The Measurement of Competitiveness of International Tourist Hotels in Taiwan Gu-Shin Tung, Associate Professor Tien-Ming Cheng, Associate Professor Li-Chih Wu, Graduate Student National Pingtung Institute of Commerce, Pingtung , Taiwan ABSTRACT The international tourist hotels (ITHs) increased rapidly in Taiwan. This trend raised an important question to figure out these hotels’ competitiveness. This study applies two analytical methods Confirmatory Factor Analysis (CFA) and Grey Relational Analysis (GRA) to indicate the level of competitiveness for those hotels by using four main themes, management performance, property asset, class and scale and communication distance. A sample of total is 58 Taiwan ITHs for the period 2007. The empirical results shed light the management performance and property asset are the key indicators for competition among hotels. The top five were Grand Hyatt Taipei, Grand Formosa Regent Taipei, Sheraton Taipei, Grand Hi-Lai Hotel and Far Eastern Plaza Hotel Taipei. Keywords : International Tourist Hotel, Competitiveness, Grey Relational Analysis INTRODUCTION The hotel industry was one of the factors affecting national competitiveness (Cooper et al., 1998). The US’ 911 incident in 2001 and China’s liberalization of overseas tourism caused the international tourists to choose the place of East Asia for traveling. Taiwan is a top priority destination of tourists from China based on the relationship of “blood is thicker than water” that attract more investors and intensify the competition of hotels market. The potential demand of hotels greatly increased that leaded investors entered into Taiwan’s hotel market, for example, Four Seasons, Kagaca and Hyatt. There was 58 international tourist hotels with a total of 17,294 rooms in 2007 and a total number of 55 under construction (Taiwan Tourism Bureau, 2009). The identification of hotel competitiveness indices can secure competitive advantage and competitiveness structure in the hotel market. There is a trend study for competition which is starting from countries, metropolitans, and further to tourism aspect. However, those methodologies adopted by these different fields were similar and limited on the results of questionnaire surveys and of expert interviews. Gooroochurn and Sugiyarto (2005) noted that different regions may cause differences in the data collection and data inconsistency. As referred literature show that a list of themes and ranking analysis of the competitiveness of ITHs are not available. This paper proposes a refined methodology of Gooroochurn and Sugiyarto (2005) to explore the competitiveness monitors, insight and rankings of ITHs in Taiwan. In this paper, the influences of various themes on competitiveness have been discussed to formulate effective competition strategies for hotel operators. LITERATURE REVIEW Competitiveness The concept of competitiveness first emerged in Charles Darwin’s “competition by natural selection, survival of the fittest” theory. Buckley et al. (1988) first proposed the academic research of competitiveness. They noted that competitiveness was the precedence of competition, a management process, and a result of competition. Francis and Tharakan (1989) classified competition into 3 levels, enterprise, industrial, and national competition. Porter (1990) proposed in his Diamond model that national competitiveness meant to indicate that the business have the ability to compete in the competitive markets. Meanwhile, industrial competitiveness is concerned with whether a certain The Journal of International Management Studies, Volume 4, Number 2, August, 2009 41 industry of a country has advantages in the global market. And in terms of business segment, companies can create relative competitive advantage and possess unique resources (Hsu, 2000). Competitiveness has different implications when applied to different levels and the common purpose is to achieve a beneficial position through the establishment of competitive advantage (Man et al., 2002). Hotel Competitiveness Monitors Researches related to competitiveness have extended from countries (Porter, 1990; Makhija, 1993; Lenway and Murtha, 1994; Keith and Lance, 1997; Moon et al., 1998 ), cities (Hu, 2004; Kresl, 1995; Begg, 1999; Rogerson, 1999), urban tourism (Crouch and Ritchi, 1999; Kim, 2000; Kozak, 1999; Gooroochurn and Sugiyarto, 2005) to various industries (Man et al., 2002). The different objectives refer to the greatly different structure of competitiveness. Our paper proposes the competitiveness of ITHs industry in Taiwan. We adopt these variables from Man et al. (2002), except technical resources, organization structure, system, creativity, culture, service differentiation, customer service and influence of business owners those are