Applying DEA Model to Measure the Efficiency of Hospitality Sector: The Case of Vietnam

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Nhu-Ty Nguyen
Linh-Xuan Thi Nguyen

Abstract

Tourism industry is one of the world's largest industries with a global economic contribution of over 7.6 trillion dollars in 2016 which provides an equal or even surpasses the business volume of oil exports, and ”Žfood and beverage.As the current climate of the globe, Vietnam's tourism in general, hospitality in particular has attracted investment from not only domestic enterprises but many international hospitality corporations which create a fierce competitive than ever.Identifying inefficient activities and providing improvement in whole process is crucial. The present research aims to study and evaluate the performance of Vietnam hospitality industry through 20 chosen companies that qualify criteria of Data Envelopment Analysis (DEA) model and Malmquist productivity index. It would be a useful tool in benchmarking the efficient firms and inefficient ones operating in the industry and help the former to improve their efficiency. The researcher uses 5 input variables (Cost of good sales; sales expense; operation expense; fixed assets and owner equity) and 2 output variables (Revenues and Profit after tax).DMU1 and DMU8 face with huge fluctuation in efficiency which acquires the management board to review and improve their operation process to ensure the sustainable development of the firm in current competitive market.

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