Market Structure, Conduct, and Performance of Star Hotels in North Sumatra, Indonesia

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Tongam Sihol Nababan
Raya Panjaitan
Ferry Panjaitan
Robert Tua Siregar
Acai Sudirman


This  study  aims  to  analyse  the  market  structure,  conduct,  and  performance  of  the  star  hotel  industry  in  North  Sumatra.  The  study  was  conducted  in  2019  with  time series data for the period of 2013 to 2018. The market structure is measured using the methods of concentration ratio, Herfindahl-Hirschman index, and barriers to entry, while descriptive methods are used to analyse the conduct and performance of five-star hotels. The results of the study show that: (i) there is a concentration of three- and four-star hotels, and that the concentration of four- and five-star hotels have an oligopolistic structure; (ii) the market structure of star hotels tends to be monopolistic; (iii) the minimum efficient scale index of star hotels is relatively small, which means that new hotels have a good opportunity to get a larger market share; (iv) the level of service and the level of availability of star hotel facilities are classified as good; and (v) the star hotel market structure influences hotel business behaviour in North Sumatra, which in turn affects hotel business performance.


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