Page 32 - Azerbaijan State University of Economics

1. Fuad Selamzade: Measurement of the Efficiency of Azerbaijan Region Hotel
2. Organization: Window Analysis and Malmquist Index

These were spoken by Ilham Aliyev, the President, in the meeting of the Council of

Ministers related to the results of socioeconomic development and future tasks in the
first half of 2018 (Azertag, 2018).

Azerbaijan hosted the First European Games in 2015, the 4th Baku Islamic Solidarity
Games in 2017 and the international sports competitions such as Formula 1 in 2018 and
2019, with the realization of the first one held in 2017 and in addition to this, it becomes
a continuously developing tourism center, as a result of the policies implemented for the
development of nature tourism. Since hotel and hotel-type accommodation
organizations are one of the indispensable factors of the tourism sector, as a result of
abovementioned activities, many employees, both seasonal and permanent staff, are
employed in the hotel and hotel type accommodation organizations and competition
among these organizations is increasing each passing day.

Efficiency measurement is based on the ground of the analysis of product and
service production and cost minimization functions. Debreu (1951), Koopmans
(1951) and Farrell (1957), who were one of the leading names in efficiency analysis,
defined the technical efficiency as the maximum reduction of all inputs with the
assumption of producing existing outputs. The first empirical studies were
performed by Debreu and Koopmans (Murillo-Zamorano et al., 2000). Farrell's
approach, that was a milestone for the development of subsequent approaches, was
made with single-output production technology and some restrictive assumptions
and ignored the structural inefficiency. This interpretation can also be expressed as
the boundary approach and this means that the production function and the
production set consisting of the entire input combination and output combinations
are adopted as the upper bound (Kutlar et al., 2011: 85).

In the literature, there are many studies carried out by Data Envelopment Analysis
(DEA) method for measuring the efficiency of service sector, especially
accommodation organizations. In international literature, it is seen that DEA method
was applied for the calculation of Ru and Ruonan (2013)) efficiencies on three-star
hotels in the UK (Sigala (2004)), tourism centers in Italy (Bosetti et al. (2006))
branches of a travel agency in Austria (Wöber (2007)), hotels in Taiwan (Shang et
al. (2010)), in various tourism centers in the Indian province of Uttar Pradesh
(Siddiqui and Tripathi (2010)), in the tourism centers in the provincial, municipal
and autonomous regions of China (Bi et al. (2011).

When the literature related to the studies carried out by using DEA method in the
tourism sector is examined, it is seen that Azizova's study (2002), in which the place
of the tourism sector in the Azerbaijani economy was examined and the proposals

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