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362 location quotient
lished. Unlike manufacturing industries which can
transport their goods to markets, service industries
must be situated in convenient proximity to
their customers. Thus, location decisions are more
important for service businesses, highlighted by the
frequently cited quote ascribed to Conrad Hilton
that `there are three things important in the hotel
business: location, location and location'.
For the firm, location selection is an important
long-term strategic decision that often involves
substantial capital investment and commitment to
the market in that area. The primary consideration
when selecting a location is its potential to return a
good profit on the firm's investment. The
governments regulating a location must have a
favourable disposition towards business investment,
as reflected in their rules regarding site development,
taxation and domestic labour. It is
important that a location's political environment
is stable and has an economy with predictable
growth. Additional factors affecting international
locations include foreign labour policy, import
duties, taxes, repatriation of profits, and stable,
favourable foreign exchange rates.
A location which has available a low-cost labour
pool and supplies is more profitable than one
where the inputs must be imported. Similarly, the
availability of utilities, transportation and communication
infrastructures reduces the capital
investment and operating expenses necessary to do
business. From a competitive viewpoint, an area
must have one or more sites available for development
and must not be saturated with competitors
relative to the size of the market being served.
The selection of a location for tourism purposes
must meet the consumer's demand for attributes
such as climate, terrain, activities, culture and
uniqueness. The area should also have a sufficient
selection of appropriate accommodation and
transportation service providers. Consumers must
perceive the location to be safe, with good social
attitudes towards tourists and adequate medical
facilities available in case of accident or illness.
Except where transportation itself is enjoyable
�cruises, motor coach tours and so on), a location
which minimises the cost and rigour of travel is
preferable to a similar one which does not.
Given the complexity and strategic importance
of location decisions, some firms employ consul-
tants who specialise in location decisions made by
using qualitative and/or quantitative research. The
latter methods of location assessment are described
in the operations management literature and texts.
A relatively simple approach called the factor rating
method consists of the sum of the products of factor
important weights and factor scores. The largest
total sum indicates the most preferred location.
See also: site analysis; trading area
location quotient
JOACHIM BARTH, CANADA
The location quotient compares a region's share
of some activities with its share of some other
aggregate. For example, if a region receives 20 per
cent of tourist arrivals to a nation and has 30 per
cent of the nation's population, its location quotient
for visitor arrivals �with population as the base)
would be 20/30 or 0.67.
locational analysis
STEPHEN SMITH, CANADA
Locational analysis deals with questions about why
land uses occur where they do or where certain
uses should be located for maximum efficiency.
Most such analyses can be assigned to one of two
schools of thought: transportation cost theory or
central place theory. The former stems from von
ThuÈnen's �1875) modelling of agricultural land use
around a village. The core of the model was the
difference between the costs of transporting various
goods versus their price at the market. This work
eventually became the inspiration for tourism
development models such as those of Miossec
�1977) on the effect of transportation links in the
shaping of destinations.
Central place theory is associated with Christaller
�1933), who conceptualised urban areas as
`central places' or concentrations of economic and
political activity. This theory was a major force in
economic geography and regional science into
the 1970s. Among the contributions this work
made to the geography of business activity has