Title: A Data Envelopment Analysis for establishing the financial benchmark of Korean hotels

Authors: Hokey Min, Hyesung Min, Seong Jong Joo, Joungman Kim

Addresses: James R. Good Chair in Global Supply Chain Strategy, Department of Management, College of Business Administration, Bowling Green State University, Bowling Green, OH 43403, USA. ' Department of Tourism Management, Yuhan University, 185–34 Goian-Dong, Sosa-Gu, Bucheon, Kyunggi Province, South Korea. ' Department of Operations and Supply Chain Management, College of Business Administration, Central Washington University, 400 E. University Way, Ellensburg, WA 98926, USA. ' Graduate School of Tourism Management, Kyunghee University, Haegi-dong Dongdaemoon-ku, Seoul, 130–701, Korea

Abstract: In the wake of catastrophic natural disasters and rising threats of terrorism, the hotel industry has seen a decline in revenue and an increase in competition. To avoid a downward spiral, the hotel industry needs to develop more competitive business strategies in order to make its operations lean and robust. These strategies may include: customer relationship management, yield management, niche marketing and continuous improvement of financial health. The success of these strategies hinges on the ability of hotel managers to assess the financial efficiency of their hotel in comparison to competition. In an effort to help hotel management enhance its financial efficiency in an increasingly competitive hotel industry, this paper proposes a Data Envelopment Analysis (DEA), which develops a meaningful set of benchmarks that will dictate best practices and form a successful hotel business model. Using the examples of 39 international and regional hotels in Korea, this paper illustrates the usefulness of DEA for the continuous improvement of hotel business practices.

Keywords: hotel management; financial benchmarking; data envelopment analysis; DEA; Korea; customer relationship management; CRM; yield management; niche marketing; continuous improvement; best practices.

DOI: 10.1504/IJSOM.2008.016611

International Journal of Services and Operations Management, 2008 Vol.4 No.2, pp.201 - 217

Published online: 11 Jan 2008 *

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