The Impact of Covid-19 on Hotel Efficiency in Spain: the Case of Barcelona

Purpose: With this study, we aim to evaluate a hotel’s performance in terms of efficiency before and during COVID-19 and provide a performance knowledge of both stable and turbulent environments.<br><br>Design/methodology/approach: The sample consists of 20 Hotels: 3-star and 4-star operating in Barcelona, Spain. Data Envelopment Analysis (DEA) will be used to analyze the efficiency of those Hotels between 2012 and 2021. The analysis includes five input variables: (X1) Current Assets; (X2) Non-Current (Fixed) Assets; (X3) Shareholders’ equity; (X4) Cost of employees; (X5) Material Costs and one output variable: (Y) Operating revenue.<br><br>Findings: The results showed that during COVID-19 more 3-star hotels are being inefficient and have a higher level of inefficiency than 4-star hotels. For each inefficient hotel’s performance during the 10 years, the highest level of inefficiency was recorded during COVID-19 meaning that the pandemic had a negative impact on all of them. Moreover, more 3-star hotels were inefficient and had a higher level of inefficiency than 4-star hotels. The lambda analysis showed that during 10 years, more 3-star hotels were identified as principal models to follow than 4-star hotels. Finally, the slack analysis revealed that inefficient 3-star hotels have to make adjustments in more resources such as Current Assets, Non-Current (Fixed) Assets, and Shareholder’s Equity than 4-star hotels where they have to reduce resources such as Cost of Employees and Material Costs. All the hotels included in the sample have to increase their Operating revenue.<br><br>Research limitations/future research: The first limitation is available data in terms of variables and available years. The second one is the limitations applicable to the method used. Regarding future research, one direction would be to evaluate a hotel’s performance in terms of efficiency and effectiveness. Another direction could be to expand the number of input and output variables for a larger sample of hotels located not only in Spain but also in other popular tourism destinations for the same purposes. Finally, to analyze hotel performance after COVID-19 to understand the resiliency and recovery speed of hotels after the pandemic.<br><br>Practical implications: The findings from the DEA analysis offer valuable information and potential strategies that could serve hotel managers to enhance their operational efficiency. The important insights that this study reveals can also guide future investors indicating that inefficiency is more common in 3-star hotels compared to 4-star hotels and that during unexpected situations such as COVID-19, the level of inefficiency is higher in 3-star hotels than in 4-star hotels.<br><br>Originality/value: This is the first study analyzing hotel efficiency before and during COVID-19. Furthermore, it pinpoints the origins of inefficiencies for each hotel and gives recommendations on how it can be improved.