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

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.     

The causality examination between demand uncertainty and hotel failure: A case study of international tourist hotels in Taiwan

The hotel business is highly sensitive to economic cycles, as the industry faces high frequency and high fluctuation of uncertainty over the demand for lodging services. Without a thorough consideration on the issue, hotels may undergo a business crisis. This research therefore investigates the influence of demand uncertainty on hotel failure by using the operation data of international tourist hotels in Taiwan during 1995–2008. The analysis applies two stages of estimation. The first stage employs a first-order autoregressive model, AR(1), to model lodging demand uncertainty. The second stage estimates the likelihood of hotels’ failure by using a logit model. The results are supportive to determine that the demand uncertainty causes hotel failures.     

A stochastic cost efficiency analysis of international tourist hotels in Taiwan

The one-stage stochastic frontier approach (SFA) is used in this study to simultaneously estimate cost efficiency scores and factors of cost inefficiency for 66 international tourist hotels in Taiwan during 1997–2006. An SFA model with three outputs and three inputs is defined. The three outputs are room revenue, food and beverage revenue, and other operation revenue while the three inputs are price of labor, price of other operation, and price of food and beverage. This model also takes into account five environmental variables, including dummy variable of the hotels located in non-metropolitan area, dummy variable of chain hotels, the number of tourist guides, the minimum distance from each hotel to Taoyuan international airport and the minimum distance from each hotel to Kaohsiung international airport. Empirical results show that international tourist hotels in Taiwan are on average operating at 91.15% cost efficiency. All nominal variables are transformed into real variables in 1997 prices by GDP deflators. Chain systems, tourist guides, and international transportation can significantly improve the cost efficiency of international tourist hotels in Taiwan.     

Revenue functions for hotels within clusters

In this note, we propose a flexible revenue function that considers the characteristics of hotels that operate within competitive clusters. We show that without a need to estimate a demand function one can estimate elasticities of demand, conjectural variations, revenue efficiency, technical change, efficiency change, productivity growth, as well the Lerner index. We use a Bayesian approach to fit the model on a sample of US hotels.     

Impact of quality on estimations of hotel efficiency

This paper provides empirical evidence on the impact of output quality on hotel efficiency. It demonstrates how ignoring quality can lead to erroneous efficiency estimates. The study uses stochastic frontier methodology and the model proposed by Battese and Coelli (1995) to estimate the efficiency of 838 hotels in Spain in the period 2009–2013. The key advantage of this methodology is its ability to estimate efficiency and identify factors that explain differences in efficiency in a single-stage sampling procedure. Estimates of cost efficiency, which only include the costs of higher quality, are compared to those of profit efficiency, which not only consider costs but also the revenues generated by higher quality. Results show that quality has a negative impact on cost efficiency and a positive one on profit efficiency. Thus, hotel management should implement strategies that increase the value of their services as a way to achieve sustainable competitive advantages.     

Hotel employees’ perceptions on corporate social responsibility: The case of Hong Kong

This study examines the perceived importance of corporate social responsibility (CSR) attributes of Hong Kong hotel employees and their hotels’ performance on those attributes, and to determine underlying performance factors that ultimately lead to the perceived overall CSR effectiveness of hotels. The importance–performance analysis results show that Hong Kong hotels generally performed well on 17 out of the indicated 30 CSR attributes. Furthermore, the attribute “promote innovation in products and services” was considered to be overkill, and another attribute, “demonstrates a commitment to the environment,” requires the immediate attention of hotels. Six performance factors were extracted and Hong Kong hotels performed best in the area of finance. The factors “state of affairs” and “novelty” positively and significantly affected employees’ perceived overall CSR effectiveness of their hotels. Almost 70% of the respondents agreed that Hong Kong hotels had been effective in carrying out their CSR. Hotels in Hong Kong should find our study results helpful in pinpointing CSR attributes considered of various importance and performance levels from the perspective of one of their important stakeholders, their employees. In particular, the relatively low awareness toward the environment of both the employees and the hotels should alert the hotel management to invest greater efforts in environmental protection.     

