The sharing economy and the future of the hotel industry: Transaction cost theory and platform economics

The 'sharing economy' is in the process of transforming numerous industries. Among these, the hotel sector is especially vulnerable to the strategic disruption that sharing platforms present. Companies such as Airbnb represent the epitome of this threat. This paper sets out to achieve two fundamental research objectives. First, it develops a set of exploratory research propositions based on a qualitative application of transaction cost theory (TCT) to the emergence of sharing platforms. Second, it offers specific strategic and tactical recommendations for the hotel industry based on the TCT analysis referred to above. The paper suggests that, in revising their business models to cope with the new competitive challenges posed by sharing platforms, hotel chains can leverage their superior capacity to deal with three key features of transactions drawn from TCT (frequency, uncertainty and asset specificity) and develop what this paper terms 'integrated platforms'. By employing the TCT lens to understand the emergence of sharing platforms, this is the first study to systematically develop a theoretically grounded approach to understanding how transaction features impact the emergence of sharing platforms, and it hence has clear implications for numerous industries being impacted by these developments, not least the hotel industry.