Cost efficiency and its determinants in the hotel industry

Abstract

This study employs a stochastic frontier model to estimate cost efficiency and its determinants in the hotel industry in Spain between 2008 and 2012. Measuring cost efficiency provides useful information on the performance of hotels to management, shareholders and, in general, to all stakeholders. Cost control is an issue managers are particularly concerned about, as it gives a competitive advantage that allows hotels to perform better. The results indicate that the inefficiency in average costs for the sample considered is 32.44% and is time invariant. The results also show that labour productivity, the accumulation of knowledge and location are factors that largely determine the differences in efficiency between hotels. These findings have important implications for public policymakers and hotel management, specifically, policies aimed at improving the skills of hotels’ human resources should be encouraged. Likewise, both location and the accumulation of knowledge are strategic resources that hotel management must include in their competitive strategies to increase efficiency.

Estimation of Profit Efficiency in the Hotel Industry Using a Bayesian Stochastic Frontier Model

“…De Jorge and Suárez (2014) reveal that size and efficiency have a U-shaped relationship, whereas market share and the degree of organizational autonomy are positively related to efficiency. Arbelo et al (2017) find significant and positive relationships between labor productivity, accumulation of knowledge, location, and hotel efficiency.…”

Achieving tourist destination competitiveness: Evidence from Latin‐American and Caribbean countries

“…As regards the subject matter, particularly abundant are studies focusing on the efficiency analysis of the tourist sector through its principal stakeholders: hotels, travel agencies, and so forth. In this regard, prominent parametric‐type applications include the works of Barros ( and ), which examine the efficiency of Portuguese inns and hotels, respectively; the study by Bernini and Guizzardi (), analysing the efficiency of a broad sample of Italian hotels; the work by Assaf and Magnini () applied to eight chains of hotels in the United States; and Arbelo et al (), who examine Spanish hotels. There are, perhaps, more examples of applications of nonparametric methods, principally DEA, to evaluate aspects of the tourist industry.…”

“…In this regard, there are numerous references that set out a variety of perspectives and approaches. On the one hand, certain studies explore the agents that make up the sectorhotels or hotel chains-where the productivity analysis responds to a basic input-output structure in the commercial area (Arbelo, Pérez-Gómez, & Arbelo-Pérez, 2016;Assaf & Magnini, 2012;Oukil, Channouf, & Al-Zaidi, 2016). Other authors focus on actual territorial units, in other words, the tourist destinations.…”

Total factor productivity growth and regional competitive analysis of China’s star-rated hotels

“…Nevertheless, such indices are largely confined to the measurement of final operational outcomes, ignoring the efficiency of resource input utilization (Tsai et al, 2011) and neglecting the multidimensional aspects of hotel industry operations (Yu and Chen, 2016). To tackle such deficiency, some scholars introduced parametric approaches such as stochastic frontier analysis (SFA) by considering multiple inputs and outputs of a hotel and assessed its efficiency by measuring its deviation from an optimal frontier (Arbelo et al, 2017;Assaf, 2012;Barros, 2004;Barros, 2006;Lin, 2011). Additionally, another common approach in efficiency assessment is a nonparametric approach of data envelopment analysis (DEA) (Charnes et al, 1978), in which an efficiency frontier is constructed reflecting a firm's minimum resource usage for a given level of output (Liu et al, 2018).…”

“…Conventionally, hotel industrial performance could be measured using single dimensional indicators/ratios, such as average occupancy rates (Oses et al, 2016), relative efficiency (Arbelo et al, 2017), or partial productivity indicators (Assaf and Agbola, 2011;Sigala and Mylonakis, 2005). The majority of hotel productivity-related studies are microcosmic in nature and based on cross-sectional data at the individual level of hotels; a more holistic performance measure such as TFP growth at the industrial level has received relatively scant attention in the hotel industry in China.…”