A two-stage DEA approach to analyse the efficiency of the hospitality sector

Abstract

This article explores the performance of the hospitality sector in Sardinia (Italy) using empirical data collected from company balance sheets (from 2004 to 2013). A standard data envelopment analysis (DEA) is run using sales revenue as an output and the monetary value of all tangible and intangible assets as well as labour costs as inputs. Following the Simar–Wilson approach, a post-DEA is also carried out to investigate the factors that influence hotels’ economic efficiency. The empirical results show that business default and the cost of money negatively influence hotels’ performance and that firms located in highly specialized areas with a strong seasonality are relatively inefficient. Furthermore, the short-run debt index and the long-term debt index positively impact efficiency.