Total Productivity in the Australian Hotel Industry: Estimating and Bootstrapping Malmquist Indices

Abstract

This article measures and decomposes the productivity of Australian hotels over the period 2004–2007, using a bootstrapped Malmquist index. The aim of this procedure is to seek out those determinants that explain the sources of productivity variation between Australian hotels. Two inputs and six outputs are used in the analysis, reflecting the operational characteristics of each hotel. The results indicate that most hotels in the sample experienced a significant increase in productivity, driven mainly by an increase in technology over the period analyzed. Factors that are found to be strong determinants of productivity include the location, size, and star rating of each hotel. Related market discussions of these findings as well as the policy implications of the study are provided.