Internal features and agglomeration externalities for the hotels’ competitiveness in Emilia Romagna

The chapter aims to investigate to what extent hotels’ productivity and efficiency is affected by internal firm characteristics and agglomeration externalities related to the municipality in which the hotel operates. We estimate a stochastic frontier model in which localisation and urbanisation indicators are introduced in both the production frontier and the inefficiency model. As a case study, we consider a huge sample of hotels operating in Emilia Romagna (Italy). The results provide support for positive agglomeration externalities on both the production frontier and on technical inefficiency. In particular, inefficiency is determined to be related primarily to the tourism product offered by the destination, the presence of large enterprises and the concentration of accommodation activities; no urbanisation diseconomies have been detected.