Are stars a good indicator of hotel quality? Assymetric information and regulatory heterogeneity in Spain

This paper proposes a methodology for continuous monitoring of the hotel sector based on “objective” and demand criteria. The method applies Multiple Correspondence Analysis (MCA) to hotel facilities and services. Using that indicator the impact of differing regional regulations relating to hotel classifications is duly analysed, based on information from The Official Guide to Hotels in Spain (OGHS). The results show that even though official stars classification might be considered a good indicator of quality, there also is significant overlapping with regard to levels of quality between adjacent official categories. It is suggested that the very coexistence of 17 different regulations is one of the reasons for this.