Hospitality and Tourism Management 29 (2016) 135e142 139

Table 1
Proposed theoretical framework.

Economic dimension Ehrlich & Holdren, 1971; Bradshaw & Fraser, 1989; Liu, 2004; Fang & Yao, 2006; Xu & Watada, 2008; Chen, Lu, & Zha, 2010; Zhang et al.
- GDP per capita 2013; Luo, Qiu, Goh,& Wang, 2016a; Luo et al., 2016b
- Share of service industry in
GDP
Population dimension Chen et al., 2010; Fang & Yao, 2006; Liu, 2004; Luo et al., 2016a; Luo et al., 2016b; Pressat & Wilson, 1985; UN, 2010; Zhang et al., 2013
- Population proportion in
urban area
- Non-agricultural population
Social dimension Chen et al., 2010; Fang & Yao, 2006; Liu, 2004; Luo et al., 2016a; Luo et al., 2016b; Redfield, 1941, Sorkin & Zimmerman, 1929; Zhang et al.,
- Health care 2013
- Lifestyle
- Industry size
- Transportation
Geographical dimension Birch & Wachter, 2011; Chen et al., 2010; Fang & Yao, 2006; Liu, 2004; Luo et al., 2016a; Luo et al., 2016b; Todaro & Smith, 2012; Zhang
- Proportion of green area et al., 2013

