Efficiency and its determinants in Portuguese hotels in the Algarve

This paper uses non-parametric techniques to investigate and compare the efficiency of Portuguese hotels in the Algarve, the comparison being made between those hotels possessing golf courses and those that do not. The Algarve is one of the more important tourism locations in Portugal and a popular destination for tourists from many countries and specifically attracts tourists seeking to play golf. By using data envelopment analysis (DEA) this study investigates the influence of star ratings, golf courses and location on hotel efficiency. Additionally the study uses the test devised by Carvalho and Marques that takes into account the equality of the entire efficiency distribution. We conclude that star rating is not a significant determinant of efficiency but location and the existence of golf courses may have some relevance. A major finding is that it is those hotels that do not possess golf courses that are the more efficient.

► We measure the efficiency of Portuguese hotels in the tourism region of the Algarve.
► Robust non-parametric methods are applied to compare the performance of hotels.
► The paper provides evidence of higher efficiency in hotels without golf courses.
► Results show that hotel star rating is not a relevant issue for their performance.