Type of Submission

Refereed Article


The purpose of this study is to conduct an investigation into the link between cost efficiency and financial performance as it pertains to the hotel industry. This study employs DEA approach to estimate cost efficiency and uses three traditional financial indicators, such as the ratio of net operating profit before taxes, the ratio of earnings before taxes, and return on assets before taxes, to measure financial performance. Data were generated from 68 hotels in the international tourist hotels in Taiwan from 1997 to 2006. The major finding indicates that cost efficiency is insignificantly associated with the financial performance, whatever three above financial performance variables. The implications of the findings are discussed and the limitations of the study as well as future research directions are addressed.