Table 2 One interviewee mentioned “Urbanization will affect the city’s

The demographic profile of interviewees (N ¼ 18). culture, feature, symbolic buildings, and theme parks”. Among the
Demographics Frequency % 8 responses regarding social cultural, only two responses come
Sex
from interviewees in the tourism industry, while the rest are from
Male 15 83.3 the hotel industry. Geographical dimension was mentioned 5 times.
Female 3 16.7 The response could be further classified into environmental and
Location transportation. One dimension that was not concluded from the
Dongguan 3 16.7
literature was policy. This dimension was mentioned 12 times and
Guangzhou 6 33.3
Heyuan 1 5.6 it was the most frequent dimension among all. The policies
Jiangmen 1 5.6 mentioned could be further classified into domestic policies and
Shanwei 1 5.6 general or national policies. The interviewees’ responses included
Shenzhen 2 11.1
“Housing policy”, “government support for tourism”, “population
Yanjiang 1 5.6
Zhuhai 3 16.7
policy”, “higher taxes”, and “urban planning”.
Age Another question that was directed to interviewees was “What
25e34 1 5.6 are the effects of urbanization toward hotel development in
35e44 6 33.3 China?” This question identified the critical urbanization effects
45e54 10 55.6
and impacts on hotel development in China. The findings of the
55e64 1 5.6
Occupation interviews were presented in Table 4.
General Manager 7 38.9 The responses of this question could be classified into 1) Pro-
Deputy G.M./Assistant G.M. 2 11.1 motion, with 12 responses, 2) Improve image with 2 responses, and
Director 2 11.1 3) Strengthen cooperation and integration of resources, with 7 re-
Deputy Director 4 22.2
Section Chief 3 16.7
sponses, for the positive impact of urbanization to hotel develop-
Years in the hospitality and tourism industry ment; for the negative impact, the responses can be classified into
Under 10 years 4 22.2 1) Development imbalance, with 2 responses, 2) Over develop-
10e20 years 4 22.2 ment, with 3 responses, and 3) Increase risk, with 2 responses. The
21e30 years 9 50
total number of responses that mentioned the positive impact of
Over 30 years 1 5.6
urbanization to hotel development is 22, while the number of re-
sponses mentioned the negative impact of urbanization is 7.
A follow up question on the second question is “What opinions
that affect hotel development in China. As mentioned in the liter-
do you have about the effect of urbanization on hotel development
ature review, there were only a few studies being conducted in
in different regions?” The question is trying to understand whether
hospitality and tourism context. The findings of the interviews
were presented in Table 3.
According to Table 3, there were some common themes from the Table 3
respondents. The responses of the interviewees could be classified Factors of urbanization affects hospitality and tourism.
into the four dimensions, economics, population, social, cultural Factors Subfactors No.
and geographical, as proposed in the literature. Economic dimen-
Economic Land and real estates 4
sion was mentioned 17 times. Within the economic dimension,
Development 4
responses could be further classified into GDP, development, in- GDP 3
dustrial structure and land and real estate. One interviewee Industrial structure 7
mentioned “that urbanization may promote the restaurant and the Population Educated proportion 3
entertainment industries”, while the other mentioned “urbaniza- Labor force 1
Social cultural Historical culture 3
tion will derives real estate development”. Population dimension Attractions and theme 3
was mentioned 4 times. One response said “Urbanization will in- Life quality 2
crease labor force” while the other response said “Urbanization will Geographical Environment 2
affect the education proportion in the city”. Social cultural dimen- Transportation 3
Policy Domestic policies 5
sion was mentioned 8 times. The responses could be further clas-
National policies 7
sified into historical culture, attractions and theme and life quality.
Notes: “No.” means the number of times being mentioned by different interviewees.
140 J.M. Luo, C.F. Lam / Journal of Hospitality and Tourism Management 29 (2016) 135e142
Table 4
Effect of urbanization toward hotel development in China.
Effects Dimensions
Positive Promotion
Enhance tourism and hotel upgrade
Improve image
Strengthen cooperation and integration of resources
Negative Development imbalance
Over development
Increase risk
Notes: “No.” means the number of times being mentioned by different interviewees.
there are perceivable difference of the impact of urbanization to
hotel development. The findings of the interviews were presented
in Table 5.
There are 14 interviewees suggested that there are difference on
the impact of urbanization on hotel development, while there are 4
interviewees who indicated that there are no difference. The re-
sponses can be further classified into Direct and Indirect effect.
Direct effects mean the effects that are going to impact hotel
development immediately, while indirect effects means the effects
that are going to affect hotel development through other medium,
such as land, land price, government policies and urban planning.
Within the Direct effect, several recurrent points arise. The first is
“Hotel categories development”. For example, one interviewee said
that “Pearl River Delta is a well developed region in Guangdong,
hence Pearl River Delta has more luxury and larger hotels”. The
second is “Hotel branding in different regions”. For example, one
interviewee said “Internationally well known brand are usually
more popular among regions which are more well developed.” The
third is “Regional regulations on hotel”. For example, one inter-
viewee said “Different regional government will have different
regulations on taxes, environmental protection, and labor protec-
tion hence this will create difficulties in profits and hiring decision.”
Within the Indirect effect, other reoccurring points arises, such as
“Increase land value or prices”, “Urban development imbalance”,
“Government’s role on promotion” and “Urban planning”. The first
is “Increase land value or prices”. One interviewee said that “Due to
the difference of development stage of urbanization, the velocity of
land price increases in a different rate in different regions, hence
this would affect the intention of hotel investment.” The second is
“Urban development imbalance”. One interview said that “For
example, even among the Pearl River Delta region, those central
cities, such as Guangzhou and Shenzhen will attract many foreign
investment, hence those non-central cities, such as Qiaoxing, will
have less investment. This will then affect the location where ho-
teliers decided to invest.” The third is “Government’s role on pro-
motion”. One interviewee said “Regional governments may have
different preference on promoting tourism. For example, there are
promotions on the ‘Big Pearl River Delta” which combines Macau
and Hong Kong to tourists from the rest of the world.” The forth is
Table 5
Urbanization effect on hotel development by region.
Effects Nature of impact
Different effects Direct effect
Indirect effect
Same effect No difference between region
Notes: “No.” means the number of times being mentioned by different interviewees.
“Urban Planning”. One interviewee said “There are joint efforts
within regions, such as the Hong Kong-Zhuhai-Macau Bridge, to
No. improve transportation facilities and enhance the cooperation.”
12
To conclude this section, the results of the qualitative data
1 supported to the theoretical constructs of this study. All dimensions
2 of urbanization in this study, including economic, population, so-
6 cial, cultural and geographical landscape dimensions were
2
mentioned by the qualitative results.
3
2
5. Discussion and conclusion
This study attempts to provide factors of urbanization that affect
hotel development and the effect of urbanization towards hotel
development. According to the semi-structured interviews with
hotel stakeholders, factors of urbanization that affects hotel
development can be broadly divided into four dimensions, eco-
nomics, population, social cultural and geographical dimensions.
Within the economic dimension, responses can be further classified
into three subcategories, GDP, development and land and real es-
tate. The result of GDP and development in the economic di-
mensions confirms the result with Bradshaw and Fraser (1989),
Zhang et al. (2013) and Luo, Qiu, Goh, and Wang (2016a; 2016b).
Regarding the land and real estate subcategory, the simultaneous
expansion of the tourism industry, increase in business travel, rapid
economic growth and the real estate boom have acted as major
demand drivers for the development of the hotel sector in China
(CBRE., 2009). As hotel development becomes a recent asset class
for real estate developers, Chinese local government policies
encourage the development of mixed-use projects (residential,
commercial, retail and hotel) as a way to develop the city in a more
balanced fashion. Mixed-use development is a model which is
frequently used in China and projects typically comprise of resi-
dential, retail, office and hotel components and the projects are
usually located in city core locations (CBRE., 2009). Hence, our re-
sults also confirm with recent Chinese hotel development.
The results on population dimension confirms with the general
definition of urbanization from the United Nation (UN), economists
and demographers (UN, 2010; Bradshaw & Fraser, 1989; Pressat &
Wilson, 1985). Furthermore, the responds also include “the in-
crease labor force in the hotel service industry is beneficial to the
industry development. The impact of recognizable urbanization
features towards personality characteristics of the hotel industry”
and “there will be refinement in division of labor and this will
promote the restaurant and the entertainment industries”. This is
consistent with Burgess and Venables (2004) regarding the change
of industrial structure and the migration of people from rural to
urban.
The results on social cultural dimension confirm with the ar-
guments of Sorkin and Zimmerman (1929), and Redfield (1941),
which not only identify social cultural is an important factor of
urbanization. The results can be further classified into historical
Salient points No.
a) Hotel categories development 8
b) Hotel branding in different regions 6
c) Regional regulation on hotel 4
d) Increase land value or prices 3
e) Urban development imbalance 5
f) Government’s role on promotion 3
g) Urban Planning 2
4
 J.M. Luo, C.F. Lam / Journal of Hospitality and Tourism Management 29 (2016) 135e142 141

