Internal and locational factors affecting hotel industry efficiency: evidence from Italian business corporations

This paper investigates whether and how the competitive delay of the Italian hotel industry is influenced by the level of business corporation efficiency. A stochastic frontier production approach is proposed in which technical inefficiency is specified as a function of the internal and locational factors in a firm. The model is estimated on a balanced panel of tourism business corporations observed during 1998-2005. Estimates show that the competitive gap in the Italian accommodation system is not a result of poor business corporation performance, and the importance of location, human and immaterial capital is assessed as (in)efficiency determinants. The authors then suggest policies to improve the Italian tourist industry's competitiveness.