In accordance with the cases of non-convex and convex, we can develop the short-term and long-term strategies. Moreover, Duncan (2005) argues that the eight main issues of hospitality industry are employment, taxation, environment, disability, licensing/gaming, hotel classification, food, and music copyright.
However, we don’ t have enough information to analyze the issue of hotel classification. The grades of international hotels in our data set are more than four-star, but not clearly to separate which one is four-star or five-star. In part of the issue of licensing or gaming, the adoption of game license has passed and the related activities are proceeding in Taiwan. The value-added tax in Taiwan is lower than that of the countries in Europe, but higher than that of in the Hong Kong and Macao.
With regard to copyright issues, we also have set a clear Act.
Base on our empirical results, we can catch some ideas which in these eight main issues. The issues of employment and food can be discussed by slack analysis.
The human resource of hotel sector is a very important topic, because of the better qualities of labors can provide better service. Moreover, the food revenue of hotels are usually higher than room revenue in Taiwan. The possible reason is that the increasing ratios of people in Taiwan who eat out as local consumers in Taiwan are used to dining outside (Hu et al., 2008).
With regard to the issue of environment can be discussed by the effect of different hotel’ s position. The international tourist hotels operate under different environment and the location of these hotels can be classified as urban or country site.
The majority passengers of hotels in the urban area are business travelers. In contrast, the majority passengers of hotels in the scenic and country areas are leisure visitors. Leisure visitors are primarily motivated to travel because of they want to
explore other cultures, to experience freedom and personal growth. On the other hand, the principal motivator of business visitors is the business activity itself rather and need the convenient accommodation and transport facilities in the city.
Table 5.1 The efficiency indicator of urban and leisure hotels
Classification Sample size Mean Std. dev. Min Max
beta_M Urban 124 0.100 0.008 0.000 0.463
Leisure 46 0.101 0.022 0.000 0.702
sum 170 0.100 0.008 0.000 0.702
TG Urban 124 0.000 0.000 0.000 0.000
Leisure 46 0.055 0.016 0.000 0.660
sum 170 0.015 0.004 0.000 0.660
In the Table 5.1, the result shows that the performance of urban hotels is better than leisure hotels in Taiwan. The Mann Whitney test statistic indicates that the results are significantly with P-value 0.097 and 0.000. Therefore, we know that the development of tourism industry in Taiwan is not mature enough. The government should do more marketing and promotion for Taiwan tourism which are helpful to enhancethe leisure hotels operating efficiencies.
5.1 Short run strategy
The slack analysis can be used to measure outputs expansion and the variable inputs contraction. Table 5.2 gives the proportions of output expansion and input contraction. The proportions are the sum of radio and non-radio slacks divided by the current amount of variables.
Both groups have to reduce the similar proportions of catering expense. However, the proportion of excess employees of domestic hotels doubles that of forging-owned hotels. This suggests that domestic hotels have too many unnecessary employees
and/or lower labor productivity. The part of output slacks, domestic hotels also have employees which have experiences about foreign-owned hotel operating. That may be able to upgrade the productivity of labors. The domestic hotels can focus on the marketing and promotion for catering sector to provide the differentiated service.
Table 5.2 Summary of output and variable input slacks Number of
Note: The values are the sum of radio and non-radio slacks divided by the current amount of variables.
5.2 Long run strategy
The long term strategy can be developed by the scale analysis of hotels. We summary the characteristic of returns to scales in Table 5.3. The characteristic of returns to scales shows that there are about 70% of tourist hotels operating in the stage of increasing returns to scale. Hence, Taiwan’s tourist hotels should design to augment the operating scales in order to improve their productivity.
Table 5.3 Summary of returns to scales
DRS CRS IRS
Domestic hotels 0.133 0.124 0.713
Foreign-owned hotels 0.176 0.105 0.719
The foreign-owned hotels have best performance on average whether in the long-term or short-term. The possible reason for this result is that the foreign-owned hotels adopt international management systems, training human resource and promoting managerial capacities, share the knowledge assets and benefited by economic of scale. From an international network they can cumulate the learning experiences for operating under different country. They also have a better brand image and reputation, share reservation systems and information so that they can provide better quality of customer service and have more foreign visitors (Mazzeo, 2004; Wang et al., 2006).
Thus, the managers of the domestic hotels can participate in international exhibitions, such as the International Travel Expo Hong Kong (ITE), to promote their own hotels and link to the international network. They also can join in the international hotel association (i.e., The Leading Hotels of the World). Their service quality will be monitored and share the information, so that the operating efficiency may be better than others.
Moreover, according to the result of environment analysis, Taiwan’s government should continue to improve the development of the tourist attractions and promote the Taiwan’s tourism to the world.