not available for the database of Taiwan Tourism Bureau. We also refer previous literature to hotels as shown on Table 1. Preliminary established hotel competitiveness themes (management performance, property asset, class and scale and communication distance) and indicators for this study are listed on Table 1. Table 1: Studies on the Industries and Hotel Competitiveness Competitiveness This paper elements (Man et Theme Hotel competitiveness monitor Definition al., 2002) Total operating expenditure ： Total related expenses Greenberg (1986); Morey and Financial resources Dittman (1995) Advertising intensity ：Greenberg Advertising expenses divided by (1986) sales Average occupation rate of room ： Rooms occupied in individual Greenberg (1986); Morey and hotel divided by rooms available Dittman (1995); Tsaur (2001); Wu et al. (2008) Average production value per Return on sales divided by total employee ：Yan (1997); Wu et al. number of hotel staff during the (2008) year of reference Productivity Total revenue ：Greenberg (1986); Total the relevant income Anderson et al. (2000); Yan (1997); Chang and Hwang (2006); Wu et Management al. (2008) performance Market share ：Geller (1985); Miller The percentage of total sales in the (1990) hotel market captured by individual hotel Average daily rate ：Morey and Actual daily revenue divided by Quality Dittman (1995); Tsaur (2001) the total number of available rooms Pre-tax profit margin ：Lee et al. The aggregated before tax ratio of (2000); Wu et al. (2008) accounting profit to total sales as a percent Earnings growth rate ：Nkomo Individual hotel’s changes to Management (1987) earnings dividends, as compared performance with the previous year’s total earnings Pre-tax investment return rate ： The aggregated before tax ratio of Ruan (1994); Wu et al. (2008) accounting profit to total property asset value as a percent 42 The Journal of International Management Studies, Volume 4, Number 2, August, 2009 Competitiveness This paper elements (Man et Theme Hotel competitiveness monitor Definition al., 2002) Number of rooms ：Morey and Total number of hotel rooms Dittman (1995); Anderson et al. Product （2000 ）; Tsaur (2001); Sun and Lu (2005a) Property asset Total property asset ：Johnson and Total property value Financial resources Ball (1989) Number of employees ：Morey and Total number of hotel staff Human resource Dittman (1995); Anderson et al. （2000 ）; Tsaur (2001) Number of local chains ：Wang et Every year the number of local al.(2006); Yan and Lu (2006) chains Image and Internationalized ：Yesawich Internationalized=1 if firms Class and scale reputation (1988); Vinitia (2000) participate in internationalized systems, otherwise=0 Hotel class ：Vinitia (2000) Chain=5 if firms are classified into five-star class, otherwise=4 Transportation convenience ：Lewis The distance between the hotel to and Chambers (1989); Barsky and MRT station Labagh (1992); Roger (1998); Sun The distance between the hotel to External Communication and Lu (2005b); Yan and Lu (2006) Train station environment distance The distance between the hotel to High-speed rail station The distance between the hotel to Airport Evaluation Methods of Tourism Competitiveness Hsu and Chen (2002) analyzed the images of 11 ITHs in Taiwan area based on questionnaires interview method and the questionnaires were originally designed to collect the views of 62 local travel agents that services ITHs. In their study, the fewer number (62) of respondents hindered the shape of overall image and are unable standard (Gooroochurn and Sugiyarto, 2005). The questionnaire interviews have an advantage in addressing characteristic issues but the data is easily subjective and biased. Chang and Hwang’s (2006) used GRA and Data Envelopment Analysis (DEA) methods with the secondary data to rank the performance of ITHs in Taiwan. They selected 6 indices associated with management performance, such as room department performance, catering department performance, profitability, production value, sales and investment from the Taiwan Tourism Bureau. However, the empirical results were limited on performance and unable to provide insight on the overall competitiveness of ITHs. This paper follows Dwyer et al. (2000) and Gooroochurn and Sugiyarto (2005)’s rationale and adopts the secondary data compiled by the Tourism Bureau that could be extended to all ITHs in Taiwan. We summarize the key literatures in Table 2. Table 2: Competitiveness Measurement of the ITHs in Taiwan Units and data Paper Method Inputs Outputs Competitiveness source Chang DEA & GRA 54 Taiwan Average production value per Room Management and (secondary) hotels, room department performance Hwang operation performance (2006) analysis report Average catering production Catering of international