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The Effectiveness of Hospitality Service Operations: Measurement and

Implementation Concerns

Article  in  International Journal of Contemporary Hospitality Management · October 2007

DOI: 10.1108/09596110710818301

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 The Effectiveness of Hospitality Service Operations: Measurement and
Implementation Concerns

Carlos F. Gomes
University of Coimbra
Faculty of Economics
Institute of Systems and Robotics
Coimbra - Portugal

Mahmoud M. Yasin
East Tennessee State University
Department of Management & Marketing
P.O. Box 70625
Johnson City, TN 37614

João V. Lisboa
University of Coimbra
School of Economics
Institute of Systems and Robotics
Coimbra - Portugal

This is a post-print (i.e. final draft post-refereeing) of an article published in International Journal of
Contemporary Hospitality Management (ISSN: 0959-6119), available online at:
http://www.emeraldinsight.com/doi/abs/10.1108/09596110710818301?journalCode=ijchm

Citation: Gomes, Carlos F., Yasin, Mahmoud M. e Lisboa, João V. (2007), “The Effectiveness of
Hospitality Service Operations: Measurement and Implementation Concerns”, International
Journal of Contemporary Hospitality Management, 19(7), pp. 560-573.
 The Effectiveness of Hospitality Service Operations: Measurement and
Implementation Concerns

ABSTRACT

Classification: Research Paper

Purpose
The objective of this research is to propose a systematic approach to measuring, tracking,
monitoring and continuously improving service efficiency, availability and quality in hospitality
operational settings.

Design/methodology/approach
The proposed measure of service operational effectiveness (SOE) consists of three indicators.
They include the availability indicator, the quality indicator, and the efficiency indicator.

Findings
The proposed operational performance approach based on the SOE is consistent with the themes
of performance measures and measurement reported in the literature.

Research limitations/implications
The proposed service operational effectiveness approach represents a serious attempt at
quantifying the key facets of service effectiveness in hospitality operational settings. The
validation of this performance assessment and measurement approach is worthy of future
research.

Practical implications
The approach advocated by the SOE has operational and strategic relevance to decision-makers of
hospitality organizations. Field interviews with hospitality operating managers in different
operating base cultures confirmed this.

Originality/value
This research presents a practical, systematic approach to the problem of enhancing service
operational effectiveness in hospitality organizations. Relevant implementation issues associated
with the proposed approach are also addressed. Interviews with operational managers
representing different types and sizes of hospitality organizations in different operational cultures
were utilized to provide initial validation of the proposed approach and to shed some light on
relevant practical implementation issues.

Keywords
Performance Measurement, Hospitality Organizations, Decision-Makers, Service operational
effectiveness, Implementation issues
 The Effectiveness of Hospitality Service Operations: Measurement and
Implementation Concerns

1. Introduction
New markets and competitive realities are forcing service organizations to take the

process of tracking, monitoring, and improving operational and organizational

performance, in order to meet the growing challenges posed by the customers, very

seriously. Theses challenges have been unmistakable in recent years, as they encompass

key performance facets, which shape the relationships between the customer and the

service operational system. In this context, key performance facets focusing on improving

the service encounter and the customer-orientation through paying close attention to service

efficiency, quality, and availability are becoming critical components of organizational

performance. Improvement aimed at these key service performance dimensions are critical

toward enhancing the service value offered to customers. Thus, the systematic

measurement, tracking, monitoring and continuous improvement of service efficiency,

quality, and availability is the first step in the road toward enhancing the customers-

orientation and service value.

Most services operational systems are organized based on two stages. The first stage is

labeled the “front-stage”, while the second stage is labeled the “back-stage” (Yasin and

Yavas, 2001). The front-stage includes all operational tasks and activities, which the

customer directly interact with. An example of such tasks and activities is the process of

checking-in a guest in a hotel. The back-stage, on the other hand, includes all operational

tasks and activities, which take place without direct interaction with the customers. An

example of such tasks and activities is the room cleaning service in a hotel.

The overall performance of the service system is very much influenced by the

performance of both service stages (Dorsch et al., 1997). Therefore, any attempt to improve

1
the overall performance of the service system must systematically incorporate and integrate

the service performance aspects related to service efficiency, quality, and availability of the

two service stages. In this context, the service operational system of a hospitality

organization is no exception. The two service stages of hospitality operational system must

be measured and monitored to ensure the overall service operational effectiveness. This

requires close attention to service efficiency, quality and availability.

