MODELING OPERATIONAL EFFICIENCY USING DATA ENVELOPMENT ANALYSIS: EVIDENCE FROM ATLANTIC CITY HOTELS

The casino entertainment industry is an intensely competitive environment with many operational risks, explaining why casino managers highly prioritize performance evaluation. This study develops a performance evaluation model based on data envelopment analysis (DEA) to determine casino managerial efficiency in 2007 and the change in efficiency for eleven casinos from 2003-2007 in Atlantic City. Analytical results suggest an apparently high technical efficiency and low scale efficiency, indicating that managerial inefficiency derives mainly from an inappropriate scale of business in the casino entertainment industry of Atlantic City. Moreover, weak industrial growth of casino entertainment implies that front runners should closely examine systematic problems in their management strategies.