| Abstract: | This paper analyses the relative efficiency and productivity of a representative sample of Portuguese hotels by using the directional distance function and the Luenberger productivity indicator. The key advantage of this approach is that both input contraction and output expansion are considered. The model generates hotel efficiency scores, ranking the hotels in the sample. We conclude that both inputs and outputs play a major role in hotel efficiency. Therefore, we suggest an alteration of management procedures in order to enable efficiency to be increased, based on an effective enhanced‐incentive policy and taking into account the small hotel characteristics of the sample. Copyright © 2008 John Wiley & Sons, Ltd. |
