The performance of Croatian hotel companies – DEA window and Malmquist productivity index approach

Abstract

The hospitality industry operates in a dynamic and competitive environment whereefficiency and productivity are crucial for sustainable success. The main goal ofthis paper is to assess the dynamic changes in the efficiency and productivity oflarge and very large Croatian hotel companies and to investigate whether theirlocation influences these factors. It also aims to determine how resilient thecompanies are to macroeconomic shocks and to identify the causes of inefficiencyand productivity changes separately for each location. The analysis is conductedfor 70 large and very large hotel companies in total and separately for those incoastal and the continental Croatia from 2017 to 2022 using the Window DataEnvelopment Analysis and the Malmquist Productivity Index. The results show aslight decrease in relative efficiency in 2020 due to the impact of the COVID-19pandemic. The main cause of inefficiency for coastal hotel companies throughoutthe period is management performance and other exogenous factors. Conversely,the main cause of inefficiency for continental hotel companies shifted from non-optimal production size to management and other exogenous factors after 2020.Productivity declined between 2019 and 2020 due to the decline in technologicalchange for companies in both locations. Prior to 2020, coastal and continentalhotel companies followed a similar trend. While coastal hotels recovered faster in2021, continental hotels recovered more steadily and achieved higher productivityin 2022. This research provides valuable insights for hotel managers andacademics seeking to navigate the ever-changing field of hotel management.