IDEAS home Printed from https://ideas.repec.org/a/sae/toueco/v23y2017i5p1056-1068.html
   My bibliography  Save this article

Cost efficiency and its determinants in the hotel industry

Author

Listed:
  • Antonio Arbelo

    (University of La Laguna, Spain)

  • Pilar Pérez-Gómez

    (University of La Laguna, Spain)

  • Marta Arbelo-Pérez

    (Polytechnic University of Catalonia, Spain)

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.

Suggested Citation

  • Antonio Arbelo & Pilar Pérez-Gómez & Marta Arbelo-Pérez, 2017. "Cost efficiency and its determinants in the hotel industry," Tourism Economics, , vol. 23(5), pages 1056-1068, August.
    • Handle: RePEc:sae:toueco:v:23:y:2017:i:5:p:1056-1068
    DOI: 10.1177/1354816616656419
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/1354816616656419
    Download Restriction: no
    File URL: https://libkey.io/10.1177/1354816616656419?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Bahk, Byong-Hong & Gort, Michael, 1993. "Decomposing Learning by Doing in New Plants," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 561-583, August.
    2. Sharon Hadad & Yossi Hadad & Miki Malul & Mosi Rosenboim, 2012. "The Economic Efficiency of the Tourism Industry: A Global Comparison," Tourism Economics, , vol. 18(5), pages 931-940, October.
    3. Berger, Allen N. & Mester, Loretta J., 1997. "Inside the black box: What explains differences in the efficiencies of financial institutions?," Journal of Banking & Finance, Elsevier, vol. 21(7), pages 895-947, July.
    4. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
    5. Cristina Bernini & Andrea Guizzardi, 2010. "Internal and Locational Factors Affecting Hotel Industry Efficiency: Evidence from Italian Business Corporations," Tourism Economics, , vol. 16(4), pages 883-913, December.
    6. George E. Battese & Greg S. Corra, 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 21(3), pages 169-179, December.
    7. Jui-Kou Shang & Fei-Ching Wang & Wei-Ting Hung, 2010. "A stochastic DEA study of hotel efficiency," Applied Economics, Taylor & Francis Journals, vol. 42(19), pages 2505-2518.
    8. Fei-Ching Wang & Wei-Ting Hung & Jui-Kou Shang, 2006. "Measuring the Cost Efficiency of International Tourist Hotels in Taiwan," Tourism Economics, , vol. 12(1), pages 65-85, March.
    9. Pulina, Manuela & Detotto, Claudio & Paba, Antonello, 2010. "An investigation into the relationship between size and efficiency of the Italian hospitality sector: A window DEA approach," European Journal of Operational Research, Elsevier, vol. 204(3), pages 613-620, August.
    10. Carlos Pestana Barros & Peter U.C. Dieke & Carlos M. Santos, 2010. "Heterogeneous Technical Efficiency of Hotels in Luanda, Angola," Tourism Economics, , vol. 16(1), pages 137-151, March.
    11. Carlos Pestana Barros, 2004. "A Stochastic Cost Frontier in the Portuguese Hotel Industry," Tourism Economics, , vol. 10(2), pages 177-192, June.
    12. Akarapong Untong & Mingsarn Kaosa-Ard & Vicente Ramos & Javier Rey-Maquieira, 2011. "Change in the Managerial Efficiency and Management Technology of Hotels: An Application to Thailand," Tourism Economics, , vol. 17(3), pages 565-580, June.
    13. Kodde, David A & Palm, Franz C, 1986. "Wald Criteria for Jointly Testing Equality and Inequality Restriction s," Econometrica, Econometric Society, vol. 54(5), pages 1243-1248, September.
    14. Martin Falk, 2009. "Are multi-resort ski conglomerates more efficient?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(8), pages 529-538.
    15. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
    16. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
    17. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    18. Fei-Ching Wang & Wei-Ting Hung & Jui-Kou Shang, 2006. "Measuring pure managerial efficiency of international tourist hotels in Taiwan," The Service Industries Journal, Taylor & Francis Journals, vol. 26(1), pages 59-71, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bernardina Algieri & Antonio à lvarez, 2023. "Assessing the ability of regions to attract foreign tourists: The case of Italy," Tourism Economics, , vol. 29(3), pages 788-811, May.
    2. Emmanuel Mamatzakis & Panagiotis Pegkas & Christos Staikouras, 2023. "Labour market regulations and efficiency in tourism industry," Tourism Economics, , vol. 29(4), pages 1032-1054, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Arbelo-Pérez, Marta & Arbelo, Antonio & Pérez-Gómez, Pilar, 2017. "Impact of quality on estimations of hotel efficiency," Tourism Management, Elsevier, vol. 61(C), pages 200-208.
