Overcoming the pitfalls of economies-of-scale in shared accommodation: How can effective multi-listing management enhance the sustainability of homestay businesses?

Economies-of-scale have always been a significant concern, but previous theoretical studies have primarily focused on the traditional manufacturing industry. Consequently, their findings are not directly applicable to the tertiary sector, particularly the hospitality service industry. The hospitality service operates in a high-risk environment and is susceptible to market exits. Therefore, it becomes even more crucial to effectively leverage economies of scale for improving survival rates and long-term operations. This study aims to explore the effectiveness of economies of scale theory in the hospitality industry by examining how sharing accommodation's economies-of-scale impact personalized and professionalized homestay businesses' survival. To achieve this objective, we analyze a panel dataset comprising 551,605 properties located in New York City, Los Angeles, Chicago, and Austin using panel survival analysis techniques such as the Cox model and the exponential model. The findings indicate that economies-of-scale can confer short-term survival advantages to professional homestay businesses in comparison with personalized ones. However, in the long run, the social benefits of personalized homestay businesses surpass the impacts of economies-of-scale, thereby enabling them to achieve better sustainability than professional homestay businesses. The likelihood of survival for professional homestay businesses increases with a greater number of listings in operation, referred to as the advantage of economies-of-scale on professionalization; conversely, this is not true for personalized homestay businesses. Moreover, effective host-guest communication both facilitates the attainment of benefits for personalized businesses and amplifies its impact on professionalized enterprises; high-quality products offered by personalized hosts can derive more advantages from scales compared to low-quality products, while superhost-certified professionalized hosts experience less business benefit than uncertificated hosts. This study is one of the pioneering efforts to investigate how economies-of-scale can contribute to the professionalization and personalization of homestay properties, thereby enhancing their business survival. It significantly contributes to the existing literature on hospitality business survival and expands upon the economies-of-scale theory by elucidating its advantages and potential pitfalls in relation to homestay businesses.

Lan-fei Gao, Hui Li