Evaluating the Hotel Industry Performance Using Efficiency and Effectiveness Measures

Most studies on performance evaluation in the hospitality industry solely focus on efficiency measurement; however, effectiveness, an integral part of organizational performance that can influence its competitive stance in the market, is ignored. Therefore, this study aims to measure the performance of Indian hotels considering both efficiency and effectiveness simultaneously using a two-phase evaluation model with panel data. The efficiency and effectiveness scores are measured using data envelopment analysis. McKinsey's nine-cell matrix has also been deployed to show the competitive positioning of the hotels being studied. The results yield no significant correlation between the efficiency and effectiveness scores; nevertheless, there does seem to be a strong positive correlation between effectiveness scores vis a vis the overall performance of a hotel per se.