Competitive rivalry in the international hotel industry
Mathews, Vinitia E.
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Despite the importance of interfirm rivalry in competitor analysis, certain fundamental questions have not been explored, such as how a firm can assess which rival is most likely to retaliate, and how a firm can appropriately distinguish between its rivals. In order to answer these questions and explain what drives the competitive relationship between two firms, the extent to which pairs of firms share and compete within the same sets of markets is examined in the intemational hotel industry. Choice of market location is of great significance to competitive posture in this industry because of the distinct industry characteristics of high fixed costs, sensitivity to capacity constraints, cycles of overbuilding, high operating leverage and market segmentation. The study draws upon mimetic isomorphism and multiple point competition theories in an effort to explain why intemational hotel chains might share the same markets with other chains. Data from 1984 to 1993 were obtained from the Directory of Hotel and Motel management. The study makes use of a combination of quantitative and qualitative research methods. The study shows how market similarity provides a good starting point to identify competitors, particularly in those industries where a local market presence is importcint. Market similarity between two firms does not necessarily mean the pair of firms compete directly; the intensity of rivalry also depends on other relevant factors. However, similarity on such factors alone (without market similarity) also does not necessarily mean a pair of firms compete directly.