Using data envelopment analysis to measure hotel managerial efficiency change in Taiwan

In the face of a highly competitive environment, it has long been considered important for a hotel to formulate a marketing competition strategy, strengthen corporate operations and upgrade quality of service. In formulating competition strategies, one must first measure the comparative performance of the entire industry, before one may understand one's advantages and disadvantages. This paper uses data envelopment analysis (DEA), developed by Charnes et al. (Eur.J. Oper. Res. 2(6) (1978) 429), and the Malmquist productivity index expressed by Fare et al. (J. Product Anal. 3(1) (1992) 85), to measure the managerial performance of 45 hotels in 1998 and the efficiency change of 45 Hotels from 1994 to 1998. The results revealed that there was a significant difference in efficiency change due to difference in sources of customers and management styles. In addition, this paper showed that the managerial efficiency of international tourist hotels in Taiwan is related to the level of internationalization of hotels. Moreover, the entire industry can be partitioned into six clusters based on relative managerial efficiency and efficiency change. Effective management strategies are developed specifically to each of the six clusters of hotel. It was expected this study can provide useful information for future hotel management needs. (C) 2003 Elsevier Science Ltd. All rights reserved.