Technical and allocative efficiency in a chain of small hotels

In this paper, we analyse the technical efficiency and allocative efficiency of hotels belonging to the Portuguese state-owned chain, Pousadas de Portugal, in order to investigate the performance of the chain as a whole. The resource-based view of management sees hotels as heterogeneous, but with different competitive advantages and disadvantages, which brings about differences of performance within the chain. In investigating the efficiency of the constituent units, we find that the results are, at best, mixed. Therefore, we propose a management revision to enforce efficiency, based on a governance-environment framework.