The performance analysis of hotels in various destinations across Thailand

Abstract

The major aim of this study was to examine whether the location incorporated hotel does statistically matter to technical performance of the hotels. This paper applies labor productivity and the concepts of DEA, SFA and Metafrontier efficiency estimations to assess the firm’s performance in Thai hospitality industry. Then, the calculate parameters are regressed against location variable and other control variables. We find that hotels located in Bangkok have better performance than hotels located in regional areas. This result reflects an importance role of the capital city and quality improvement of hotel for competitive pressure in capital city. Evidences suggest that hotels located close to the airport are more efficient than hotels incorporated far from airport.  Interestingly, we find that hotels located in popular travel destinations have higher labor productivity than hotels located in other areas, but no supporting evidence to conclude that hotels in popular travel destinations operate at higher efficiency. The results from this paper could be potentially utilized as preliminary input for policy maker to improve the capability of the entrepreneurs by understanding the location-effect on performance of the hotels.