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THE PPF AND PARETO EFFICIENCY IN HOSPITALITY INDUSTRY

THE PPC AND PARETO EFFICIENCY IN HOSPITALITY INDUSTRY
Named after the Italian Economist Vilfredo Pareto,Pareto Efficiency is used to evaluate the efficiency of a product resources allocation on the PPC.
Any output combinations for the two products X and Y lying inside the PPC eg Points D ,E and F inefficient because they are below the possible maximum attainable output.
The possible maximum attainable output combinations for the two products lie on the PPC. eg. Points A,B and C represent output combination points where resources available are fully and effectively employed in production.
Output Levels outside the PPC are considered to be beyond the reach of the company and unattainable using the currently available resources.
In Hospitality Sector lets say a Restaurant,new and improved technology deployment would push production outside the PPC. Staff Training and Consultancy to boost the productivity of the labor factor can push the output outside the curve.
More output for the two products can also be realized through proper allocation of resources without necessarily expanding the amount resources available.This approach brings out the concept of Allocative Efficiency.Some resources yield better outputs when increased to produce a particular product X than when used to produce Y. For Instance,citing the PPC above,taking away some labour resources from Conferencing and adding them to Fine Dining and taking away some technology resources from Fine Dining and adding them to Conferencing could lead to output of both the products increasing even as the total resources available remain constant.It is basically a question of determining which resources fit better for which product for allocative efficiency purposes.
For Example,a hotel that seeks to grow both its restaurant business and conferencing business may find out that restaurant business gives more output when more labour and lesser space is employed and conferencing business gives better output when more space(land) and lesser labour is employed.Shifting more space from restaurant to conferencing and more labour from conferencing to restaurant could lead to outputs of both growing without acquiring any labour or space outside of what is currently available for the hotel.This definitely helps managers,owners of Hospitality establishments to rotate their resources effectively to achieve different business targets without necessarily acquiring more resources from outside hence minimizing the overall cost of operation of a an hospitality outlet. 

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