Incumbents’ Strategic Responses to Gig Disruptors in the Hotel Industry

Disruptive technologies afforded by the gig and sharing economy have placed existential threats on the incumbent firms. We use property-level hotel data to examine the impact of short-term rental disruptors on incumbent hotels and how incumbents respond. We argue that the innovations brought by these disruptors differ from past disruptive technologies because they possess architectural advantages over the smaller incumbent hotels while growing from a niche to compete with the larger incumbent hotels. As a result, incumbents need to dynamically adjust their positioning based on their resources and capabilities to respond effectively. To address endogeneity concerns, we explore regulatory events limiting the operation of short-term rental hosts. We find suggestive evidence that performance impacts and responses are heterogeneous across incumbent hotels with different organizational characteristics.