Investigation of efficiency in the UK hotel industry: a network data envelopment analysis approach

Aaron Tan, Dimitris Despotis

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)

Abstract

Purpose – This paper aims to investigate efficiency in the UK hotel industry and further evaluate the impacts of hotel characteristics and industry environment on efficiency.
Design/methodology/approach – The network data envelopment (DEA) weak link approach is used for the efficiency analysis, while the determinants of efficiency are evaluated by bootstrapped truncated
regression.
Findings – The findings show that the UK hotel industry is very inefficient. The results of overall efficiency deconstruction show that the second-stage production process experiences an even lower level of efficiency than that of the first stage. The second-phase analysis shows that both the hotel-specific characteristics and the industry-specific characteristics are significantly related to UK hotel efficiency.
Research limitations/implications – The robustness of the results is affected because a single set of input-intermediate product-outputs and a single DEA method were used. Therefore, further studies can use alternate inputs, intermediate measures and outputs in the efficiency analysis. In addition, the robustness of the efficiency score can be checked using alternate parametric or non-parametric methods.
Practical implications – Hotels in the UK should focus on cost reduction, business diversification, improvement in the capital level and labor productivity, while at industry and macroeconomic level, discounts are recommended to be provided to international tourism and the tourism industry should be further opened.
Originality/value – The weak-link approach has been applied to estimate the efficiency level, as this provides more robust and accurate results compared to other non-parametric methods in the existing empirical studies and unique hotel-specific and industry-specific determinants of efficiency are considered in the second-stage analysis.
Original languageEnglish
Pages (from-to)1080-1104
Number of pages25
JournalInternational Journal of Contemporary Hospitality Management
Volume33
Issue number3
Early online date11 Feb 2021
DOIs
Publication statusPublished - 15 Mar 2021

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