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A stochastic DEA study of hotel efficiency

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  • Jui-Kou Shang
  • Fei-Ching Wang
  • Wei-Ting Hung

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.

Suggested Citation

  • Jui-Kou Shang & Fei-Ching Wang & Wei-Ting Hung, 2010. "A stochastic DEA study of hotel efficiency," Applied Economics, Taylor & Francis Journals, vol. 42(19), pages 2505-2518.
    • Handle: RePEc:taf:applec:v:42:y:2010:i:19:p:2505-2518
    DOI: 10.1080/00036840701858091
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    References listed on IDEAS

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    1. Mei Xue & Patrick T. Harker, 1999. "Overcoming the Inherent Dependency of DEA Efficiency Scores: A Bootstrap Approach," Center for Financial Institutions Working Papers 99-17, Wharton School Center for Financial Institutions, University of Pennsylvania.
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    Cited by:

    1. Christina Bampatsou & George Halkos & Olga-Helen Astara, 2022. "Composite indicators in evaluating tourism performance and seasonality," Operational Research, Springer, vol. 22(3), pages 2373-2396, July.
    2. Songsong Zhao & Tai Huang & Jianchao Xi, 2022. "Understanding the Evolution of Regional Tourism Efficiency: Through the Lens of Evolutionary Economic Geography," Sustainability, MDPI, vol. 14(17), pages 1-16, September.
    3. Jiung-Bin Chin & Mu-Chen Wu & Ling-Feng Hsieh, 2013. "Strategic planning of optimal resource allocation in response to global financial crisis -- a study of international tourist hotels," Applied Economics, Taylor & Francis Journals, vol. 45(23), pages 3316-3328, August.
    4. Olawale Ogunrinde & Ekundayo Shittu, 2023. "Benchmarking performance of photovoltaic power plants in multiple periods," Environment Systems and Decisions, Springer, vol. 43(3), pages 489-503, September.
    5. Chin‐wei Huang & Hsiao‐Yin Chen, 2023. "Using nonradial metafrontier data envelopment analysis to evaluate the metatechnology and metafactor ratios for the Taiwanese hotel industry," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(4), pages 1904-1919, June.
    6. Luis César Herrero-Prieto & Mafalda Gómez-Vega, 2017. "Cultural resources as a factor in cultural tourism attraction," Tourism Economics, , vol. 23(2), pages 260-280, March.
    7. Assaf, A. George & Tsionas, Mike G., 2019. "A review of research into performance modeling in tourism research - Launching the Annals of Tourism Research curated collection on performance modeling in tourism research," Annals of Tourism Research, Elsevier, vol. 76(C), pages 266-277.
    8. Antonio Arbelo & Pilar Pérez-Gómez & Marta Arbelo-Pérez, 2017. "Cost efficiency and its determinants in the hotel industry," Tourism Economics, , vol. 23(5), pages 1056-1068, August.
    9. Fukuyama, Hirofumi & Tsionas, Mike & Tan, Yong, 2023. "Dynamic network data envelopment analysis with a sequential structure and behavioural-causal analysis: Application to the Chinese banking industry," European Journal of Operational Research, Elsevier, vol. 307(3), pages 1360-1373.
    10. Lado-Sestayo, Rubén & Fernández-Castro, Ángel Santiago, 2019. "The impact of tourist destination on hotel efficiency: A data envelopment analysis approach," European Journal of Operational Research, Elsevier, vol. 272(2), pages 674-686.
    11. Marco Corsino & Enrico Zaninotto, 2012. "Revealing the influence of managerial practices and entrepreneurs' characteristics on hotel efficiency," DISA Working Papers 2012/03, Department of Computer and Management Sciences, University of Trento, Italy, revised May 2012.
    12. Corne, Aurélie & Peypoch, Nicolas, 2020. "On the determinants of tourism performance," Annals of Tourism Research, Elsevier, vol. 85(C).
    13. Ghimire, Sarad & Amin, Saman Hassanzadeh & Wardley, Leslie J., 2021. "Developing new data envelopment analysis models to evaluate the efficiency in Ontario Universities," Journal of Informetrics, Elsevier, vol. 15(3).
    14. Eleni Dimitriadou & Asimina Kouriati & Sofia Karampela & Anna Tafidou & Thomas Bournaris, 2023. "The Three Dimensions of Small Accommodation Businesses and Their Efficiency," Tourism and Hospitality, MDPI, vol. 4(3), pages 1-16, August.
    15. Gómez Vega, Mafalda & Herrero Prieto, Luis César, 2017. "Determinantes de la eficiencia en la captación de turismo cultural nacional y extranjero en España: Un análisis regional/Drivers of Efficiency in Attracting Domestic and Foreign Cultural Tourism to Sp," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 35, pages 849-872, Agosto.

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