A Data Envelopment Analysis for establishing the financial benchmark of Korean hotels Online publication date: Fri, 11-Jan-2008
by Hokey Min, Hyesung Min, Seong Jong Joo, Joungman Kim
International Journal of Services and Operations Management (IJSOM), Vol. 4, No. 2, 2008
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.
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