    2. Manlagnit, Maria Chelo V., 2015. "Basel regulations and banks’ efficiency: The case of the Philippines," Journal of Asian Economics, Elsevier, vol. 39(C), pages 72-85.
    3. Lensink, Robert & Meesters, Aljar & Naaborg, Ilko, 2008. "Bank efficiency and foreign ownership: Do good institutions matter?," Journal of Banking & Finance, Elsevier, vol. 32(5), pages 834-844, May.
    4. Manlagñit, Maria Chelo V., 2011. "Cost efficiency, determinants, and risk preferences in banking: A case of stochastic frontier analysis in the Philippines," Journal of Asian Economics, Elsevier, vol. 22(1), pages 23-35, February.
    5. Kalb, Alexander, 2008. "The Impact of Intergovernmental Grants on Cost Efficiency: Theory and Evidence from German Municipalities," ZEW Discussion Papers 08-051, ZEW - Leibniz Centre for European Economic Research.
    6. Tom Kompas & Tuong Nhu Che & R. Quentin Grafton, 2004. "Technical efficiency effects of input controls: evidence from Australia's banana prawn fishery," Applied Economics, Taylor & Francis Journals, vol. 36(15), pages 1631-1641.
    7. Williams, Jonathan, 2004. "Determining management behaviour in European banking," Journal of Banking & Finance, Elsevier, vol. 28(10), pages 2427-2460, October.
    8. Roy, Manish & Mazumder, Ritwik, 2016. "Technical Efficiency of Fish Catch in Traditional Fishing: A Study in Southern Assam," Journal of Regional Development and Planning, Rajarshi Majumder, vol. 5(1), pages 55-68.
    9. Roberto Furesi & Fabio Madau & Pietro Pulina, 2013. "Technical efficiency in the sheep dairy industry: an application on the Sardinian (Italy) sector," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 1(1), pages 1-11, December.
    10. Raulin Lincifort Cadet, 2015. "Cost and profit efficiency of banks in Haiti: do domestic banks perform better than foreign banks?," International Journal of Banking, Accounting and Finance, Inderscience Enterprises Ltd, vol. 6(1), pages 37-52.
    11. Zoltan Bakucs & Imre Fertő & József Fogarasi & Laure Latruffe & Yann Desjeux & Eduard Matveev & Sonia Marongiu & Mark Dolman & Rafat Soboh, 2011. "EU farms’ technical efficiency and productivity change in 1990 – 2006 [Efficacité technique et changement de productivité des exploitations agricoles européennes 1990-2006]," Post-Print hal-02808334, HAL.
    12. Dairo Estrada & Poldy Osorio, 2004. "Effects of Financial Capital on Colombian Banking Efficiency," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 22(47), pages 162-201, December.
    13. Tom Kompas, 2004. "Market reform, productivity and efficiency in Vietnamese rice production," International and Development Economics Working Papers idec04-4, International and Development Economics.
    14. Thi Bich Tran & R. Quentin Grafton & Tom Kompas, 2008. "Firm Efficiency in a Transitional Economy: Evidence from Vietnam," Asian Economic Journal, East Asian Economic Association, vol. 22(1), pages 47-66, March.
    15. Madau, Fabio A., 2005. "Technical Efficiency in Organic Farming: An Application on Italian Cereal Farms Using a Parametric Approach," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24545, European Association of Agricultural Economists.
    16. Lajos Zoltan Bakucs & Laure Latruffe & Imre Ferto & Jozsef Fogarasi, 2006. "Technical efficiency of Hungarian farms before and after accession," Post-Print hal-02285626, HAL.
    17. Nguyen, Hoa-Thi-Minh & Do, Huong & Kompas, Tom, 2021. "Economic efficiency versus social equity: The productivity challenge for rice production in a ‘greying’ rural Vietnam," World Development, Elsevier, vol. 148(C).
    18. Alejandro Esteller-Moré, 2005. "Is There a Connection Between the Tax Administration and the Political Power?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(5), pages 639-663, September.
    19. Tom Kompas & Tuong Nhu Che, 2004. "Production and Technical Efficiency on Australian Dairy Farms," International and Development Economics Working Papers idec04-1, International and Development Economics.
    20. Madau, Fabio A., 2011. "Parametric Estimation of Technical and Scale Efficiencies in Italian Citrus Farming," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 12(1).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:toueco:v:23:y:2017:i:5:p:1056-1068. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.