Persistence of financial efficiency in tourism and hospitality firms

Abstract

This paper analyses the nature and degree of persistence of the financial efficiency of the tourism and hospitality industry in China. Efficiency scores and the degree of persistence of firm efficiency are estimated using data envelopment analysis and dynamic panel regression, respectively. The results confirm significant and positive persistence of the financial efficiency of sample firms over 9 years, and support the ‘performance-persistence’ theory. The findings of this study can help new industry entrants formulate market-entry strategies and make investment decisions. In addition, existing firms can use the findings as a guide to increase their financial efficiency and sustainability.

Keywords Tourism and hospitality industry, China, Financial efficiency