Travelers’ reactions toward recommendations from neighboring rooms: Spillover effect on room bookings

Abstract This research aims to test the potential spillover effect among room rentals using the context of room-sharing platforms. The spillover effect refers to the influence of related units' outcomes on a unit's outcome. On this basis, we hypothesize that the number of bookings of targeted neighboring rooms influences the number of bookings of a recommended room. Given our sample of nearly 20,000 observations, the empirical application results show that with the increase in the bookings of targeted neighboring rooms, the bookings of a recommended room rise in line with the hypothesized spillover effect. Moreover, the similarity between the recommended room and its neighboring rooms targeted at the room search stage and the quality of the recommended room further strengthen the spillover effect. This research contributes to the literature by providing novel perspectives to the boundary conditions of spillover effects and presents managerial implications for hosts and operators of room-sharing platforms.