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In this paper, the innovative two-stage procedure of Simar and Wilson (2007) is used to estimate the efficiency determinants of Portuguese hotel groups from 1998 to 2005. In the first stage, the hotels' technical efficiency is estimated with DEA in order to establish which hotels have the most efficient performance. These could serve as peers to help improve performance of the least efficient hotels. In the second stage, the Simar and Wilson model is used to bootstrap the DEA scores with a truncated regression.
The paper contributes to the hotel industry literature by adopting a somewhat novel approach that has never been applied to this industry despite its managerial implications. The motivation for the analysis lies in the fact that during the period under analysis Portuguese hotels faced a number of threats. Knowing what the best practices are is then good news for managers and institutions.