The purpose of this paper is to investigate the effects of quasi-fixed inputs, such as the number of hotel rooms, on measurement of operating efficiency of Taiwan’s international tourist hotels. The phenomenon of quasi-fixed inputs commonly exists in Hotel industry. We utilize cost frontier to decompose the technical, allocative and economic efficiency, under scenarios of with and without quasi-fixed inputs and conclude that quasi-fixed inputs have significant effects on efficiency measurement. Ignoring such quasi-fixity would cause technical efficiency to be overestimated and allocative efficiency to be underestimated.