Efficiency Analysis of the Australian Accommodation Industry

Abstract

This article measures and compares performance in the accommodation industry across Australian states and territories. The authors specify a Bayesian frontier model and estimate the model using panel data spanning the period 1998 to 2009. The results indicate that there are differences in efficiency across states and territories and also between sectors. Empirical results show that the hotel sector is the most efficient, followed by the guest house and motel sector and, finally, the serviced apartment sector. The Bayesian regression results indicate that the key determinants of efficiency in the accommodation industry are the international attractiveness of the state or territory, the share of large accommodation providers in the sector, and the prevailing economic conditions within the state or territory. The findings that the efficiency measures differ across regions and types of sector indicate that adopting a holistic approach to policy formulation and implementation may not be appropriate to ensure competitiveness of the accommodation industry in Australia.