Super Efficiency and Sensitivity Analysis of the Indian Hotels and Restaurants

Abstract

Abstract Over the course of COVID-19, the global growth of the hospitality and restaurant (H&Rs) sector has declined. During this difficult period, this sector's overall performance declined. As a result, this industry must adopt fresh approaches to seize the potential and overcome the obstacles at this pivotal moment. One of these difficulties is figuring out how to evaluate H&Rs' effectiveness using a variety of factors. This study evaluates the performance of 45 significant H&R businesses operating in India using the Data Envelopment Analysis (DEA) method. The Basic DEA models usually do not disclose the improvement in the capability of different DMUs as these models calculate only radial efficiency. In this paper, the New Slack Model (NSM) of DEA has been employed to examine the efficiency of the different 45 large-scale Indian Hotels and Restaurants (H&Rs). The NSM model cognate the input and output slacks straight away. In this study, four inputs: Capital employed, Gross fixed assets, Current assets, and Operating costs, and two outputs: Operating income and Profit before depreciation, interest, and tax (PBDIT) are considered. The data for the study has been collected from the Prowess database of the Centre for Monitoring Indian Economy (CMIE). The study indicates that only 65.58% of H&R are technically efficient which shows that some resources are unutilized and therefore there is a huge scope for an upswing. To validate the stability of results sensitivity analysis is also carried out.