This paper examines the joint effects of product differentiation and ownership structure on the evolution of agglomeration in the Texas lodging industry. Using the data from the Texas Comptroller of Public Accounts from 2010 to 2016, this study focuses on how the joint effects of product market strategy and ownership structure shape the lodging industry dynamics and eventually the spatial distribution of hotels. The literature on agglomeration claims that the agglomeration effect is heterogeneous among hotels and this effect is based on product heterogeneity between entrants and incumbents nearby. In addition, the choice of the ownership structure of entrants might substantially change the competitive environment of the market. We propose that multi-unit owners who operate a bundle of product portfolios can obtain more benefits but neutralize more threats from agglomeration. The results show that the multi-unit owner will establish a new high-end hotel in the market characterized by high counts of low-end hotels if one of the incumbents belongs to the multi-unit owner. Moreover, the findings also show that multi-unit owners who operate multiple cross-tier/same-chain hotels will neutralize the negative externality from agglomeration. The results imply that the owner of high-end hotels may find it beneficial to control nearby incumbents.