Abstract
Ownership structure, a source of firm heterogeneity, can change competitive environments and market structures; the impact on the hospitality industry is unknown. This study investigates the impact of hotel ownership structure changes on the magnitude of localized competition of different quality segment hotels. Two‐level mixed‐effect analyses reveal that hotel ownership structure change from chain‐affiliated to independent increases the number of neighboring economy hotels, whereas the change from independent to chain‐affiliated increases the number of neighboring upper‐upscale hotels. Ownership structure changes in the same market can be a key driver of market dynamics, suggesting that hotels should colocate with caution.