Formulating management strategy for international tourist hotel using DEA

Abstract

In the face of a highly competitive environment, it has long been considered important for a hotel to formulate a business competition strategy, strengthen corporate operations and upgrade quality of service. This paper is to discuss the management strategies formulation of the international tourist hotel industry in Taiwan based on the efficiency evaluation. First, data envelopment analysis (DEA), developed by Charnes et al. (Eur J Oper Res 2(6):429-444, 1978), is used to measure the relative managerial efficiency of the international tourist hotels in Taiwan. Through the Kruskal-Wallis, Taiwan’s international tourist hotels are divided into different strategic group. Secondly, by way of factor analyses of industry strategies, a clear picture of the industry strategies and features are identified. Consequently, the appropriate management strategies for different market segments are discussed. The research shows that the efficiency of international tourist hotels is different due to their managerial styles. International tourist hotels can be categorized into three groups: international cooperation; domestic franchise; and independent. “Target market”, “product differentiation”, “the degree of vertical integration”, “economics of scale”, “location” and “competitive edges” is concluded as the key factors to the formation of the managerial strategies. These six variables are used to discuss the managerial strategies of each market segment. The result of this paper will provide useful information for future business management needs of managers. Also, they may serve as valuable reference to the relevant authority of tourism.