Measuring Hotel Performance Using the Game Cross-Efficiency Approach

Abstract

This study evaluates the comparative operating efficiencies of 23 international tourist hotels in Taipei by means of data envelopment analysis (DEA). A game cross-efficiency extension of the original DEA method is applied to provide reliable and comprehensive evaluation results. The main advantage of this approach is that it not only assesses hotel efficiency effectively based on self- and peer evaluation but also takes the competition among decision-making units (DMUs) into account. A star-rating system is also proposed to rate the performance of the international hotels under study based on their DEA efficiency scores over different periods. The results reveal that the mode of hotel operation significantly affects efficiency, in that hotels operated by international chains are more efficient than independent hotels. However, the level achieved in the traditional Taiwanese plum-rating system by hotels had no significant impact on hotel operational efficiency.