Analyzing the performance of the South Tyrolean hospitality sector: a dynamic approach

Purpose of the study: The objective of this paper is to introduce a methodology to explore the dynamical behavior of the economic efficiency of the hospitality sector. As a case study, the hospitality sector in the Autonomous Province of Bolzano, during the period 2002-2008, is analyzed. Design/methodology/approach: First, using the Data Envelopment Analysis (DEA), the efficiency level of the decision making units (DMUs) with respect to its own performance over time, and the performance of the relatively most efficient regions and periods, is quantified. The dynamics of the hospitality sector of each DMU are also considered, analyzing the evolution of its economic efficiency through a cluster an alysis, hierarchical and spanning trees. Findings: Employing annual data from 2002 to 2008, the DM Us are clustered according to the temporal evolution of their efficiency. Hence, using two complementary measures of distance (i.e. the correlation and the average distance) between the time series of the hospitality sector, evidence has been provided that neither the evolution of the trend, nor the trajectory of the efficiency of DMUs are affected by their geographical location. Other factors, such as the size and the subsector of activity, seem to affect the common trend and trajectory of the DMUs in the sample. Originality/value: The contribution of the present study consists of applying an under-researched methodology to explore the dynamical behavior of the economic efficiency of the hospitality sector in the Autonomous Province of Bolzano. The evolution of the economic efficiency is analyzed using a cluster analysis. Also, geometrical and taxonomic aspects of the performance between DMUs pairs are presented, using minimal spanning and hierarchical trees, respectively. Research limitations/implications: Future research will in volve using new distances to extract different information from this empirical data. Furthermore, if longer time seri es were available, the evolution of the clusters could be further investigated (Brida et al., 2010). Practical implications: Exploring the key determinants of the dynamics of efficiency represents an essential tool to manage the hospitality sector in the South Tyrolean region, providing entrepreneurs with useful indications about the best way to process inputs.