The performance of Croatian hotel companies – DEA window and Malmquist productivity index approach

The hospitality industry operates in a dynamic and competitive environment where efficiency and productivity are crucial for sustainable success. The main goal of this paper is to assess the dynamic changes in the efficiency and productivity of large and very large Croatian hotel companies and to investigate whether their location influences these factors. It also aims to determine how resilient the companies are to macroeconomic shocks and to identify the causes of inefficiency and productivity changes separately for each location. The analysis is conducted for 70 large and very large hotel companies in total and separately for those in coastal and the continental Croatia from 2017 to 2022 using the Window Data Envelopment Analysis and the Malmquist Productivity Index. The results show a slight decrease in relative efficiency in 2020 due to the impact of the COVID-19 pandemic. The main cause of inefficiency for coastal hotel companies throughout the period is management performance and other exogenous factors. Conversely, the main cause of inefficiency for continental hotel companies shifted from non-optimal production size to management and other exogenous factors after 2020. Productivity declined between 2019 and 2020 due to the decline in technological change for companies in both locations. Prior to 2020, coastal and continental hotel companies followed a similar trend. While coastal hotels recovered faster in 2021, continental hotels recovered more steadily and achieved higher productivity in 2022. This research provides valuable insights for hotel managers and academics seeking to navigate the ever-changing field of hotel management.