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RESEARCH PRODUCT

An optimized system dynamics approach for a hotel chain management

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The proposed model consists of an integrated system dynamics-data envelopment analysis approach to value, in a dynamic framework, the effects over time of the policies implemented according to the relative efficiency analysis. Rooms’ price and competing facilities (the hedonics) are the decision variables to move in order to push the hotels towards a higher relative efficiency at the end of the observation periods. In fact, in competitive markets as tourism, hotels compete for money offering differentiated quality. Moreover, according to the microeconomic theory, a producer of differentiated goods is not a price taker but a price maker. Therefore, we assume that the decision maker of the hotel chain can freely set the rooms’ price and the hedonics that will increase the relative economic efficiency of all the hotels of the chain. The proposed model treats the rooms’ pricing and the hedonic setting problem in an environment characterized by uncertainty of the customers’ preferences. The relative efficiency analysis is carried out by making use of data envelopment analysis that identifies the peer group and targets for the inefficient units. The dynamic analysis of the effects over time of the policies implemented is carried out using system dynamics methodology. This combined approach will help the decision maker in answering the following questions: which hotels of the chain will be attractive, and which ones will be efficient? What adjustments on prices and hedonics will attract more tourism demand? What are the dynamic effects of the DEA policies? The remaining sections of this paper are organized as follows. Section 3.2 is devoted to a brief survey of the theoretical background with particular attention to data envelopment analysis and system dynamics. Section 3.3 describes our model both from the customer side and the hotel management side. Section 3.4 shows the