International Conference on Social Science and Technology Education (ICSSTE 2015)
Comparative Study on the Performance of China’s Economy Hotel with Different Chain Organization Modes
Zhang Tao, Jia Binbin
School Of Management, Hefei University of Technology, Hefei 230000, China
ABSTRACT: Economy hotels are not only a brands had developed rapidly like bamboo service industry with huge consumption shoots after a spring rain. However, the new potential and franchising widely used，but also “Tourism Law” was implemented formally in is outstanding in the hotel industry. However, 2013, plus the scant domestic demand after the affected by the rapid rise in rent and labor costs, financial crisis, which has brought great impact severe homogeneous competition and other to both the luxury hotels and the economy hotels. reasons, hotels are facing development The expansion rate of economy hotel straight bottlenecks. Based on the perspective of camp shop began to slow down and the corporate chain organizational model, the CCR occupancy rate also declined, with a depression model and BCC model of data envelopment situation. Therefore, scientific and reasonable analysis (DEA) are used to comparative analysis measure and analysis of performance of the operating efficiency of 12 economy hotels in economy hotel has become an important issue 2013.The results show that in 2013： the overall that the operators and researchers are commonly efficiency of the Chinese economy hotel is not concerned about. high, but the average pure technical efficiency at The most widely used methods on hotel a high level; the performance differences performance is data envelopment analysis between different organizational models (DEA). Early in 2000, Anderson and Scott once economy hotel chain significantly, in addition to applied DEA-BCC and DEA-CCR model to the little difference of pure technical efficiency, assess the business performance of 48 tourist are both predominantly company-owned hotels in America, and the result showed that chain>plural form>predominantly franchised the average performance of all the hotels is 0.42. chain. In recent years, DEA model also began to spread up in China. Wang Feiqing used DEA KEYWORDS: Economy Hotel; Chain method to measure the comprehensive technical Organization Mode; Efficiency; DEA efficiency, pure technical efficiency and scale efficiency of 50 tourist hotels in Taiwan, and it I. Introduction was concluded that the efficiency of chain In the 1990s, the concept of economy hotel hotels is higher than that of non-chain hotels. began to enter China. In 1996, Shanghai However, there is lack of research on Jinjiang group launched the first economy hotel enterprise micro-level with DEA method, so is brand of China: JinJiang Inn. Later since the efficiency evaluation of economy hotel, twenty-first century, a variety of economy hotel especially from the perspective of different
© 2015. The authors - Published by Atlantis Press 845 chain organization types. In this context, in this the corresponding weight coefficients. We can paper, from the perspective of chain always choose appropriate weights v and u, to organization type, we use DEA model to make hj≤1, j=1, 2, …, n. Then construct the compare and analyze the resource allocation original plan optimization model as follow: efficiency, technical efficiency and scale TYu max 0 efficiency of 12 China’s economy hotels in T Xv 0 2013, and put forward some countermeasures to TYu improve the efficiency and business .ts 0 nj ,,,1,1 T Xv performance of economy hotels. 0 vu 0,0 II. Research Methods and Variable Selection Apply Charnes-Cooper conversion, introducing the slack variables S+ and S-, and A. DEA Theoretical Model non-Archimedean infinitesimal ε; add convexity DEA is a kind of linear programming method, n proposed by Charnes, Cooper and Rhodes, constraint of weights: j 1 , and obtain based on Farell’s research foundation on production efficiency evaluation. Through the the DEA model based on inputs – BC2 model comprehensive analysis of sample input and (D2:): output data, it obtains the numerical values of ^ T comprehensive efficiency of each decision unit min ([ T SeSe )] and sorts them, to determine whether the n . XSXts , decision making units are effective or not. j j 0 j1 Meanwhile, DEA model has advantages in n solving the multiple-input and multiple-output j j YSY 0 , problems. j1 There are many kinds of DEA model, j ,,1,0 nj including the initial CCR model, and the current SS 0,0 BCC, ST and FG models as well, among which In the formula,
CCR model and BCC model are most widely ^ T e ,1,1( …,1 ,) eT 1( ，1，…，1) , ε is used. In this paper, we apply the Em Es investment-oriented CCR model and BCC non-Archimedean infinitesimal. With BC2 model to describe the comprehensive technical model (D2:) we can judge whether the observed efficiency, pure technical efficiency and scale decision making unit has technical efficiency or efficiency of economy hotels. not: that is, suppose ε as non-Archimedean Suppose there are n economy hotels (DMU), infinitesimal, and the optimal solutions of linear each of which using m sorts of input factors and 0 0 0 0 programming problem D2 is , s , s , ; s sorts of output factors; Xij refers to the number i input of the number j hotel; Yfj refers to the if 0 1 , and s0 0 , s0 0 , then the number r output of the number j hotel. (Xi, ,Yj) refers to the number j hotel (DMUj). V=( V1, decision making unit DMUjn is effective of T T V2,…,Vm) and U=( U1,U2,…,Um) refers to DEA (BC2).
