Financial consequences of competitive set choice |
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| Institution: | 1. University of Lethbridge, Room S6037, 345 6 Ave SE, Calgary AB T2G 4V1, Canada;2. Hannover, Germany;3. University of Groningen, P.O. Box 800, 9700 AH Groningen, the Netherlands;4. The University of Queensland, UQ Business School, Brisbane, QLD 4072, Australia;1. College of Science & Industry Convergence, Department of Nutritional Sciences and Foodservice Management, Ewha Womans University, 305 Human Ecology Building, 11-1 Daehyun-dong, Seodaemun-gu, Seoul, 120-750, Republic of Korea;2. School of Hotel, Restaurant and Tourism Management, College of Hospitality, Retail, and Sport Management, University of South Carolina, 701 Assembly Street, Columbia, SC 29208, USA;1. College of Business Administration, University of South Florida, United States;2. College of Hospitality & Technology Leadership, University of South Florida, United States;3. University of Central Florida, Rosen College of Hospitality Management, United States;1. Rosen College of Hospitality Management, University of Central Florida, 9907 Universal Boulevard, Orlando, FL 32819, United States;2. School of Hotel and Tourism Management, The Hong Kong Polytechnic University, Kowloon, Hong Kong |
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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. |
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| Keywords: | Competitor identification Competitive set Competitive intelligence Strategic management Competitor monitoring Competitor set |
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