culture, attractions and theme and life quality. Among the 8 re-
sponses regarding social cultural, only two responses come from
interviewees in the tourism industry, while the rest are from the
hotel industry. This might seem contradictory because people in
the tourism industry should be more aware of these theme parks,
attractions and symbolic buildings. One possible explanation is as
land price becomes an important issue during the process of ur-
banization, this means that the hotel must make their investment
more carefully. Having a hotel that is close to one or several theme
parks and attractions would increase the value of the hotel. This
would also change the pricing strategies of existing hotels. This
makes the hotel general managers become more aware of the at-
tractions nearby.
Within the geographical dimension, two subcategories are
identified, environment and transportation. This dimension is
mentioned only 5 times among all interviewees. This is quite small
as compared with the economic dimension, as suggested by the
literature, and policy, which is a dimension that is not discussed in
the literature. Among the policy categories, domestic policies and
national or policies in general are being identified. Domestics pol-
icies include “urban planning”, “housing policy”, “population pol-
icy” and “higher taxes”. In Zhang et al. (2013) and Luo et al. (2016a;
Fig. 3. The revised framework.
2016b), both studies use China entering WTO as the policy variable.
This policy is considered as a more countrywide policy, while the
interviewees here are more concerned with local policies that Second, from government or practitioners’ perspective, this
would produce direct benefits. This is quite possible because a study identifies government make an important role on urbaniza-
policy like China entering WTO would affect every individual more tion towards hotel and tourism development. Particularly, gov-
equally, while a particular, and specific local policy, such as pre- ernment policies have significant impacts on hotel development
serving a historical building or reconstruction of a certain area, from domestic and national level. Since the domestic policy and
might give advantages to the hotels that are nearby. Regardless, this national policy can have different effects on hotel and tourism
results show that, in China, policy is as much as important as development, they should consider the different effect of polices
economic. towards hotel and tourism development. Evaluate the different
This study further identifies the effects of urbanization toward Therefore, city administrator and cental government should
hotel development. The positive impacts include promotion, consider policies’ effect to tourism and hotel development when
improve image, and strengthen cooperation and integration of re- they develop tourism products. Furthermore, urban characteristics
sources and the negative impacts include development imbalance, related to economic, population, social and geography have
over development and increase risk. This was consistent with different impact on hotel development in China. Hotel investors can
Spence et al. (2009) claiming that urbanization would produce use this study as a marketing tool when they invest to hotel in-
benefit and cost at the same time. This means policy makers, while dustry relating to the level of urbanization on the city.
promoting urbanization and hotel development, should incorpo- In conclusion, this study confirms that the factors and effects of
rate the potential cost associated with such development. Using the urbanization on hotel development. This study suggests that eco-
number of responses as a criterion of judgment, the results seem to nomics, population, social cultural, geography and policies as fac-
suggest the benefit of urbanization outweighed the cost. Further- tors that may affect urbanization. Furthermore, this study identifies
more, Luo, Qiu, and Lam (2016b) showed that there exist some the positive and negative effects of urbanization toward hotel and
regional imbalances in hotel development in China. This is tourism development. The positive effects include promotional,
consistent with some of our interviewee’s responses, such as enhance tourism and hotel upgrade, improve image, and
“There should be a reasonable coordination between large, medium strengthen cooperation and integration of resources while the
and small scale hotels and development planning with high, me- negative effects include development imbalance, over develop-
dium and low grade hotels”, “City overall development planning, ment and increase risk.
co-operation between city and city”, and “Development imbalance,
resource sharing will lead to more competition”(See Fig. 3).
This study makes two important contributions. First, from 6. Research limitations and future research
hospitality and tourism perspective, this study enhances hospitality
and tourism literature by confirming that the factors and effects of This study consists of a number of limitations that deserves
urbanization on tourism and hotel development. This study con- further investigations. First, the sample size of this study is only 18.
firms economics, population, social cultural and geography as fac- Moreover, the interviewees are general managers from the hotel
tors affects urbanization. In addition, this study further identifies and tourism industries. Many stakeholders, such as customers,
policies as another factor that affects urbanization in China. The frontline employees and citizens are not included in this study. Due
policy factor can be divided into domestic policies and national to limited data, factors of urbanization on hotel development might
policies. Furthermore, this study also identifies the positive and not be fully identified. For example, city branding and city image is
negative effects of urbanization toward hotel development. The only mentioned twice in the interviewees’ responses. This can be
positive effects include promotional, enhance tourism and hotel an important consideration for policy makers when they are
upgrade, improve image, and strengthen cooperation and integra- structuring the urbanization development of the cities. A full dis-
tion of resources while the negative effects include development cussion regarding the connection between urbanization, hotel
imbalance, over development and increase risk. development, destination image and destination branding is out of
142 J.M. Luo, C.F. Lam / Journal of Hospitality and Tourism Management 29 (2016) 135e142

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