Financial consequences of competitive set choice

James Hesford, Kelly Hoffmann, Nicolas Mangin*, Michael J. Turner

*Corresponding author for this work

    Research output: Contribution to journalArticleAcademicpeer-review

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    Abstract

    This study examines the financial consequences of competitive set choice using a sample of 312 hotels in a major metropolitan area in the United States. We document existence of asymmetric competitor monitoring, finding just 55% of monitoring is reciprocal; that is, about half of managers "agree," by virtue of monitoring one another, on being direct competitors. Monitoring reciprocity is positively associated with performance through average daily rates. With total revenue unchanged, profits are higher through lower occupancy and lower total costs. We examine alternative competitive sets formed using strategic groups- and customer-based approaches, comparing these to actual compsets. We found that performance declines when managers deviate from these alternative sets. Post-hoc analyses provide insight on how overlapping compsets impact rates, occupancy and revenue. Our study is of value to academics and practitioners, providing evidence on the financial impact of competitive monitoring, and insights for managers who choose competitive sets.

    Original languageEnglish
    Article number102453
    Number of pages11
    JournalInternational Journal of Hospitality Management
    Volume86
    DOIs
    Publication statusPublished - Apr-2020

    Keywords

    • Competitor identification
    • Competitive set
    • Competitive intelligence
    • Strategic management
    • Competitor monitoring
    • Competitor set
    • MANAGERIAL IDENTIFICATION
    • STRATEGIC GROUPS
    • HOTEL
    • INTELLIGENCE
    • HOSPITALITY
    • ADVANTAGE
    • INDUSTRY
    • VIEW

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