Airbnb and Business Travelers: A Prospect Theory Explanation

The Lodging Shared Economy (LSE) has recently become a dominant force in the lodging industry. Airbnb is a well-known example of LSE and has become a favorite for business and leisure travelers. However, research in the lodging industry is limited regarding business travelers' preferences for staying at an LSE property while traveling for business. The current study investigates this topic as it affects traditional hotels being at the risk of becoming a commodity with the growth and expansion of the LSE segment. A survey was conducted comparing respondents traveling for business who stayed in a traditional hotel room versus an LSE property, respectively. This study evaluates LSE guest preferences for seven established accommodation characteristics: Price; Financial Information Security; Personal Safety; Location, Empathy, Amenities, and Cleanliness. Analyses were conducted using SmartPLS and produced results that indicated that five of the seven measured criteria were perceived differently by business travelers. Management implications include suggestions for both hotels and LSE and how to diminish the impact of direct competition between the two segments of the lodging industry.