Correspondence: Cheng-Hung Tsai, Department of Business Administration,Cheng Shiu University, No. 840, Chengcing Rd., Niaosong Township, Kaohsiung, Country 833, Taiwan R.O.C. Tel: +886 7 322 5438; Fax: +886 7 322 5438; E-mails: lit.child@msa.hinet.net, litchild@ms11.hinet.net

¹is a professor in the Department of Business Administration at National Cheng Kung University, Taiwan. His research interests are strategic marketing, knowledge management and quality management.

²is a professor in the Department of Industrial Design at National Cheng Kung University, Taiwan. His research interests are industrial design, Grey theory and fuzzy theory.

³is an assistant professor in the Department of Business Administration at Cheng Shiu University, Taiwan. His research interests are in tourism management, knowledge management and strategic management.

Received 1 March 2007; Revised 1 March 2007; Published online 31 March 2008.

Abstract

Although Grey theory is extensively adopted to construct the forecasting models for evaluating organisational performance, it is rarely used in the hotel industry. This study draws on the GM(1,1) model to accurately predict the coming year's output value and on Grey relational analysis to select the best-performing hotels in Taiwan. Measures of hotel performance — including profit before tax, ROI before tax, revenue per employee, REVPAR, revenue per square meter, and occupancy rate — were collected from the Tourism Bureau in Taiwan. These data contain the performance of 56 international tourist hotels in 2002 and industry data from 1992 to 2005. Results in this study indicate that four-point GM(1,1) is the best model for predicting output value in the future. In addition, this investigation reveals the various competitive advantages and strategies in these top hotels, such as their appropriate site, higher price, and higher occupancy rate.