An Agency Perspective On Hotel Competitive Set Identification

Abstract

Competitive set identification is the first step in a hotel's competitive analysis, which is critical for strategy formulation and performance evaluation. Numerous studies have focused on the attributes and methods used for competitive set identification in the hotel industry. These studies provide managerial implications for the problem of how to identify competitive sets. Nonetheless, very few studies explore the variance of competitive sets across different types of hotel properties. Moreover, agency applications in the hospitality industry are surprisingly limited. This study aims to research the competitive set variance among hotels with different ownership structures and to explain the variance from the perspective of agency. Using a dataset from the U.S. hotel industry, four regression models test the four hypotheses about competitive sets identification. The results reflect four main findings: independent properties will have lower competitive set match-back than chain properties; corporate properties will have lower competitive set match-back than franchised properties; corporate properties will manipulate their competitive set to improve relative performance more than franchised properties; and corporate owned properties will manipulate their competitive set to improve relative performance more than corporate properties with management contracts. These findings provide important managerial implications for agency relationships in the hotel industry. Future research suggestions are also presented at the end of the article.