Presenters: Harsh Soni
Authors: Harsh Soni, Anna Schiffmann
Faculty Advisor: Yang Huo
Institution: Utah Valley University
The financial objective of the hospitality business is to maximize the shareholder’s wealth through the achievement of operational efficiency in unit level productivity. A hotel consists of multiple units/outlets or amenities (restaurants, banquet, etc.,). These multiple units are considered as Decision Making Unit (DMU). The lodging operation’s efficiency has received considerable attention by escalating customer value driven expectation and competitive market situation. However, the mechanisms and methods for measuring and analyzing productivity in the lodging area have not been scientifically applied and utilized. The purpose of this paper is to apply the technique, known as DEA. This technique integrates multiple input and output variables simultaneously and produces a single productivity index that compares all multiple units to the most-efficient units in the sample (i.e., DMU). The DEA model provides a new benchmark filtering measure to identify the best performance and to consider the time-dependent nature of lodging operators who operate multi-units. In addition, this approach will observe and identify the multi-period sustained high performance. The proposed approach is applied to a data set spanning five years. The financial statements showing the inputs and outputs are obtained from the ABC Hotel Group as it operates multiple properties in the Western region, and it is a good way to compare those properties as DMU and construct and determine the benchmarking property. This paper will make two important contributions to the lodging operators. First, it applies a framework utilizing three operating variables (product efficiency, product effectiveness, and service effectiveness). Second, it analyzes the performance of revenue management in the context of DMU’s forecasting methods since this paper will measure management capabilities such as booking and forecasting and to determine whether it integrates other onsite services that impact the operational effectiveness including: food and beverage operations, housekeeping (labor control), etc.