Cost Efficiency of International Tourist Hotels in Taiwan: A Data Envelopment Analysis Application

Abstract

This paper uses the data envelopment analysis approach to measure cost, allocative and overall technical efficiencies of international tourist hotels (ITHs) in Taiwan during 1997-2006. There are three outputs, three inputs, three input prices and four environmental variables in the empirical model. The cost inefficiency of these hotels is from overall technical inefficiency. International tourist hotels in Taiwan have an average efficiency of 57%. Chain systems, non-metropolitan areas and occupancy rate have significantly positive impacts on all efficiency scores of Taiwan's ITHs. The distance from the nearest international airport significantly worsens their efficiency scores.