Airbnb vs. hotels: New research sheds light on how they can compete and benefit | 5/1/2019 | Staff
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Researchers from the Tepper School of Business at Carnegie Mellon University published new research in the INFORMS journal Marketing Science which sheds new light on the impact Airbnb and similar "sharing economy" companies are having on the hospitality industry. The findings suggest that in some cases, the presence of Airbnb can help attract more demand in some markets while challenging the traditional hotel pricing strategies.

The study to be published in the May edition of the INFORMS journal Marketing Science is titled "Competitive Dynamics in the Sharing Economy: An Analysis in the Context of Airbnb and Hotels," and is authored by **** Li and Kannan Srinivasan of Carnegie Mellon University.

Researchers - Entry - Economy - Platform - Airbnb

The researchers focused on the entry of the flexible-capacity sharing economy platform Airbnb and studied its impact on the competitive landscape in the traditional fixed-capacity lodging industry. They examined how the sharing economy has fundamentally changed the way the hospitality industry accommodates demand fluctuations and how traditional hotels should respond.

Study authors took into account market conditions, seasonal patterns, hotel pricing and quality, consumer make-up, and the supply of Airbnb accommodations in specific markets. They also considered factors such as Airbnb's strategy toward business travelers, government regulations on Airbnb, changes in hosting costs due to tax changes and third-party services, along with the professionalism of hosts.

Analysis - Number - Insights - Li - End

"Our analysis gleaned a number of insights," said Li. "In the end, we arrived at four conclusions. Airbnb cannibalizes hotel sales, especially for lower end hotels. Second, Airbnb can help stabilize or even increase demand during peak travel seasons, offsetting the potential for higher hotel prices which can sometimes be a deterrent. Third, the flexible lodging capacity created by Airbnb may disrupt traditional pricing strategies in some markets, actually helping to minimize the need for seasonal pricing. And finally, as Airbnb targets business...
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