Research paperThe effects of Airbnb's price positioning on hotel performance

- The effects of Airbnb's price positioning on hotels' performance was examined.
- Airbnb supply negatively impacts nearby hotels' financial performance.
- Price difference (hotel − Airbnb) is positively related to hotel performance.
- Price dispersion among Airbnb listings is positively related to hotel performance.
- Price difference and price dispersion moderate Airbnb supply's negative impact.

This study examined the relationship between the price positioning of Airbnb listings, measured in price difference between a hotel property and the nearby Airbnb listings as well as price dispersion among these Airbnb listings, and the performance of nearby hotels. An exploratory analysis using field data points collected from the Airbnb listings and their hotel counterparts in the metropolitan area of Austin, Texas between Quarter 3, 2008 (debut of Airbnb in Austin) and Quarter 2, 2011 reveals intriguing findings. The entry of Airbnb listings was penetrative to local hotels. However, the price positioning of Airbnb, manifested in higher average price as compared to nearby hotels, as well as larger price dispersion among individual listings, significantly mitigated such penetration. Important theoretical contributions and practical implications for hotels are discussed.

73