Balanced Scorecard Example For Hotel Top Management

4/3/2019 Balanced Scorecard Example for Hotel Top Management
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Balanced Scorecard Example for Hotel Top Management

We have recently had a discussion about showcasing the Balanced Scorecard approach to the hoteliers, specifically the way the strategy can be
described and executed using it.
The best way to explain something is to come up with an example! In this case we had an example of generic strategy map for a hotel business,
and I’d like to share this example with some comments.
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View Hotel Balanced Scorecard online, sign-up with a free account to unlock all functions.
Some important notes before we start:

4/3/2019 Real strategy must be tailor-made according to the needs Balanced
of theScorecard
hotel; Example for Hotel Top Management
This example can be a base for a strategy analysis, but the end strategy of your hotel will be very different from what you see here;
This is a top-level scorecard, as you will notice most objectives are general sounding; in your business they need to be cascaded down to the
lower organization levels.
Whatever you do, don’t forget about the cause-and-effect connection, and particularly the connection to the customer value that you create,
like those hotel performance hacks that we discussed.
Finance perspective
On the top of the “Finance” perspective we have Shareholders Interests. They might be formulated in various ways, as we agreed to discuss here a
generic strategy then we can simply use “Profit Growth.”
How a hotel can increase its profits? According to the generic strategies discussed before, a hotel might work on:
Growing current productivity, which in the case of a hotel might be decreasing the operation costs and optimizing the usage of the
resources.
Increasing revenue, which can actually be achieved by improving current profitability or by developing new sources of revenue.
I would be great to have respective measures that would give us an idea about the inputs and outputs of these goals. For outputs in this example we
used two lagging indicators:
Service
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Average room rate which is aligned with “Improving current profitability” objective.
4/3/2019
Here Balanced
we’ve done the easiest part of the job finding some lagging Scorecard Example
indicators, for Hotel Top
as for leading Management
ones, I believe they need to be defined during strategy
discussion between hotel management and their operational partners/employees.
As you can see objectives from the “Finance” perspective as linked to the objectives on the lower levels, so let’s discuss those objective now.
Customer perspective
As was explained in the previous article, customers are actually:
The guests of the hotel and

Various partners of the hotel.
For example, when we discuss the “Improving profitability” objective by improving customer value, we need to think about two type of customers –
hotel guests and partners.
From the view point of hotel guests, high profitability can be achieved by focusing on high-value customers and their needs. We formalize this on the
strategy map with the objects “Add and retain high-value customers” and “Room excellence.” Basically, in this way we focus on high-
value customers and we need to improve their hotel experience.
From the view point of partners: the generic goal sounds like “Achieve and retain win-win partner relations.” One of the sub-goals might be “Improving
hotel’s image
This website useson bookingtowebsites.”
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4/3/2019
Respective lagging metrics for these objectives are: Balanced Scorecard Example for Hotel Top Management
Booking website score. A score that is based on user opinions that one can take directly from the booking websites.
Room excellence score, % according to the experts opinion or room quality scorecard.
Two financial objectives – “Decrease costs” and “Develop new revenue sources” are tightly linked with current products and services provided to the
hotel guests. That’s where the business genius of your team need to start working, hopefully after a discussion you’ll come up with some strategic
hypothesis that you will test in your hotel.
Internal perspective
According to the goals discussed before, we can come up with some generic objectives for the “Internal processes” perspective.
Implementing customer relationship management system (or focusing it on the specific objectives) will help to understand the current value
proposition and show you possible ways to improve it.
Existent room need to be modified according to the established standards. A basic lagging indicator here is the percentage of the rooms
according to the quality standards.
The image of the hotel on booking websites need can be addressed by some brand and quality programs. For example, when cascading this
objective to the level of specific manager, we might want to formalize such goals as “Keeping information on booking sites up to date,”
4/3/2019 “Analyzing customer feedbacks” and so on. Balanced Scorecard Example for Hotel Top Management
Learning & Growth Perspective
Finally, learning and growth perspective. According to the objectives specified before our goals are to learn:
What are the expectations of our guests from the room? (remember, we are focusing on those high-value guests)
What additional service might our guests need?
What are the factors of high or low scoring on booking websites?
The answers to these questions are not written in some user survey feedback form; these questions are the directions where you might want to focus
your search. In some case you will need to improve your business systems in order to be able to answer them.
An example of a strategy hypothesis

