Monday, June 1, 2020
How Incumbents Respond to Competition from Innovative Disruptors in the Sharing Economy: The Impact of Airbnb on Hotel Performance
Hung-Hao Chang (National Taiwan University) and D. Daniel Sokol (University of Florida) identify How Incumbents Respond to Competition from Innovative Disruptors in the Sharing Economy: The Impact of Airbnb on Hotel Performance.
ABSTRACT: This paper investigates the impacts of Airbnb on hotel demand and the price and non-price response strategies of incumbent hotels to Airbnb. We constructed a unique dataset of tourist hotels and Airbnb listings before and after the entry of Airbnb in Taiwan. We found that the entry of Airbnb makes the hotel industry more heterogeneous. Low quality hotels compete on price with Airbnb after Airbnb’s entry. In contrast, prices and the investment in service quality increase for high quality hotels. These findings suggest that high quality hotels reposition themselves in the higher end of the lodging market as a response strategy to the entry of Airbnb.