Abstract
The idiosyncrasies of the hospitality industry account for the fierce price competition among hotels: services provided are highly substitutable, barriers to entry are low while exit barriers are high, and the low industry concentration prevents any collusion to increase prices. Additionally, the widespread adoption of information technology and electronic commerce in the industry has facilitated the rise of multi-sided distribution platforms (such as Booking.com...), which serve as sources of intermediation biases and increase price competition among hotels, or Red Ocean strategies. Hoteliers are nevertheless able to adopt differentiation strategies - or Blue Ocean strategies - and thus counter competition solely based on prices.
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