846 B. Variable Selection and Data Source character and chain organization mode, we For variable selection, compliance with the regard the 12 economy hotels as decision standard of different year operation, enterprise making units, as shown in Table 1:
Table 1. Data Description of 12 Economy Hotels Name Group Begi Operati Room Total PC Organizati Mark Managem MBI n on numb branc O on type et ent Fee time duratio er h share n Home Home Inn 200 19645 0.3 17.26 112.2 Inns group 12 1784 PFC 6% 2 8 9 % 8 JinJiang Jinjiang Inn Internatio 199 0.3 7.71 97.6 nal Hotel 18 87724 700 PFC 4.5% 6 4 % 2 Group
Hanting China live Hotel 200 13074 0.4 11.49 85.3 9 1226 PFC 5% Group 5 7 6 % 2
7 Days Platinum Inn Tao Hotel 200 16173 0.3 14.21 70.5 9 1683 PFC 7% Group 5 9 2 % 6
GreenTr GreenTre ee e Inn 200 0.0 7.17 55.6 10 81608 906 DFC 5% Hotel 4 6 % 1 Group Podinns Sumitom o Hotel 200 0.4 1.33 25.6 7 15132 207 PFC 5% Hangzhou 7 7 % 2
Super 8 Super 8 200 0.0 5.61 24.6 10 79800 532 DFC 5.6% Hotel Hotel 4 2 % 5 Motel Home Inn 200 0.4 4.65 20.1 168 group 12 52889 378 PFC 6% 2 3 % 6 Orange Orange 200 0.14 18.0 Hotel 8 1546 14 1 DCC / 6 % 7 group Ibis Accor 201 0.7 1.31 13.2 hotel 4 15000 67 DCC 6.5% 0 0 % 3 group Thanky Thankyou 200 0.2 1.45 5 16521 301 DFC 4.5% 9.63 ou Hotel 9 1 % City City Express Express 200 0.3 1.22 8 13914 149 PFC 6% 4.96 Hotel 6 2 % Group
847 Considering DEA method needs to focus on Management Association, 2014 China Hotel the correlation between inputs and outputs, and Chain Development and Investment Report by variable selection in previous research on hotels, China Hotel Association, and Meadin hotel we finally select the index of hotel operation industry portal. duration in1, hotel room number in2 and royalties in3. In output index selection, we III. Results select Meadin Brand Index (MBI, weighted Use DEAP2.1 software to make CCR model average of influence of the user, media and and BCC model arithmetic of sample data from industry) as output variable. In order to the perspective of input, and obtain the overcome the effects of the economic crisis and comprehensive technical efficiency (CRSTE), other factors outside interference on research, pure technical efficiency (VRSTE) and scale we choose 2013 as the data time. The data in efficiency (SE), as shown in Table 2: this study mainly comes from 2013 Chinese 120 top franchise chain by Chinese Chain
Table 2. Efficiency Value Difference of 12 Economy Hotels CRSTE VRSTE Returns Name SE Score Benchmarking Score Benchmarking to scale 1. Home 1.000 （0） 1.000 （0） 1.000 Constant Inns 2. JinJiang 1.000 （5） 1.000 （1） 1.000 Constant Inn
3. Hanting 1.000 （3） 1.000 （4） 1.000 Constant 4. 7 Day 0.827 3 0.886 3；10 0.933 Increment Inn 5. 0.817 2；3 0.859 2；3；6；9 0.951 Increment GreenTree 6. Podinns 1.000 （4） 1.000 （1） 1.000 Constant 7. Super 8 0.458 2；3 0.910 3；9；10 0.504 Increment Hotel 8. Motel 168 0.328 2；6 0.526 3；9；10 0.624 Increment 9. Orange 1.000 （1） 1.000 （4） 1.000 Constant 10. Ibis 0.705 2；6 1.000 （4） 0.705 Increment 11. 0.437 2；6 1.000 （0） 0.437 Increment Thankyou 12. City 0.185 6；9 0.697 9；10 0.265 Increment Express Average 0.730 / 0.907 / 0.785 /
