Did the Financial Crisis and Policy Deregulation for Chinese Tourists Affect the Efficiency and Output Slacks of Taiwanese Hotels?

  • Chin Yi Fang


The financial crisis of 2008 caused the economic recession. In addition, restrictions on Chinese tourists to Taiwan were relaxed in July of 2008. The paper was to examine whether the financial crisis or the deregulation of Chinese tourists affected the performance of hotels in Taiwan. A metafrontier approach to data envelopment analysis (MDEA) was used in this paper to estimate the efficiency scores and metatechnology ratios (MTRs) of 84–99 international tourism hotels (ITHs) and standard tourism hotels (STHs) in Taiwan during the period ranging from 2005 to 2010. The results indicated that the MTR of ITHs with more service facilities was worse than that of STHs with specialised room revenue during the economic downturn. After the Chinese tourists policy deregulation, the MTR of ITH had increasingly outperformed that of STH. A truncated regression with a bootstrap procedure had examined the impact of macroeconomic and microeconomic variables on hotel efficiency and output slacks. In addition to the insignificant effects of the financial crisis on the efficiency of Taiwanese hotels, China/Taiwan tourism policy deregulation had a favourable influence on hotel efficiency, but mainly benefited on the occupancy rate, and unfavourable impact on the room revenue.


Data Envelopment Analysis Efficiency Score Data Envelopment Analysis Model Data Envelopment Analysis Approach Gross Domestic Product Growth Rate 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.



We would like to thank Professor Manuela Sarmento (the conference chairperson), Professor Stephen Wanhill, Professor John Tribe, and other participants in the “Destination Management and Tourism Performance” session of the International Conference on Advances in Tourism Economics in 2011 (Universidade Lusíada de Lisboa, Portugal) for their helpful comments.

Financial supports from Taiwan’s National Science Council (NSC 100-2410-H-003 -005, NSC 99-2410-H-003-002) are also gratefully acknowledged.


  1. Assaf AG, Agbola FW (2011) Modelling the performance of Australian hotels: a DEA double bootstrap approach. Tour Econ 17:73–89CrossRefGoogle Scholar
  2. Assaf A, Matawie KM (2009) A two-stage approach to efficiency modeling: an application to the Australian hospital food production industry. J Hosp Tour Res 33:284–304CrossRefGoogle Scholar
  3. Assaf A, Barros CP, Josiassen A (2010) Hotel efficiency: a bootstrapped metafrontier approach. Int J Hosp Manag 29:468–475CrossRefGoogle Scholar
  4. Banker RD, Charnes A, Cooper WW (1984) Some models for estimating technical and scale inefficiencies in data envelopment analysis. Manag Sci 30:1078–1092CrossRefGoogle Scholar
  5. Barros CP, Dieke PUC (2008) Technical efficiency of African hotels. Int J Hosp Manag 27:438–447CrossRefGoogle Scholar
  6. Battese GE, Rao DSP, O’Donnell CJ (2004) A metafrontier production function for estimation of technical efficiencies and technology gaps for firms operating under different technologies. J Product Anal 21:91–103CrossRefGoogle Scholar
  7. Bierlen R, Featherstone AM (1998) Fundamental q, cash flow, and investment: evidence from farm panel data. Rev Econ Stat 80:427–435CrossRefGoogle Scholar
  8. Charnes AC, Cooper WW, Rhodes E (1978) Measuring the efficiency of decision making units. Eur J Oper Res 2:429–444CrossRefGoogle Scholar
  9. Coelli TJ (1995) Recent developments in frontier modeling and efficiency measurement. Aust J Agric Econ 39:219–245CrossRefGoogle Scholar
  10. Drake L, Hall MJB, Simper R (2006) The impact of macroeconomics and regulatory factors on bank efficiency: a non-parametric analysis of Hong Kong’s banking system. J Bank Financ 30:1443–1466CrossRefGoogle Scholar
  11. Fang CY, Hu JL (2009) A metafrontier study of securities broker and dealer efficiency under zero-sum gains. Invest Manag Financ Innov 6:53–62Google Scholar
  12. Fidrmuc J, Korhonen I (2010) The impact of the global financial crisis on business cycles in Asian emerging economies. J Asian Econ 21:293–303CrossRefGoogle Scholar
  13. Fried HO, Schmidt SS, Yaisawarng S (1999) Incorporating the operating environment into a nonparametric measure of technical efficiency. J Product Anal 12:249–267CrossRefGoogle Scholar
  14. Fried HO, Lovell CAK, Schmidt SS, Yaisawarng S (2002) Accounting for environmental effects and statistical noise in data envelopment analysis. J Product Anal 17:157–174CrossRefGoogle Scholar
  15. Graham IC, Harris PJ (1999) Development of a profit planning framework in an international hotel chain: a case study. Int J Contemp Hosp Manag 11:198–204CrossRefGoogle Scholar
  16. Hong K, Lee JW, Tang HC (2010) Crises in Asia: historical perspectives and implications. J Asian Econ 21:265–279CrossRefGoogle Scholar
  17. Hu JL, Su YY, Chen CP (2008) Efficiency of nationwide banks in China. J Am Acad Bus 13:84–90Google Scholar
  18. Hu JL, Shieh HS, Huang CH, Chiu CN (2009) Cost efficiency of international tourist hotels in Taiwan: a DEA application. Asia-Pac J Tour Res 14:371–384CrossRefGoogle Scholar
  19. Hwang SN, Chang TY (2003) Using data envelopment analysis to measure hotel managerial efficiency change in Taiwan. Tour Manag 24:357–369CrossRefGoogle Scholar
  20. Li Y, Hu JL, Chiu YH (2004) Ownership and production efficiency: evidence from Taiwanese banks. Serv Ind J 24:129–148Google Scholar
  21. Moreira VH, Bravo-Ureta BE (2010) Technical efficiency and metatechnology ratios for dairy farms in three southern cone countries: a stochastic meta-frontier model. J Product Anal 33:33–45CrossRefGoogle Scholar
  22. O’Donnell C, Rao D, Battese G (2008) Metafrontier frameworks for the study of firm-level efficiencies and technology ratios. Empir Econ 34:231–255CrossRefGoogle Scholar
  23. Simar L, Wilson PW (2007) Estimation and inference in two-stage, semi-parametric models of production processes. J Econom 136:31–64CrossRefGoogle Scholar
  24. Sun S, Lu WM (2005) Evaluating the performance of the Taiwanese hotel industry using a weight slacks-based measure. Asia-Pac J Oper Res 22:487–512CrossRefGoogle Scholar
  25. Tsaur SH (2001) The operating efficiency of international tourist hotels in Taiwan. Asia Pac J Tour Res 6:73–81CrossRefGoogle Scholar
  26. Yang C, Lu WM (2006) Performance benchmarking for Taiwan’s international tourist hotels. Inf Syst Oper Res 44:229–245Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  1. 1.Graduate Institute of Hospitality ManagementNational Taiwan Normal UniversityTaipei CityRepublic of China

Personalised recommendations