基于DEA方法的内外资星级酒店效率评价与差异分析——以东部省份14个城市为例

近年来,酒店投资规模不断扩大,但整体收益却不尽如人意,内外资星级酒店利润率差距明显。应用DEA方法对2011~2016年我国东部省份14个主要城市的内外资星级酒店效率进行评价,研究发现:从综合效率来看,虽然内外资酒店存在差异,但两者总体水平均较高,且两者波动趋势一致;从技术效率来看,外资酒店略高于内资酒店,两者差距不明显,且差距有缩小的趋势;从规模效率来看,内外资酒店均处于较高水平,但两者差距明显;从效率分类来看,不同效率水平下的内外资酒店技术效率和规模效率表现不同。据此,对内外资星级酒店综合效率与影响因素之间的关系进行了进一步研究。     

Excess capacity,production technology and technical inefficiency in hospitality sector

This article examines the effects of excess capacity on the production cost and technical inefficiency of hotels and restaurants in Norway. The dataset includes a daily unbalanced panel of 94 hotels and restaurants from 2003 to 2014. To accommodate inefficiency, we use an input distance function (IDF). Inefficiency in the IDF means that if inputs are overused by k% then production cost is also increased by k%. We also allow inefficiency to differ across locations and regions by using them as determinants. The results indicate that excess capacity considerably affects the cost and increases inefficiency. The marginal effect on cost increases with excess capacity, but the effect on inefficiency sets in when it exceeds 50 percent. Furthermore, we find less overuse of inputs by firms in small metro towns and the Northern region causing them to be more efficient [except for the Southern and Western regions] than their counterparts.     

Endogeneity in multiple output production: Evidence from the US hotel industry

The treatment of endogenous inputs and outputs in the estimation of multiple–output distance functions is an important issue that has been largely ignored in the hotel and tourism literature. It is well known that directional distance functions with endogeneity are difficult to estimate using maximum likelihood-based methods since the specification of additional identifiable equations for each endogenous variable is highly challenging. In this paper, we propose a limited-information approach to models of this type using a flexible reduced form for the endogenous variables. This approach allows us to easily estimate technical efficiency and does not rely on information about input or output prices, which are typically unavailable. We employ Bayesian methods and propose and use novel posterior measures of weakness and relevance of instruments in an application involving data from major US hotels. We show that controlling for endogeneity has a substantial impact for relative and absolute hotel performance.     

How can tourism use land more efficiently? A model-based approach to land-use efficiency for tourist destinations

In densely populated areas of Central Europe, many successful tourist destinations face the problem of approaching the limit of their growth potential. Solutions to this problem commonly refer to the idea of “smart growth” based on increasing efficiency in the use of nature for economic production (eco-efficiency). In this paper, we show how eco-efficiency can be used to evaluate tourism strategies on local scale based on an augmented regional input–output model that delivers information on economic performance, land use (as indicator for environmental pressure), and employment. We illustrate this approach via a case study of the tourist destination of Davos in the Swiss Alps. The model predicts that the key drivers of land-use efficiency are: (i) the economic impact of tourists, (ii) occupancy intensity, and (iii) the density of beds per area covered by residential buildings and hotels. The economic impact of increasing bed capacity is highly dependent on the tourist category triggering the development; this can also be used to attract new tourist categories at the expense of tourist categories that make inefficient use of available land. As the impact of an increased density of beds per ground floor area is as high as an improved occupancy rate over during the year, spatial planning, building design, and facility management also play a major role in improving land efficiency in the tourism sector.     

A study of economies of scale and economies of scope in Taiwan international tourist hotels

This paper is to investigate economies of scale and economies of scope for the international tourist hotel industry in Taiwan. The research sample contains 50 international tourist hotels in Taiwan. Research data is from financial statements in the official annual report published by the Tourism Bureau, Ministry of Transportation and Communication, R.O.C., and the sample period is from 1993 to 1997. The empirical model contains the Translog cost function, which includes three output variables and four input factors, the cost‐share equations, and the constraints on the parameters in the simultaneous cost system. The seemingly unrelated regression (SUR) is used to estimate the parameters of the simultaneous cost system. The results show that, based on the 1997 data, international tourist hotels in Taiwan are in general not operating efficiently, in terms of cost efficiency. There are some cost incentives or benefits from expansion both in scale and scope of business.     

