Applying Economic Methods on Analyzing Hostel Industry

Economic methods are widely used to analyze the behavioral issues such as consumption and production of goods and services. However, most of economic analyses are addressed on the demand and supply of goods, but not services. Since the hospitality industry mainly contains service issues, numerical analysis with service indexes can provide important information to management of the industrial organizations. Chen and Lin have used the number of housekeeping staff per room and the number of food and beverage (F and B) staff per floor area as the proxy of room service quality and F&B service quality respectively to investigate the relationship between the service quality and profitability in hotel business [1]. Their results show that there is a non-linear relationship between F&B service quality and hotel profitability, while the room service quality effect is not significant. Lin and Chen (forthcoming) also investigate the relationship between service quality and market structure to reveal the dominated strategy of service quality depended on the market concentration of hotel scales [2]. As can be seen, adopting service science into the industrial economics can provide a practical vision on analyzing hotel industry.