Measuring efficiency of the hotel and restaurant sector: the case of India

The purpose of this research is to provide exploratory insights on measurement of efficiency of the hotel and restaurant companies operating in India.

This study will use a linear programming‐based approach, data envelopment analysis (DEA), to evaluate the efficiency of hotel and restaurant companies operating in India. DEA is a method of evaluating the relative efficiency of decision‐making units (DMUs). In this study the decision‐making units are the hotel and restaurant companies. The study further explores if there exists a relationship between the efficiency and size of the hotel and restaurant companies.

The DEA model used in this study assigns efficiency scores to each of the hotel and restaurant companies taken in the sample of 68 companies for the year 2004‐2005. The study also explores whether there is a relationship between the efficiency and size of the hotel and restaurant companies.

As this study evaluates the efficiency of the hotel and restaurant sector, it separates the most efficient hotel and restaurant companies from the non‐efficient ones. The study identifies the top performers in this sector. Also, managers get important insights for their strategic and operational decisions to improve performance.

There are very few known studies that have measured the efficiency of the hotel and restaurant companies. This study is one of the few exploratory initiatives in the Indian context.