Seasonality and Efficiency of the Hotel Industry in the Balearic Islands: Implications for Economic and Environmental Sustainability

Abstract

Tourism seasonality generates negative environmental and economic impacts. This paper analyzes the effects of seasonality on the efficiency of the hotel industry in the Balearic Islands (Spain). To that end, a sample of hotel establishments is divided into two groups (those that close down during the off-season and those that do not). Data envelopment analysis (DEA) is applied to assess the radial efficiency of each of the selected hotels; then, directional distance functions (DDFs) are used to measure the degree of efficiency with which these hotels use each of the inputs that form part of their production process. To the best of our knowledge, this is the first time that the said technique has been applied to the hospitality industry to examine the effects of seasonality. The results of this study suggest that those establishments that do not close down their operations are markedly more efficient than the ones that do. Moreover, they are more efficient in the use of each input. Therefore, a reduction in the levels of tourism seasonality would improve the economic sustainability of the hotels and reduce the environmental pressure at peak times. Finally, in line with the theoretical hypotheses formulated, the results regarding the specific efficiency levels for each input show that the greater the degree of flexibility with which these inputs are used, the higher the efficiency.