The purpose of this research was to analyze performance of small hotels in three major cities in Tanzania ? Dar es Salaam, Arusha, and Mwanza ? using unit-level financial data. Results showed that small hotel efficiency in these three cities is being impacted by scale and location effects, and an inefficient use of labour input. Continued focus on increasing capacity utilization and allocating resources to develop human resources are the challenges facing industry practitioners and government policy makers. This study contributed to literature through a comparative spatial analysis of small hotels? performance using novel data collection methods.
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