Researchers have developed a data-driven analytical framework that demonstrates how hotel mergers may unlock substantial efficiency gains, even when the properties involved already operate at high levels of performance. By examining how operational resources can be redistributed after consolidation, the framework reveals that strategic mergers can significantly reduce excess capacity and improve the use of existing assets across the hospitality sector.
The study evaluates potential merger scenarios among 58 hotels located in Oman. To carry out the analysis, the researchers constructed an integrated modelling approach that combines inverse data envelopment analysis (IDEA) with an ordered weighted averaging (OWA) operator. This framework allows the model to estimate how the operational inputs of two hotels might be optimised if the properties were combined into a single entity. Key inputs considered in the analysis include the number of rooms, bed capacity, staffing levels, and employee salary expenditures. By adjusting these variables within the model, the researchers can simulate how resources may be redistributed in a merged operation while maintaining the same level of service output.
A distinguishing feature of the framework is its ability to preserve relationships among operational variables. Traditional merger evaluation methods frequently remove highly correlated inputs in order to simplify modelling, yet doing so may introduce bias or distort operational realities. In contrast, the new framework retains these relationships, allowing the analysis to reflect the interconnected nature of hotel resources. For instance, staffing levels, salaries, room capacity, and bed availability are closely linked in practice, and evaluating them together provides a more realistic picture of potential post-merger performance.
To identify the most beneficial combinations, the researchers simulated every possible pairing among the 58 hotels. Each scenario was evaluated to determine whether merging the two properties would lead to measurable efficiency improvements. The model labels successful cases as “productive post-mergers,” referring to combinations that can deliver genuine operational gains rather than simply pooling resources without improvement. This comprehensive simulation approach allows decision-makers to examine merger opportunities systematically instead of relying on intuition or limited financial indicators.
The results reveal that even hotels that are already classified as strongly efficient on their own may still benefit significantly from strategic consolidation. In several simulated scenarios, the combined operation required far fewer resources than the sum of the individual hotels before merging. In some cases, the model indicated that the required number of rooms and beds could fall by more than 90 per cent relative to the combined pre-merger capacity. These findings highlight the potential for eliminating duplicated capacity and improving resource allocation when operations are coordinated under a single structure.
The framework also illustrates how predictive analytics can assist hotel managers and investors in pre-merger planning. By identifying which partnerships are most likely to improve operational performance, the model helps stakeholders evaluate consolidation strategies more objectively. Improved asset utilisation, reduced staffing requirements, and lower operating costs are among the potential benefits revealed by the analysis.
Although the current study focuses on 58 hotels in Oman, the researchers emphasise that the framework can be expanded to larger datasets and other geographic contexts. Future research could also incorporate sustainability indicators such as energy consumption, water use, or environmental performance, enabling the model to support long-term planning for a more resource-efficient hospitality industry. Overall, the analytical framework offers a forward-looking tool for uncovering hidden efficiency opportunities and guiding strategic collaboration within increasingly competitive hotel markets.
More information: Amar Oukil et al, Uncovering Optimal Gains in Hotel Mergers in the Presence of Correlated Inputs: An Integrated OWA-Inverse DEA Framework, The Journal of Engineering Research. DOI: 10.53540/1726-6742.1311
Journal information: The Journal of Engineering Research Provided by Sultan Qaboos University