Evaluation of efficiency and technological bias of tourist hotels by a meta-frontier DEA model

Abstract

Tourist hotels may face different production frontiers and bias of technology between the group frontier and meta-frontier due to technological heterogeneity. This paper develops a meta-frontier data envelopment analysis framework for evaluating the efficiency and technological bias of tourist hotels. By comparing the curvatures of the group frontier and meta-frontier, the relative technological bias between a specific group and the whole industry can be obtained. Furthermore, by investigating the relative technological bias, the direction of technological improvement needed for individual hotels can be ascertained. The proposed method is applied in an empirical example of Taiwanese tourist hotels. The results indicate that most hotels have technological bias and should adjust the curve of their production possibility frontier to match the meta-technology.

Keywords:

• Technological bias
• efficiency
• meta-frontier data envelopment analysis
• tourist hotel

Notes

1 For a more detailed review of related studies, refer to Assaf, Barros and Josiassen (2012).

2 Due to the limitation of the plane figure, only two kinds of outputs are used to illustrate the technological bias. However, when there are more than two kinds of outputs, pairwise comparisons can be applied to understand the direction of technological bias. For example, if three outputs, $y_1$, $y_2$ and $y_3,$ are produced, there are three combinations, $y_1\mathit{vs}.y_2,$ $y_2\mathit{vs}.y_3$ and $y_1\mathit{vs}.y_3,$ to identify bias directions.

3 In terms of international tourist hotels, other departments mainly include the catering department, entertainment department, shopping department, valet service department, and business-related service department. In terms of ordinary tourist hotels, the catering department is the main part of ‘other departments’.