848 A. Overall Efficiency Analysis Thankyou is the fastest growing hotel in 2013 in The results show that, the overall technical China, with pure technical efficiency of 1. The efficiency and scale efficiency of the economy Possible reason is that Thankyou is orientated as hotels are relatively low, with the average super economy hotel, so customers’ service are not so comprehensive technical efficiency, pure requirements for quality and high as that of economy hotels. Its scale technical efficiency and scale efficiency efficiency is only 0.437, that is to say, because it respectively are 0.730, 0.907 and 0.785. The entered the hotel industry later, and investment comprehensive technical efficiency, pure in rooms number is too less, leading to increase technical efficiency and scale efficiency of of returns to scale. Therefore, it is necessary to Home Inns, JinJiang Inn, Hanting, Podinns and increase investment to achieve effective of Orange are all 1, which are more efficient than scale. the other seven hotels. This proves that these five hotels have made full use of resources in B. Efficiency Difference between Hotels of 2013, and got the maximum output with the Different Chain Organization Mode existing investment. In this paper, we are trying to analyze and 7 Day Inn, GreenTree, Super 8, Motel 168 compare economy hotels’ efficiency from the and City Express are pure technical inefficient perspective of different chain organization types, and scale inefficient as well. Among them, scale so firstly we need to classify and define the efficiency of 7 Day Inn and GreenTree are very chain types of organization. Since the high, and technical inefficiency is mainly pure development of franchise, foreign scholars have technical inefficiency, so it requires managers to summarized its organization types as three improve production technology and categories: chartered dominant mode, direct management level, so as to increase the dominant mode and composite mode. utilization capacity of existing resources; Considering that franchise in China started later however, scale efficiency of Super 8 Hotel, than foreign countries, we classify the Motel 168 and City Express are very low, and in organization types as: chartered dominant mode the stage of increasing returns to scale. DFC (PCO less than 25%), composite mode Therefore, for these three hotels, they not only PFC (25%~70%) and direct dominant mode need to improve their management levels, but DCC (PCO more than 70%). also need to make use of hotel’s effective Classify the 12 economy hotels above, and resources and adjust their input, to improve the obtain their efficiency differences, as shown in scale efficiency. Table 3. Pure technical efficiency of direct Finally, the economy hotels that pure dominant mode is 1, while average pure technical efficiency is 1 and scale inefficient are technical efficiency of chartered dominant mode Ibis and Thankyou. The pure technical and composite mode is respectively 0.923 and efficiency of 1 right reflects Ibis’ pursuit of 0.873, which show that they respectively need brand and server; scale efficiency of 0.705 to decline about 8% and 13% to improve their illustrates that Ibis would better accelerate the efficiency. In addition, the pure technical rate of expansion in china, so as to achieve efficiency is high because after the financial economies of scale. Similarly, as the bright crisis, most hotels have improved internal younger generation of economy hotel, management and rationally made use of the
