An Optimized System Dynamics Approach for a Hotel Chain Management

Abstract

In this work we combine System Dynamics (SD) methodology with Data Envelopment Analysis (DEA) in order to investigate the path taken by the hotels of a chain as they move towards the efficient frontier. Periodically a centralized decision maker collects multiple input/output data of the hotel chain to compute the relative efficiency of each hotel and to figure out the policies to implement to increase the total system’s performance. The relative efficiency is measured by making use of DEA whereas the economic effect of the policies implemented is integrated into a dynamic framework in order to enhance the usefulness of the efficiency analysis. SD offers readily accessible methodology for making this integration operational. Differently from the static approach, the study shows that in a dynamic framework DEA has to be run more than one time in order to push the hotels of the chain towards the efficient frontier. Moreover, the more the market is reactive to the policies implemented, the more the efficiency analysis will not be completely effective to increase the total performance of the system.