Do contextual factors matter? Evidence from Chinese hotel productivity with heterogeneity

Abstract

In this article, an assessment of efficiency and productivity of Chinese hotels at the provincial level in relation to their star rating is proposed. This heterogeneity is considered by using a hierarchical structure. The drivers of productivity and its components are studied through various and innovative environmental and contextual factors. This study shows that Chinese star-rated hotels experienced a slight productivity deterioration in the last decade. Furthermore, several contextual and environmental factors explain significant differences in productivity rankings of the Chinese provinces. These findings reveal important patterns that are useful for both hotel managers and policymakers.

The Nature of Technological Change in the Chinese Hotel Sector

“…After the global and Chinese economic slowdown in 2009, China’s hotel industry is gradually facing the dilemma of saturation of supply and demand and stagnation of revenue after 2008. Furthermore, in 2012, Chinese government has introduced several policies to reduce expenditures (Dong et al, 2020). As a result, the total profit of star-rated hotels in China declined considerably to −.2 billion in 2009 as a result of the global financial crisis in 2008; total profits recovered to 6.143 billion in 2011, but this number downed sharply to −2.09 billion in 2013, and it has not restored peak as before until 2016 (Yearbooks of China Tourism Statistics, 2017).…”

“…Walheer and Zhang (2018) applied a Malmquist–Luenberger index from 2005 to 2015 on 30 Chinese provinces and found that star-rated hotels performed better over time in China, but not for every activity they operated. Dong et al (2020) have adopted a two-stage DEA model to study the influence of enviromental variables on the hotels’ performance. Furthormore, dynamic aspects have also been also investigated to reflect productivity changes over time and the sources of the changes.…”

“…The hotel industry has become the pillar of the regional tourism industry and has promoted its development by providing necessary accommodation, entertainment, catering, and conference facilities (Yang et al, 2012). However, in recent years, the number of hotels, rooms, employees, rental rates, and operating income in China’s hotel industry have declined to a certain extent (Dong et al, 2020; Tsai, 2009; Yang et al, 2017). China’s hotel industry is facing unprecedented challenges.…”

Tourist attractions in efficiency analysis

“…Tourism efficiency analysis in China received large attention from scholars, mainly at the provincial level and/or by using data from hotels (Dong et al, 2020; Walheer and Zhang, 2018; Walheer et al, 2020). In this paper, we follow this stream of the literature and the efficiency of Chinese provinces is studied by using data from the hospitality sector on the star rating basis.…”

Heterogeneity of Resources and Performance in the Hotel Industry

“…Other authors, such as Z. Yang et al (2017), Assaf, Oh, and Tsionas (2017), Walheer and Zhang (2018) and Dong et al (2020), introduce endogenous and exogenous variables into the analysis of hotel efficiency to study the problem of heteroge neity. In practice, these studies measure efficiency by comparing the position of each hotel with a common frontier.…”