Revisiting the taxonomy of market exit strategies in hotels

Abstract

Theories of service firm life cycle do not explain what happens to a hotel at the end of the decline stage. Although market exit is one of the possible outcomes of business decline, it is under-researched. Yet, such research is critical for understanding the options available to a hotel in a time of crisis. By interviewing senior managers with the experience of failed hotels (n=17), this study revisits a taxonomy of market exits to reconceptualize the decline stage of a hotel’s life cycle. The study shows that, on some occasions, market exits can affect hotels positively rather than negatively, thus leading to business regeneration. Investors/owners play a central role in market exits and their cognition determines how market exit impacts the business future. The study positions turnaround not as a market exit, but as a strategy which can lead a hotel to it or away from it.