Using Data Envelopment Analysis for Measuring and Benchmarking Productivity in the Hotel Sector

The value of stepwise Data Envelopment Analysis (DEA) for measuring and benchmarking hotel productivity is illustrated by applying it in a dataset of three star hotels in the UK.

Abstract

SUMMARY Low productivity within the hospitality industry has been a major concern, but this situation is unlikely to improve without a general change in the way productivityis measured and managed. This paper aims to illustrate the value of stepwise Data Envelopment Analysis (DEA) for measuring and benchmarking hotel productivity. The issues regarding productivity measurement as well as the advantages of using DEA for measuring productivity are analysed. However, the paper extends current DEA applications by developing a stepwise approach to DEA. The latter technique combines correlation and DEA analysis for developing robust DEA models and its advantages are illustrated by applying it in a dataset of three star hotels in the UK.