Fueling the intrapreneurial spirit: A closer look at how spiritual leadership motivates employee intrapreneurial behaviors

This study enriches the hospitality literature by testing a theoretical model on the direct and indirect (via psychological empowerment) relationships between spiritual leadership and intrapreneurial behaviors among hotels' frontline employees. The study also tests the moderating role of work centrality in these relationships. Using time-lagged data from 204 employees and 48 supervisors in 48 hotels, our results show that spiritual leadership is positively associated with frontline employees' psychological empowerment, which in turn increases intrapreneurial behaviors. We also find evidence that work centrality increases the strength of these positive relationships. Our results thus provide new insights on how spiritual leadership motivates hotels’ frontline employees to depart from customary ways of performing their jobs, towards seeking new opportunities to create value for the organization. We suggest that managers, through their vision, altruistic love and faith, can indeed inspire feelings of empowerment among frontline employees and encourage them to engage in intrapreneurial behaviors.     

Do religion and spirituality matter for hotel workers’ well-being and guests’ happiness? An update of the Attraction-Selection-Attrition theory

Drawing on the Attraction-Selection-Attrition (ASA) theory (Schneider et al., 1995), this paper examines how adhering to religious regulations and offering spiritual facilities may affect hotel workers’ psychological well-being and guests’ happiness. Using a mixed method approach, we collected data through two studies on religious practices and spiritual facilities at 5-star hotels in Jordan. In the first stage, interviews were conducted with 18 senior managers at hotels in the Dead Sea area (study 1). In the second stage, data were collected from Muslim guests who visited and stayed at a 5-star hotel in Jordan (study 2) and the hypotheses were tested with partial least squares-structural equation modelling (PLS-SEM) using SmartPLS 3.3.3. Our results indicate that spiritual facilities at hotels enhance workers’ well-being and guests’ happiness while not adhering to religious regulations adversely affects workers’ well-being and guests’ happiness. The paper offers a contextual and novel framework to understand the linkages between religion/spirituality and psychology at hotels in a diverse cultural context in the Middle East. The empirical studies highlight the contextual relevance and extension of Schneider’s (1995) ASA theory by incorporating religiosity/spiritualty and well-being of hotel employees in a Middle Eastern context.     

Corporate social responsibility and sustainability balanced scorecard: The case study of family-owned hotels

This research aims to find empirical support for the benefits of Corporate Social Responsibility (CSR) to family-owned hotels by identifying paths through which CSR influences business. The Sustainability Balanced Scorecard (SBSC) concept is used to assess the perceived importance of relationships between CSR and business performances to support the goals of the case hotels. SBSC breaks the business down into five dimensions namely; Financial, Customer, Internal Business, Learning & Growth and Non-Market Perspective, which is CSR in this study. The results of partial least squares (PLS) regression using the sample consisting of three stakeholders (i.e., two hundred customers, seventy employees and thirty managers) of family-owned hotels delivered several findings: (i) both the employee and manager group shows that CSR has a significant influence on BSC dimensions with variance (ii) all of the stakeholder groups support the significant relationship between CSR and goals and (iii) all of the stakeholder groups confirm the causal relationship among BSC dimensions with variance. Lastly, we conclude the paper by discussing implications for family-owned hotels as well as addressing limitations.     

