Decomposition of meta‐frontier inefficiency in the two‐stage network directional distance function with quasi‐fixed inputs

Abstract

Abstract Few studies have considered the quasi‐fixed inputs that have an impact on hospitality. The number of guest rooms and the area of the catering department of international tourist hotels are shown to be constant in Taiwan from 2008 to 2009. Therefore, this paper proposes the use of the two‐stage network directional distance function with quasi‐fixed inputs to explore the productive and service efficiencies of tourist hotel formats (chained versus independent). In addition, a new approach is developed to decompose the technical inefficiency of the hotels within the meta‐frontier; this approach helps to identify the source of the meta‐frontier inefficiency. Demonstration of this new approach with practical data reveals that the average productive efficiency is greater than the average service efficiency for Taiwanese tourist hotels. Additionally, the causes of the overall productive inefficiency and the overall service inefficiency are mainly derived from the input excess of the productive process and the output shortfall of the service process, respectively.