Improving performance measurement and benchmarking in the accommodation sector

Abstract

Purpose – The aims of the paper are to evaluate the relevance of environmental factors (seasonality, size and quality) on hotels’ performance and benchmarks; to measure the bias in efficiency resulting from a failure to control for these sources of heterogeneity; and to propose some managerial policies to handle for environmental heterogeneity. Design/methodology/approach – The sample is constituted by 2,705 hotels operating in Emilia-Romagna (Italy). The metafrontier approach is used to identify the different production processes and measure technical efficiency scores. Findings – Different production processes exist among accommodation firms due to environmental features; not considering heterogeneity in technological sets produces high levels of bias in the efficiency measurement, albeit the ranking of hotels tends to be fairly consistent; the star rating is the primary source of efficiency bias followed by seasonality, while size has a minor impact. Research limitations/implications – Future research could be directed to analyse the relevance of environmental heterogeneity in other areas; study the dynamics; investigate agglomeration effects; and use other methodological tools. Practical implications – The analysis proposes new managerial interventions: targeted strategies to different groups; creation of networks of enterprises, clustered mainly in respect to size for highly rated enterprises and seasonality for low-rated enterprises; and incentives to annual hotels and raise in the product quality. Originality/value – This paper simultaneously considers several environmental factors affecting heterogeneity in hotel production processes; investigates the effect of heterogeneity on either the efficiency scores or the ranking of hotels; and focuses on micro, low-quality or seasonal hotels.