The Response of Hotels to Increasing Food Costs due to Food Shortages

During 2008–2009 the hotel industry in Hong Kong had to respond to a steady price increase in general food items and in basic food commodities. As most hotels in Hong Kong predict their food cost budgets a year in advance, these sudden and unexpected increases in food commodities came at a time when there was a downturn in the global economy in the wake of the financial crisis and a worldwide influenza A (H1N1) epidemic. There have been articles published in hospitality and tourism journals that have discussed the issue of food cost and control in hotels resulting from poor storage and purchasing, portion control, and preparation and production methods. However, none of the previous studies has examined the sudden and rapid increases in the cost of foods and the impact that this has had on the hotel industry. The measures adopted by Hong Kong hotels of different tiers to control or reduce expected food costs are analyzed in this study. This study employed a cross-sectional exploratory design, encompassing in-depth personal interviews with food and beverage managers and executive chefs in high-, mid- and low-tier hotels in Hong Kong. Empirical findings revealed that mid- and low-tier hotels found the increases in commodity prices challenging and thus employed innovative methods to combat rising food costs. High-tier hotels were more concerned about satisfying customers' needs by maintaining high-quality food products and services. The findings indicate that hotels and restaurants at all points of the market adopted functional strategies to increase their efficiency and profitability. Based on the operating experience of existing hotels, this study demonstrates that enhancing the quality of suppliers' commodities, good staff communication and training practices, and innovative ideas can improve a hotel's financial situation.     

The efficiency of the hotel industry in Singapore

Existing literature related to evaluating the efficiency of the hotel industry, generally, uses different types of radial Data Envelopment Analysis (DEA) to compare the relative efficiency of different hotels in a location. This research note has adopted a different approach by treating years as decision making units (DMUs). This will allow policymakers to evaluate the relative efficiency of a hotel industry as a whole over a specified time period so that the effects of the occurrence of events on the efficiency of hotel industry can be evaluated. This study focuses on the efficiency of hotel industry in Singapore from 1995 to 2010. The analysis is carried out using the non-radial DEA called the Slacks-Based Measure (SBM) to identify the efficient years. Then the efficient DMUs are ranked with the SBM model of super-efficiency.     

The impact of workplace ostracism in service organizations

This study examines the effects of personal and situational determinants on work engagement and service performance. Drawing on Conservation of Resources (COR) Theory, we hypothesize that workplace ostracism will reduce work engagement and service performance and that highly neurotic individuals are more susceptible to ostracism. To test the model, we collect longitudinal data from 304 supervisor–subordinate dyads in 19 Chinese hotels. As predicated, we find that: (1) workplace ostracism is negatively related to service performance; (2) workplace ostracism negatively impacts employee service performance via work engagement; and (3) neuroticism strengthens workplace ostracism's direct effect on work engagement and indirect effect on service performance. The implications of these findings, the strengths and limitations of the study, and directions for future research are discussed.     

Innovation activity in the hotel industry: Evidence from Balearic Islands

The paper provides empirical evidence on technological activity in the Spanish service sector, in particular for the tourist accommodation in the Balearics. The study wants to fulfil the lack of analyses in the field of tourism. Commonly, the study of innovation activity has been carried out from a manufacture perspective, for that reason the paper discusses the precise definition of innovation in accommodation services. The data refer to a large representative sample of hotels in Balearic Islands (Spain), providing a homogeneous set of information. The results show as higher-categories hotels are more innovative than lower-categories hotels; an aggregated measure of technological innovation presents a rate over the average for hotels that belong to a chain, and that for hotels under management contract. Half of innovative companies adjust the human capital skills and abilities. The hotel industry is a supplier-driven sector that innovates introducing R&D embodied technology rather than undertaking internal R&D activities.     

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

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.     

To be similar or to be different? The effect of hotel managers’ rote response on subsequent reviews

Hotel managers increasingly compose rote responses (e.g., similar responses repeated from prior responses) to reviews when dealing with customers' opinions while improving efficiency and saving cost. However, such responses may be ineffective because they are unspecific and add little information to reviewers' comments. To address this dilemma, we examine the degree of managers' rote responses to identify the similarity of managers' response texts. Basing on panel data of 334,671 reviews and 169,794 manager responses from 868 hotels in TripAdvisor, we find that customers leave fewer reviews and lower review valence during the subsequent month, when the level of roteness of managers’ responses is higher. However, rote responses only decrease the volume of subsequent positive reviews but have no influence on the volume of negative reviews. Moreover, such effects are weaker for chain hotels than for independent ones. Therefore, managers should differentiate their responses to online reviews, particularly for independent hotels.