Applying a Peer-Restricted Cross-Efficiency Approach to Measuring the Performance of International Tourist Hotels in Taipei

Data envelopment analysis technique has been frequently utilized to assess hotel performance. However, studies that utilize this approach tend to use a self-evaluation method, in which a great number of non-zero weights are selected to maximize the efficiency scores. Aiming at addressing this shortcoming, this study utilizes a peer-restricted, cross-efficiency evaluation approach that does not only eliminate zero weight of the variables during performance evaluation but also reduces the differences between profiles of the weights. Both the peer-restricted, cross-efficiency model and the classic benevolent cross-efficiency approach are applied to measure the efficiency and to provide complete ranking orders for all the international tourists hotels (ITHs) in Taipei between the years of 2008 and 2009. Implications for hotel management in ITHs are discussed.