116 Journal of Hospitality & Tourism Research, Vol. 38, No. 1, February 2014, 116-132 DOI: 10.1177/1096348012451459 © 2012 International Council on Hotel, Restaurant and Institutional Education EFFICIENCY ANALYSIS OF THE AUSTRALIAN ACCOMMODATION INDUSTRY: A BAYESIAN OUTPUT DISTANCE FUNCTION A.George Assaf University of Massachusetts–Amherst Isenberg School of Management Frank W. Agbola University of Newcastle, Callaghan New South Wales, Australia This article measures and compares performance in the accommodation industry across Australian states and territories. The authors specify a Bayesian frontier model and estimate the model using panel data spanning the period 1998 to 2009. The results indicate that there are differences in efficiency across states and territories and also between sectors. Empirical results show that the hotel sector is the most efficient, followed by the guest house and motel sector and, finally, the serviced apartment sector. The Bayesian regression results indicate that the key determinants of efficiency in the accommodation industry are the international attractiveness of the state or territory, the share of large accommodation providers in the sector, and the prevailing economic conditions within the state or territory. The findings that the efficiency measures differ across regions and types of sector indicate that adopting a holistic approach to policy formulation and implementation may not be appropriate to ensure competitiveness of the accommodation industry in Australia. KEYWORDS: hotel management; econometrics; data envelopment analysis Over the past decade or so, there has been a growing number of theoretical and empirical studies measuring and explaining technical efficiency across the accommodation industry. These studies have traditionally used different techniques for estimating technical efficiency, hereafter referred to simply as efficiency. Most of these analyses have been limited to simple ratios and partial productivity indicators (e.g. gross profit, salesor revenue, occupancy, or spending). Although these ratios provide some insights into efficiency in the accommodation industry, the approaches have been limited to examining efficiency in relation to specific areas of operation of the accommodation industry. For example, the widely used labor productivity measure only provides information on the efficiency of labor by guest on April 29, 2016 jht.sagepub.com Downloaded from