Unpacking Competitive Performance in 5* Hotels: The Joint Effect of Dynamic Managerial Capabilities and Digital Transformation

Digital transformation in the hospitality sector was accelerated by the COVID-19 pandemic. Strategy scholars discussed dynamic managerial capabilities as capabilities needed to adapt to rapid change and navigate digital transformation to gain a competitive advantage in the hospitality sector. It suggests that by leveraging digital technologies, fostering a culture of innovation, and building agile business ecosystems, hospitality organizations can enhance their competitive position and ensure long-term sustainability in an increasingly digitalized marketplace. The research question of our study is how dynamic managerial capabilities and the adoption of digital technologies affect the competitive advantage of the hospitality sector. We address the research question by deploying a multiple case study research design and collecting data from 5* Hotels in Lithuania. The study finds that the synergy between dynamic managerial capabilities such as data-driven decision-making, connectivity to internal and external networks, also digitally driven operational efficiency, and sustainability-oriented attitudes significantly enhances the competitive performance of 5-star hotels by fostering innovation, strategic alignment, and superior guest value. We also provide insights for 5* hotel owners and managers.