Group cross-efficiency evaluation in data envelopment analysis: An application to Taiwan hotels

Data envelopment analysis methodology has been applied to hotels performance evaluation in tourism industry. This study develops group efficiency and group cross-efficiency models to evaluate Taiwan hotel chains and subsidiary hotels with data from 2011 to 2015. We present group efficiency with two definitions and develop self-evaluation models for groups. The two definitions are the average performance which views the group efficiency as the average of its members' performance, and the weakest performance which uses the worst of members' efficiencies to indicate the group efficiency based on the cask principle, respectively. In the group cross-efficiency evolution, we develop corresponding models based on the average performance and the weakest performance as the group efficiency. Our developed models are extensions of classic cross-efficiency model, focusing on the performance of hotel chains in the perspective of the group instead of individual hotel. Empirical results show that Hotel Royal and Regent Hotel outperformed from 2011 to 2015 comparing with other hotel chains.