COVID-19 and Hotel Productivity Changes: An Empirical Analysis Using Malmquist Productivity Index

Abstract

This research investigates the impact of COVID-19 on hotel productivity change using the Malmquist Productivity Index (MPI). For 26 U.S. hotel brands, productivity changes over 10 quarters from the first quarter of 2018 to the second quarter of 2020 were analyzed. After the COVID-19 outbreak, the investigated hotels’ productivity deteriorated. Decomposition revealed that, whereas technical efficiency change (EC) improved, technological change (TC) regressed, resulting in deterioration of the MPI. The investigated hotels’ EC-related practices included enhanced cleaning operations, partnering with a hygiene brand, cutting the workforce, and pay cuts. Practices related to TC included the adoption of new hygiene technology and setting a new standard at the organizational level through the formation of a global council and accreditation related to disinfection and hygiene. Our results show that though U.S. hotels are trying to improve their productivity by efficiently utilizing resources, frontier technology’s regress is decreasing productivity. Our results support the importance of investment in technology for productivity management. This research provides empirical evidence for the need for hotels to pursue technological advances to overcome the pandemic.

Preparing for a future crisis: using DEA-based performance analysis to assess initial pandemic responses in the Taiwanese hotel industry

“…This formula can be rewritten as shown below and decomposed into two components: an efficiency change component (EFFCH) and a technical change component (TECH) of productivity change (Fare, Grosskopf, & Margaritis, 2011;Mohammadi & Ranaei, 2011;Kim et al, 2021).…”

“…According to Fare et al (1994Fare et al ( , 2011 and Tone (2004), an EFFCH measures the relative deviation from the production frontier, which indicates how efficiently a DMU transforms inputs into outputs from maximum potential production between period t and period t þ 1. A hotel may facilitate its improvement in EFFCH when allocating the inputs more efficiently under the existing technology (Kim et al, 2021). Furthermore, a TECH measures the production frontier shift between period t and period t þ 1.…”

“…How the pandemic affects individual hotel performance and productivity depends on a number of factors such as location, hotel type, segments served, hotel size, timing, ownership structure, brand affiliation, hotel strategy, management interaction and technology capabilities, among others (Kim, Kang, Chung, & Choi, 2021). These issues affect hotels in all areas of the world, but the impact varies due to differences in each hotel’s strategic environment.…”

The impact of COVID-19 on the productivity of large companies in Taiwan

“…Lockdowns affect several industries. Tourism and the related industries are prominent examples ( de Vries et al, 2021 ; Hao et al, 2021 ; Kim et al, 2021 ). Studies also indicate that agriculture is an industry affected by lockdowns due to delayed harvest ( Golban & Golban, 2021 ; Mohanty et al, 2020 ).…”

How to Alleviate Hotel Employees’ Job Stress in the Associations between Job Stressors and Its Consequences

“…It can be concluded that the dependence on human resources is relatively high and that the role of industrial workers is critical [5]. Therefore, the threat to human resources in the service industry due to the pandemic can lead to a decline in the quality of services, which may eventually affect the hotel's corporate productivity [6]. In other words, companies must solve job insecurity or manage job stress to improve corporate productivity.…”