4/3/2019
Let’s Balanced
take a small piece of this generic strategy and see where Scorecard
one can use Example
it. for Hotel Top Management
According to the strategy map one of the possibilities to increase revenue is to improve the room quality for high-value customers. In the Learning and
Growth perspective we have a focus on the analysis of the guests’ expectations from the room. What is the next step? Bring your team together and
start a brainstorming using this strategy map as base for the discussion!
I’m sure you are communicating with your guests in some way now, but what about those who did not stay in your hotel? You might want to
reach those guests who canceled their room reservation for some reason. The idea is not to make them change their mind, but to understand
what was the factor of their decision. You might find out that by just adding a cheap coffee machine to the room, you might satisfy several
expectations.
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This is a hypothesis that you might have. Before implementing it, you might want to check if it is disagree with
other goals. For example, if one of the ideas was to open a 24 hour bar downstairs, then this idea with coffee machines in each room might not be the
best one.
You might test it by asking your guests, or by placing some coffee machines into rooms and seeing how this will influence your costs, client
scores in the surveys, and feedbacks on the booking websites.
Properly designed measures on the scorecard will tell you if you are on the right track. Make sure you have adequate metrics aligned with your goals.
For example, a score on the booking website might be a good metric, but if it is not changing that fast; you might want to combine it with asking
2-3 key questions to the guests when they do a check-out.
Balanced Scorecard in Chained-Brand Hotels

Let’s review some famous hotel brands that use Balanced Scorecard. Studies presented by Huckstein and Duboff [1] in 1999 and by Denton and
White[2] in 2000 summarized some results of the Balanced Scorecard implementation in Hilton Hotels and Marriott franchisee White Lodging
Services. According to these studies Balance Scorecard helped management to focus on both long-term and short-term goals (and respective
measures) and identify negative trends before they affected ultimate financial results.
Balanced Scorecard at Marriott International
In the official Marriott’s brochure[3] the Balanced Scorecard is mentioned not only as a tool for “reporting and measurement,” but for “achieving
Marriott’s vision.” It is also recognized as a mean to incorporate goals related to the intangible assets.
Although Marriott doesn’t share their Balanced Scorecard with the public, one can deduct some general directions
that the company has on it:
Finance: Shareholders Interests; Cost-effective Business; Efficient Business;

Customers: Providing High-quality Service; Achieving Customer Satisfaction, Achieving Partners Satisfaction
Internal business processes: Standardized processes;
Learning and growth: Motivation and Skill Development of Associates;
From the brochure one can see that their strategy is divided into several strategic schemes, and some of them are
mentioned by the authors:
Marketing excellence. The Marriott’s marketing strategy is focused on finding, attracting, and retaining high-value clients.
A separate theme is “Strategic Account Management,” the strategy that “deploys a proactive sales effort against top accounts.”
Operational excellence. As explained in “Operations Planning”, Marriott’s provide each hotel with the resources in the diverse areas, such as
room operations, engineering, food and beverage, spa, event management, and quality assurance.
I believe there are a few more themes related to the Construction, Franchise, and the extensive efforts to achieve excellence in management of a
multicultural workforce.
Balanced Scorecard and management compensation
In the annual report published in 2004[4] it was mentioned that the leaders’ compensations is aligned with the balanced scorecard that took into
account such factors as associates’ satisfaction, customer satisfaction, and profitability. In the annual report for 2013[5], scorecard is no longer
mentioned as a tool for the calculation of compensation, which is probably now incorporated in “Stock and Cash Incentive Plan.”
Hilton Worldwide Quality Balanced Scorecard and Connie Award
4/3/2019
According to the Hilton Worldwide, the Balanced Scorecard Balanced
is used Scorecard
widely toExample
rewardforteamwork
Hotel Top Management
and achieve customer service excellence. Based on
the year-end evaluation best hotels are recognized with Connie Award [6].
The winners are selected according to:
Total Quality Scorecard (TQS),

