Using Data Envelopment Analysis to Evaluate Efficiency: An Exploratory Study of the Chinese Hotel Industry

Abstract

. This paper uses data envelopment analysis (DEA) to benchmark relative efficiency of China's hotel sector among its 31 provincial regions. Two popular DEA models (CCR and BCC models) are used to generate three efficiency measures: the overall efficiency, pure technical efficiency, and scale efficiency. A K‐means cluster analysis, with values obtained from the DEA outcome, was subsequently performed to further define cluster membership of the 31 regions in China. Findings of this research provide guidelines for formulating hotel entry strategies as well as for evaluating hotel production efficiency at the sub‐national level. Implications for government decision makers and destination management organizations are discussed.

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