Cost efficiency and its determinants in the hotel industry

Antonio Arbelo Alvarez, Pilar Pérez-Gómez and Marta Arbelo-Pérez
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Pilar Pérez-Gómez: University of La Laguna, Spain
Marta Arbelo-Pérez: Polytechnic University of Catalonia, Spain

Tourism Economics, 2017, vol. 23, issue 5, 1056-1068

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.

Keywords: cost efficiency; hotel industry; stochastic translog cost frontier (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:23:y:2017:i:5:p:1056-1068

DOI: 10.1177/1354816616656419

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