Loyalty score according to SALT (Satisfaction and Loyalty Tracking)
The quality assurance (QA) score.
The role of strategy execution software
For this example we used BSC Designer to describe the strategy, formalize objectives, and align metrics with them. In the end of the article you will
find a link to view and edit the scorecard discussed here. Feel free to modify it according to your needs.
s using the specialized software a must? Well, it is not, but it saves your time and gives a framework for the discussion around the strategy!
A similar strategy map can be designed in PowerPoint, but it won’t be so easy to maintain it or visualize up-to-date performance indicators on
it.
Metrics
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different levels, it might be a big challenge
https://bscdesigner.com/bsc-for-hotel-top-management.htm to maintain all this in order and be able to use it effectively. 11/15
4/3/2019 Balanced
With professional strategy execution software you can save Scorecard
a lot of timeExample for Hotel Top of
on visualization Management
the strategy and reporting of the progress. The
software gives a framework that is easy to follow.
I invite all professionals from the hospitality industry to ask questions below and share their thoughts.
Use Hotel Balanced Scorecard discussed in this article as a starting template for your own scorecard!
Sign-up with a free account to unlock all functions of the software. Learn how to copy template scorecard to your account.
View Hotel Balanced Scorecard online
References
1. ^ Hilton hotels: A comprehensive approach to 5 delivering value for all stakeholders. Huckstein, Duboff, 1999, Cornell Hotel and Restaurant
Administration Quarterly.
2. ^ Implementing a balanced-scorecard approach to managing hotel operations. Denton, White, 2000, Cornell Hotel and
Restaurant Administration Quarterly.
3. ^ The Power of Marriott International
4. ^ Marriott International, Inc. 2004 Annual Report
5. ^ Marriott International, Inc. 2013 Annual Report
6. ^ Hampton Hotels Recognizes Top Performing Hotels with Connie Award, 2013, Hilton Worldwide
Related Articles
5 Hotel Performance Balanced Scorecard

Hacks Focused on Example for Hotel
the Value for the Top Management
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About Aleksey Savkin

Scorecard Expert | Speaker | CEO. Aleksey Savkin (LinkedIn, @bscdesigner) is helping companies to better formulate their
strategies and make the process of strategy execution more tangible with KPIs. New book by Aleksey: 10 Step KPI System
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Posted in Hospitality
Last updated on March 3, 2019, first posted on October 24, 2014 by Aleksey Savkin
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4/3/2019 Balanced Scorecard Example for Hotel Top Management

Home › Articles › BSC Application › Hospitality ›

Balanced Scorecard Example for Hotel Top Management

Some important notes before we start:

As was explained in the previous article, customers are actually:

The guests of the hotel and

Learning & Growth Perspective

An example of a strategy hypothesis

Strategy Map Wizard – Balanced Scorecard in 6 Minutes

Answer simple questions - build a professional strategy map in 6 minutes.

Balanced Scorecard in Chained-Brand Hotels

Balanced Scorecard at Marriott International

Finance: Shareholders Interests; Cost-effective Business; Efficient Business;

Balanced Scorecard and management compensation

The winners are selected according to:

Total Quality Scorecard (TQS),

The role of strategy execution software

View Hotel Balanced Scorecard online

5 Hotel Performance Balanced Scorecard

About Aleksey Savkin

 Recommend 1 t Tweet f Share Sort by Best

Start the discussion…

Be the first to comment.

ALSO ON BSC DESIGNER

Contact Us Partners About Us Privacy and Terms of Use Sitemap

This© website uses cookies to improve your experience. We'll assume

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