tThe tourism industry, particularly the hotel sector, is becoming increasingly competitive and dynamicas a result of the pressures of globalized supply and demand in a context of uncertainty. The aim of thisstudy is to discuss the efficiency of hotel companies in the Algarve (Portugal), a tourist destination ofexcellence in southwest Europe. In particular, we intend to assess the efficiency of the hotels in terms ofstar rating (four and five-star hotels), their location (Windward and Leeward), owning or not golf coursesand owning just a single hotel or more than one. This analysis will be based on the parametric methodof stochastic frontier approach using a revenue function. We found relevant levels of inefficiency. Theresults also point out the important role of the operational environment, particularly the hotel locationand the existence of golf facilities. Star rating and owning multiples hotels do not seem to be so relevant.