NBER

Andrew Butters

Kelley School of Business, Indiana University
1309 E. Tenth Street
Bloomington, IN 47405-1701

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: Indiana University

NBER Working Papers and Publications

December 2019Industry Structure, Segmentation, and Competition in the U.S. Hotel Industry
with Thomas N. Hubbard: w26579
This paper investigates how increases in concentration can be interrupted or reversed by changes in how firms compete on quality. We examine the U.S. hotel industry during the past half century. We document that starting in the early 1980s, quality competition came more in the form of costs that vary with hotel size, and less in the form of costs that are fixed with hotel size, particularly for business travelers. We then show that, consistent with Sutton (1991), industry structure has evolved differently since then in areas that are business travel versus personal travel destinations. Demand increases have been associated with more, but smaller, hotels in business travel destinations. In contrast, the growth in the number of hotels is much smaller, and the growth in average hotel size...

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