Understanding the microfoundations that boost hotel innovation and how it affects competitive advantage is a current controversial topic debated by both academics and practitioners. The aim of this study is to shed light on the mechanisms that foster hotel innovations (differentiating between service, process, and organizational innovation) to improve their competitive advantage in terms of cost and differentiation. Based on a sample of 212 Spanish hotels, our empirical results find a positive and chain-moderated influence of dynamic capabilities (sensing, seizing, and reconfiguring) on different types of hotel innovations. Furthermore, while service, process, and organizational innovation are positively related to the improvement of differentiation competitive advantage, only process innovation is significantly related to cost competitive advantage. This research makes a useful contribution to both academic literature and professional hotel managers, who should be attentive to the microfoundations of dynamic capabilities and hotel innovation.
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