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Arturs Kalnins
Research summary: I conducted a nationwide replication of Baum and Mezias' (1992) pioneering single-market study of localized competition by pooling the populations of 90 urban U.S. hotel markets. Consistent with Baum and Mezias' three hypotheses, I demonstrate a negative market-level effect on survival duration of size-based, geographic-based, and price-based localized competition. When analyzing submarket 'windows,' I found support for size-based and geographic-based localized competition. In contrast, Baum and Mezias find support for only size-based localized competition at the market level, but for all three forms of localized competition when analyzing submarket windows. I extend their analysis by (1) using standardized measures of localized competition, and (2) showing separate results for key subpopulations. I conclude that there are indeed firm-level benefits of avoiding localized competition. Managerial summary: This paper demonstrates that-at a broad level of analysis such as a city-hotels are more likely to survive if there are fewer other properties (1) in their geographical vicinity, (2) of similar size, and (3) at their price point. Thus, prospective owners should be leery of location in the more crowded niches even if these may be plausibly more lucrative for some. Sparsely populated niches appear to be less risky on average. When we study this phenomenon within a narrower geographic scope such as a part of the city, the least crowded niches in terms of geography, price or size no longer appear to provide benefits in terms of survival. Thus, it is possible that only the most sparsely populated niches citywide improve a hotel's likelihood of survival. Copyright © 2016 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]
