Substitutability of hotels and peer-to-peer accommodations in Shanghai

Purpose: This paper aims to determine to what extent hotels and peer-to-peer (P2P) facilities are substitutes for travelers. It then examines whether hotels target business travelers and P2P facilities target leisure travelers. Design/methodology/approach: The author collected characteristics of Shanghai hotels and P2P facilities from websites to determine on what basis the two accommodation types compete. The author then conducted a modified importance-performance analysis (IPA) to determine the relationship between accommodations' provision of these characteristics and their importance to Chinese business and leisure travelers. Findings: The characteristics of hotels and P2P facilities systematically differ, and travelers perceive these differences as important. While the differences are significant across all price ranges, they are smaller for budget hotels than for high-end hotels. The modified IPA indicates that P2P facilities appeal more to leisure travelers than to business travelers. Yet hotels better satisfy the requirements of both types of travelers. Practical implications: The findings imply that P2P facilities can target lower- and middle-income vacationing families by charging lower prices. High-end hotels can compete by providing more diverse services and greater value to business travelers and higher-income leisure travelers. Budget hotels can reduce costs by not providing non-essential characteristics. Originality/value: This paper contributes to the discussion of the competition between hotels and P2P facilities by focusing on the Shanghai market. It uses the modified IPA to derive implications for lodging market segmentation.