<abstract xmlns="http://www.w3.org/1999/xhtml"><p> The goal of the paper is to evaluate the economic efficiency of tour operators in the Czech Republic in the period 2007-2014 using data envelopment analysis (DEA) models and prove the link between economic efficiency and profitability and to find out if profitability is a good proxy for economic efficiency. Data was exported from the database Albertina CZ Gold Edition. We calculated the efficiency score using CCR (Charnes, Cooper and Rhodes) and BCC (Banker, Charnes and Cooper) models based on 3 inputs and 1 output. In the years 2007 to 2010, the efficiency score of almost all the companies was higher than 0.5; however, in years since 2011, we revealed significant differences in the efficiency of individual firms and only about 40 percent of tour operators achieved an efficiency score higher than 0.5. Using Pearson and Spearman correlation coefficients, our findings show that, in the case of the Czech tour operator market, profitability ratios do not correspond with firm efficiency. Profitability ratios are not a good proxy for economic efficiency and should not be used as the only firm criterion of performance.</p></abstract>

The goal of the paper is to evaluate the economic efficiency of tour operators in the Czech Republic in the period 2007-2014 using data envelopment analysis (DEA) models and prove the link between economic efficiency and profitability and to find out if profitability is a good proxy for economic efficiency. Data was exported from the database Albertina CZ Gold Edition. We calculated the efficiency score using CCR (Charnes, Cooper and Rhodes) and BCC (Banker, Charnes and Cooper) models based on 3 inputs and 1 output. In the years 2007 to 2010, the efficiency score of almost all the companies was higher than 0.5; however, in years since 2011, we revealed significant differences in the efficiency of individual firms and only about 40 percent of tour operators achieved an efficiency score higher than 0.5. Using Pearson and Spearman correlation coefficients, our findings show that, in the case of the Czech tour operator market, profitability ratios do not correspond with firm efficiency. Profitability ratios are not a good proxy for economic efficiency and should not be used as the only firm criterion of performance.

Is profitability a good proxy for efficiency? Evidence from the subsector of tour operators

Review of Economic Perspectives

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

The goal of the paper is to evaluate the economic efficiency of tour operators in the Czech Republic in the period 2007-2014 using data envelopment analysis...

Is profitability a good proxy for efficiency? Evidence from the subsector of tour operators

Published Online: Dec 21, 2017

Page range: 425 - 440

Received: Jun 13, 2017

Accepted: Oct 18, 2017

DOI: https://doi.org/10.1515/revecp-2017-0022

Keywords
DEA model, economic efficiency, tour operators, profitability, efficiency-profitability relationship

© by Martina Kuncová

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Is profitability a good proxy for efficiency? Evidence from the subsector of tour operators

Published Online: Dec 21, 2017

Page range: 425 - 440

Received: Jun 13, 2017

Accepted: Oct 18, 2017

DOI: https://doi.org/10.1515/revecp-2017-0022

KeywordsDEA model, economic efficiency, tour operators, profitability, efficiency-profitability relationship

© by Martina Kuncová

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
DEA model, economic efficiency, tour operators, profitability, efficiency-profitability relationship