849 available resources. From the scale efficiency dominant mode is only 0.571, which means that perspective, it is almost equivalent of direct it still has 43% promotion space. As shown in dominant mode and composite mode, which are Figure 1, we can see that the efficiency of direct respectively 0.853 and 0.832, much higher than dominant mode is higher than chartered chartered dominant mode. Scale efficiency of dominant mode and composite mode, which chartered dominant mode is the lowest, because proves the importance of straight battalion inn this kind of economy hotels is in early stage of in the expansion of the chain. No matter rapid development, and still need through the expansion of the chartered dominant mode, or franchise to quickly complete nationwide layout. robust expansion of the composite mode, all From the comprehensive technical efficiency need to pay attention to ensure that the perspective, direct dominant mode> composite proportion of straight battalion inn. mode> chartered dominant mode, chartered
Table 3. Organizational Type Efficiency Score Differences
Efficiency Organization Standard Number Average Minimum Maximum Score Type deviation Chartered 3 0.571 0.174 0.437 0.817 dominant Comprehensive Composite 7 0.763 0.328 0.185 1.000 technical mode efficiency Direct 2 0.853 0.147 0.705 1.000 dominant Total 12 0.730 0.289 0.185 1.000 Chartered 3 0.923 0.058 0.859 1.000 dominant Composite Pure technical 7 0.873 0.176 0.526 1.000 mode efficiency Direct 2 1.000 0.000 1.000 1.000 dominant Total 12 0.907 0.145 0.526 1.000 Chartered 3 0.630 0.228 0.437 0.951 dominant Composite Scale 7 0.832 0.264 0.265 1.000 mode efficiency Direct 2 0.853 0.147 0.705 1.000 dominant Total 12 0.785 0.256 0.265 1.000
850
Figure 1. Efficiency Comparison of Different Chain Organization Mode Hotels
C. Benchmarking of Economy Hotel of China’s 12 economy hotels in 2013, and In table 2, it also provides the benchmarking focus on comparison of efficiency differences enterprises of low-efficiency hotel, and the between economy hotels of different chain reference times of benchmarking enterprises by organizational modes, and obtain the following other decision making units. From the conclusions: (1) the average comprehensive comprehensive technical efficiency perspective, technical efficiency, pure technical efficiency the benchmarking economy hotels include: and scale efficiency of economy hotels have a JinJiang Inn (five times as a benchmark), certain gap with the optimal efficiency. five of Podinns (four times as a benchmark), Hanting all twelve hotel are in the state of pure technical (three times as a benchmark), and Orange (once inefficient and scale inefficient, so they still as a benchmark). Three of them are composite need to be improved in management level and mode, while one of them is direct dominant investment ratio. (2) The efficiency differences mode. between economy hotels of different chain organizational modes are significant. In addition However, from the pure technical efficiency perspective, that is, simple taking hotel to the pure technical efficiency, the sequence is management efficiency into account, he direct dominant mode> composite mode> benchmarking economy hotels include: Hanting, chartered dominant mode. mbined with the empirical results, here we Orange, Ibis (four times as a benchmark), Co propose some measures and suggestions to JinJiang Inn and Podinns (once as a benchmark). enhance the efficiency of Chinese economy Three of them are composite mode, while two hotel as follow: (1) For the economy hotels that of them are direct dominant mode. do not achieve economies of scale, they should adopt the forms of reducing the franchise IV. Conclusions threshold, acquisition or re-OEM, to achieve In this study, we use DEA model to economies of scale. (2) For the pure technical synthetically evaluate and analyze the efficiency inefficient economy hotels, faced with the
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