Empirical Study On Spillover Effects From Foreign Direct Investment To Domestic Hotel Industry

Hotel industry is one of the industries introduce foreign capital at an earlier time, andwith a high degree of opening to the outside word. With the threshold of foreign hotelscoming to China becoming lower these years, more and more foreign hotels expand theiroperations in China. In recent years, the business areas of foreign hotels have expanded frombig cities to middle or even small cities, the services also become much more diverse.Competition between foreign hotels and domestic hotel industry is almost inevitable.The foreign hotels have entered China market, the operation of foreign hotels anddomestic hotels are related as the demonstration effect, the competition in the market, themovement of staffs and the frontward and backward of the supply chain related factors,etc.Thereby it would affect the development of the industry. In general, the positive spillovereffects can promote the sustainable development of domestic related industry, and reduce theindustry’s dependence on external. Under normal circumstances, a desired expectation is theadvantages of the foreign hotels’brand management, business operations and staff traininggenerate a positive demonstration effect through a variety of related channels to local hotels,and improve the quality and market competitiveness of service of the local hotel. However,when the development gap is huge, such a positive relationship between local of hotels andforeign hotel is hard to achieve, sometimes it would even produce the crowding-out effect,which is not conducive to the investment and development of the independent industry. Aproduction function model of the logarithmic form based on a comprehensive analysis of avariety of spillover effects, combined with the specific features of the hotel industry was builtto measure the spillovers of foreign direct investment in China’s hotel industry. Studied afixed effects variable intercept model, did a regression analysis based on the correlationbetween the model variables, revealed the degree and direction of the spillover effects.From the micro point of view, the operation and development of the hotel industry issubdivided into a number of important factors, and the nature of the hotel industrydevelopment impact factors are analyzed and confirmed based on the correlation of domesticand foreign hotel generated by these factors. The establishment of impacting channelsbetween foreign direct investment and the whole hotel industry is complex, and the impact, either positive or negative, to the local hotel industry need to be measured more explicit. Onlyif the spillovers effects channels of domestic and foreign hotels as well as the degree anddirection of the spillover effects were precisely grasped, can the local hotel industry takeappropriate measures to maximize positive spillovers, and avoid the negative spillover effectsat the same time. From the macro point of view, the overall measure of spillovers effectsbetween foreign direct investment hotels and the whole industry, we can understand theimpact to the local hotels, and even the entire hospitality service industry of the introductionof foreign hotels. At the theoretical level, the empirical research on the spillover effects offoreign direct investment in the hotel industry is lacking, and this paper would be a necessarycomplement; at the practical level, accurately determining the direction and degree of thespillover effects provides a valuable reference for industrial policy’s choice between moreconservative or more open.