A stochastic DEA study of hotel efficiency

Abstract

This current study is the first to apply Stochastic Data Envelopment Analysis (SDEA) approach to assess the efficiency of hotels. The determinants of hotel efficiency were also investigated employing the Tobit regression model approach. The SDEA results show that the SDEA efficiency measures are higher than the deterministic ones and the greater the stochastic variability of outputs, the closer the envelope moves successively to any given observation and the efficiency score approaches one. The optimal solution to SDEA involves the presence of some buffer (slack) of all outputs. In applications involving practice production situation, such buffer (slack) can be interpreted as the firms' need to hold inventory, excess capacity and organizational slack against stochastic uncertainty of market environment. Our results also indicate that resort hotels achieve better efficiency than those in metropolitan areas and operating as part of a chain is not the main determinant of the efficiency of international tourist hotels in Taiwan.

Performance evaluation of the hotel industry in an emerging tourism destination: The case of Oman

“…This study uses a two-stage approach (Barros, Botti, Peypoch, & Solonandrasana, 2011;Shang, Wang, & Hung, 2010). The approach starts with a Data Envelopment Analysis (DEA) evaluation of the hotels' technical efficiencies, followed by a statistical regression of the efficiency scores over a set of contextual factors.…”

Are operation style and outsourcing type important drivers in Airport Restaurant efficiency in Taiwan?

“…The third reason for airport restaurant ineff iciency might be the restaurant's location (Bull, 1994;Hwang and Chang, 2003;Barros, 2005;Shang et al, 2009). A restaurant's eff iciency might be aff ected by whether or not it is located within the security area.…”

“…The fi rst possible explanation for these disputes might be the patterns of operation (Hwang and Chang, 2003;Chiang et al, 2004;Shang et al, 2009). Restaurants in Taipei Airport are classifi ed into two groups based on their patterns of operation: independent operations and chain operations.…”

“…The DEA methodology has been widely applied to measure eff iciency in a variety of areas, including education, health care, banking, armed forces, sports, transportation, agriculture, retail stores and electricity suppliers (Martin and Roman, 2001). The DEA has been adopted by most eff iciency studies in the context of hotel industry to measure hotel's performance (Barros, 2005;Reynolds and Thompson, 2005;Wang et al, 2006;Chen, 2007;Shang et al, 2009). The study of the operational eff iciency of international airports began with Tolofari et al, (1990) and has attracted signifi cant attention in the last decade (Humphreys and Francis, 2002;Graham, 2005; Barros and Managi, 2008;Tseng et al, 2008;Tovar and Martin-Cejas, 2010).…”

Evaluating the Efficiency Progress With Technology in a Spanish Hotel Chain

“…The most widely used outputs are total revenue and the revenue generated by each activity or service, such as accommodation, food and beverages, and others (Chiang et al, 2004;Hu & Cai, 2004;Morey & Dittman, 2003;Shang et al, 2010, Wu et al, 2010, 2011. Occupancy or the number of beds sold are also widely used as output (Alonso de Magdaleno et al, 2009;Barros, 2004Barros, , 2005aBarros, , 2005bBarros & Alves, 2004;Barros & Mascarenhas, 2005;Keh, Chu, & Xu, 2006;Shang et al, 2010;Sigala, 2003;Wu et al, 2010). Authors such as Sigala (2003), Fuchs (2004) and Chen (2007) have taken into account outputs such as customer satisfaction indexes and the Yielding Index (Chiang et al, 2004;Fuchs, 2004).…”