۱- Introduction

۲- Literature review

۳- A Model for the location selection

۴- The application of the proposed model

۵- The sensitivity analysis

۶- Conclusion

References

Abstract

The primary objective of this paper is to give an efficient model for the selection of an optimal location for the construction of a tourist hotel. The application of the multiple-criteria decision-making – MCDM methods is proposed because the examined problem is related to a set of alternatives that should be estimated against a set of conflicting criteria. The proposed model includes the application of the adapted step-wise weight assessment ratio analysis – SWARA for the determination of the weights of criteria and the Weighted Sum method, based on the decision-maker’s preferred levels of performances – WS PLP for the final prioritization and ranking of alternative locations. The applicability of the proposed model is demonstrated through a concrete example, which includes the consideration of six Serbian mountains as the potential locations where a tourist hotel could be constructed.

Introduction

The key issue for the hotel industry is how to select an appropriate hotel location because a choice made has numerous effects on the hotel’s future business. In the paper by Newell and Seabrook (2006), the location is denoted as one of the five categories important for making a decision on an investment in a hotel. The results obtained from the application of the AHP method in the mentioned paper show that the location is the first or the second important factor (depending on whether the hotel owners or investors are in question) for decisions on investment in a hotel, which reflects the fact that the location attributes that could be specifically identified have a great influence. Namely, decisions on the location have significant strategic implications because they involve a long-term commitment of resources. Therefore, the determination of the geographical site where a hotel is to be located is a very important task for the investor because if the selection is appropriate, it will save the costs of a relocation or reconfiguration and bring a myriad of advantages, such as: the shorter payback of the invested resources, a bigger market share, a higher tourist satisfaction (which leads to their loyalty, facilitates the operations of the hotel, etc.). All of the foregoing points out the fact that the location selection is a very important strategic decision that requires the investor’s full attention and careful planning because future operation depends on this first step. During the past three decades, researchers and practitioners have been paying greater attention to the issue of the selection of a hotel location, which has increasingly been a very important issue because the satisfied tourist/customer will be loyal in a future period. The selection of the location of a hotel implies the identifying of available location alternatives, their evaluation and the final selection of the most suitable one for the present conditions. The number of the tourists that will visit a hotel and stay in it, on the one hand, and future hotel income, on the other, are directly dependent on the location. The location does not only represent the infrastructure and utilities, but it also represents the surroundings, such as cultural heritage, national parks and other picnic areas potentially interesting to the average tourist. Chou et al. (2008) stated that the decision on “a suitable hotel location has become one of the most crucial issues for the hotel industry”.