Heterogeneous Technical Efficiency of Hotels in Luanda, Angola

Abstract

This paper uses a random frontier model to analyse technical efficiency in a data set of hotels in Luanda, the capital city of Angola, for 1990–2007. The hotels are ranked according to their technical efficiency, disentangling homogeneous and heterogeneous variables. This methodology attempts to account for observed and unobserved heterogeneity across hotels. The study rests on the premise that hotels in Luanda have an established role in the business market and emerging significance in the tourism market, broadly defined. Based on the analysis, the authors conclude that those hotels adopting a more strategic approach are better, and thus more efficient, than those that lack vision. They then point to the wider implications of the discussion.