Managing Efficiency in International Tourist Hotels in Taipei using a DEA Model with Non-discretionary Inputs

In this paper, an input-oriented data envelopment analysis model with discretionary and non-discretionary variables is proposed for measuring the efficiency of international tourist hotels (ITHs). The model considers two outputs (total revenues and occupancy percentage), two discretionary inputs (total number of employees and total operating costs) and two non-discretionary inputs (total number of guest rooms and food and beverage capacity). Variable returns to scale are assumed. Both the proposed and the traditional input-oriented model are applied to measure the efficiency of 21 ITHs in Taipei during 2003-2007, and different efficiency measures and benchmarks are derived to help the management of these hotels adjust more effectively their discretionary inputs to achieve better efficiency. Implications are also discussed.