The Measurement of Efficiency in Addis Ababa Hotels: A Data Envelopment Analysis Approach
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Date
2019-10
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A.A.U
Abstract
Efficiency has become an essential emphasis in today’s highly competitive business environment. Efficiency measurement determines how hotels provide an optimal combination of financial services with a set of inputs. The purpose of this thesis is to study the relative efficiency between hotels operating under international brand and local hotels, in Addis Ababa, Ethiopia that identifies the inefficiency causes and suggest managerial implications to relevant business experts and managers in order to increase hotel efficiency in the city. The research adopted an explanatory survey design. The population of interest for this study was all hotels in Addis Ababa. The sample was constituted by 15 five and four-star hotels operating in Addis Ababa in 2018 of which 4 hotels are operating under international brand and 11are operating as Local Hotels with purposive sampling technique. The efficiency for the above hotels is estimated through the data envelopment analysis methodology. The study utilized primary and secondary sources of data. International brand hotels are efficient and local hotel are partly efficient and partly the least efficient. The hotels’ inefficiency causes are mainly due to the input/output configuration. The inefficiency causes are identified, and suggestions are made to hotel owners and managers, at the level of strategic and operational management to enhance hotel efficiency. A direction for future research could be increase input and output variables. The thesis would be better, if data set have more variables for more than one year in order to understand the dynamics nature of hotel efficiency. It is also advised to incorporate more international brand hotel as the data set on this thesis are not even in international brand hotel and local hotel. This is the first study measuring hotel efficiency in Addis Ababa. Moreover, it identifies the inefficiency causes of hotels and offers suggestions, at the level of strategic and operational management, to increase hotel efficiency, which are applicable to Addis Ababa.
Description
A Thesis Submitted to the department of accounting and Finance, AAU in Partial Fulfillment of the Requirement
for Master of Science Degree in Accounting and Finance
Keywords
Data Envelopment Analysis, Performance measurement, Technical efficiency