Productivity and efficiency of hotels in Singapore

Abstract

Low productivity growth in the hotel sector is a growing concern for Singapore in the next lap of a??developeda?? status. To address its challenges, this dissertation has four objectives. A model is developed for estimating total factor productivity growth (TFPG) at sectoral level and the hotel sector is ranked six. Testing the a??knowledge diffusiona?? hypothesis of the endogenous growth theory is done through governmenta??s expenditure on R&D and manpower, macroeconomic stability, foreign direct investments and firma??s capital investments. Each sector has different sources of TFPG. Governmenta??s expenditure on manpower and R&D, FDI and macroeconomic stability are significant for the hotel sector. There is evidence of the a??stock market pressure on managersa?? hypothesis whereby hotel managers may try to maximize market capitalization by reducing investments and hence affect productivity growth. Finally, the Predictive Information Link and Valuation Link Models show that managers can focus on financial efficiency to maximize market capitalization.