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Impact of quality on estimations of hotel efficiency

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  • Arbelo-Pérez, Marta
  • Arbelo, Antonio
  • Pérez-Gómez, Pilar

Abstract

This paper provides empirical evidence on the impact of output quality on hotel efficiency. It demonstrates how ignoring quality can lead to erroneous efficiency estimates. The study uses stochastic frontier methodology and the model proposed by Battese and Coelli (1995) to estimate the efficiency of 838 hotels in Spain in the period 2009–2013. The key advantage of this methodology is its ability to estimate efficiency and identify factors that explain differences in efficiency in a single-stage sampling procedure. Estimates of cost efficiency, which only include the costs of higher quality, are compared to those of profit efficiency, which not only consider costs but also the revenues generated by higher quality. Results show that quality has a negative impact on cost efficiency and a positive one on profit efficiency. Thus, hotel management should implement strategies that increase the value of their services as a way to achieve sustainable competitive advantages.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:touman:v:61:y:2017:i:c:p:200-208
    DOI: 10.1016/j.tourman.2017.02.011
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    Cited by:

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    2. Yaguo Deng & Helena Veiga & Michael P. Wiper, 2019. "Efficiency evaluation of hotel chains: a Spanish case study," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 10(2), pages 115-139, June.
    3. Javier M. Moguerza & Clara Martín-Duque & Juan José Fernández-Muñoz, 2022. "The importance of service quality as an instrument for client customization: a methodological and practical approach within the hotel sector," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(3), pages 1631-1642, June.
    4. Zutao Deng & Yan Gao & Bin Liang & Alastair M Morrison, 2020. "Efficiency evaluation of hotel operations in Mainland China based on the superefficiency SBM model," Tourism Economics, , vol. 26(2), pages 276-298, March.
    5. Barnabé Walheer, 2019. "Dynamic directional nonparametric profit efficiency analysis for a single decision-making unit: an aggregation approach," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 41(4), pages 1123-1149, December.

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