The Efficiency Score of Small Accommodation Businesses in Non-Coastal Rural Areas in Greece

Abstract

Small accommodation businesses dominate the rural hospitality industry, producing simple or complex tourist products and services in order to be sustainable and competitive. In this paper, a two-stage data envelopment analysis (DEA) model was applied in a representative sample of 151 small accommodation businesses in non-coastal areas in the region of Central Macedonia in Greece. In the first stage, DEA-bootstrapping is applied to estimate point and interval efficiency ratios of accommodation businesses and identify the benchmark accommodations. The double bootstrapping truncated procedure of Simar and Wilson is implemented in the second stage to investigate the role of five business factors in terms of efficiency. The findings suggest that small accommodation businesses, although they are based in areas where tourist resources abound, are inefficient. Moreover, the results of the truncated regression method showed that the business’s size, the operating days, and the variety of activities (simple/complex) affect business’s inefficiency. On the contrary, the business’s age and their engagement in agriculture or not do not affect business’s efficiency. The results are important for rural entrepreneurs and policy makers, and they will also be useful for the adaptation of businesses to increase their efficiency.