Measuring and Decomposing Efficiency in International Tourist Hotels in Taipei Using a Multidivision DEA Model

Abstract

Traditional efficiency studies using data envelopment analysis (DEA) models considered all resource inputs as homogeneous, which appears to be unwarranted. In this article, we propose an output-oriented, multidivision DEA model considering the heterogeneity of different operating departments in a hotel when measuring its efficiency. Using the data of 21 international tourist hotels (ITHs) in Taipei during 2005–2007, we first measured each hotel's systematic efficiency by maximizing the performance of two different departments (i.e., rooms along with food and beverage) and then we decomposed the systematic efficiency by separately measuring the subsystematic efficiency of each department. Managers of the underperforming ITHs would find the model application and results of this study beneficial in helping them identify the operating department(s) that was causing the inefficiency for the hotel during 2005–2007. As a result, strategies and efforts for tackling the inefficiency could then be proposed by the managers in a more desirable direction. Implications are discussed.