Hospitality service organizations are facing increasing competitive pressures due to

recent environmental changes (Lovelock and Wirtz, 2004 in Gursoy and Swanger, 2006).

In recent years, the significance of hospitality related services has increased significantly in

developing countries (Tsaur and Lin, 2004; Barros, 2005). Overall, the hospitality industry

is becoming a truly competitive, global industry (Claver et al., 2006). Due to increasing

level of competition in the global hospitality industry, organizations in this industry are

becoming more aware of the need to customize services and service performance to the

emerging requirements of the sophisticated global customers. Thus, monitoring, tracking

and improving service quality, availability and efficiency are becoming more critical than

ever before in hospitality operational service settings.

Motivated by above discussion, the objective of this research is to introduce a

systematic approach to the measurement, tracking and improvement of key aspects of

service performance in hospitality operational settings. The proposed approach utilizes a

measure called service operational effectiveness (SOE) to monitor, track and improve

service quality, availability and efficiency. The development and components of this

measure are presented and discussed from a practical perspective. In the process, the

operational and strategic benefits of the proposed approach are presented in the context of

the effective implementation of the proposed SOE approach.

2
2. Background
Based on an extensive literature review concerning performance evaluation, measures

and related implementation issues (Gomes et al., 2004b), two distinct themes emerged. The

first theme may be labeled as the “universal” theme. The second theme, on the other hand,

may be labeled as the “contingency” theme.

The first theme includes approaches to performance measurement and implementation

efforts which advocate transferability across organizations and operating environments

(Cross and Lynch, 1988-1989; Lynch and Cross, 1991; Kaplan and Norton, 1992, 1993;

Ghalayini et al. 1997; Kloot and Martin, 2000; Kaplan and Norton, 2004, Moullin, 2004,

Chand et al, 2005). The second theme includes approaches which stress the unique

characteristics of the organizations, functions, or business units involved, when considering

and/or implementing performance measures and measurement (Dixon et al., 1990; Eccles

and Pyburn, 1992; Crowther, 1996; Neely et al., 1995; Waggoner et al., 1999; Neely et al.,

2001, 2002; Gunasekaran et al., 2004; Bourne, 2005). The performance measurement

approaches advocated in the literature under these two themes highlighted above have

practical relevance to hospitality operational systems.

While the approaches advocated under these two themes tend to differ with regards to

their treatments of different organizational and environmental contexts, they tend to clearly

point out the increasing importance of the non-financial aspects of organizational

performance (Dempsey et al., 1997; Gomes et al., 2004a; Abdel-Maksoud et al., 2005;

Hoque, 2005).

Despite the fact that organizations in the hospitality industry have been slow in

focusing on performance measurement (Witt and Witt, 1989), they have attempted to adopt

similar practices found in other industries. In this context, the hospitality organizations have

utilized specific performance measurement approaches, as in the cases of service quality

3
(Stank et al., 1999, Brady et al., 2002, Chow et al, 2006) and human resources (Eaglen et

al., 2000, Tsaur and Lin, 2004; Haber e Reichel, 2006, Cho et al., 2006). In addition to the

measure-specific approach, some hospitality organizations have also utilized an

organization-wide approach to performance measurement (Huckstein and Duboff, 1999;

Denton and White, 2000). These organization-wide approaches are, somewhat, consistent

with the Balanced Scorecard approach (Harris and Mongiello, 2001). Such approaches,

however have been characterized by their small scale and limited scope (Atkinson and

Brown, 2001). In general, managers of hospitality organizations appear to remain,

primarily, focused on traditional financial measures (Chung and Parker, 2006). This narrow

focus has been attributed to the limited understanding of operations' managers in the

hospitality industry of techniques and their positive impact on productivity in hotels

(Ingram and Fraenkel, 2006). This limited understanding of service operational

management has led to adoption of performance measurement approaches which lack and

integrated, systematic perspective.

The performance measurement literature underscores the notions that the future of

performance measurement systems will not be judged only based on their aggregation or

integration features, but also on their abilities to incorporate the dynamic relationships

among efficiency-specific and effectiveness-oriented organizational measures (Gomes et al,

2004b). Thus, organizational performance measurement initiatives and efforts must be

viewed as a complete organizational system, rather than a collection of stand-alone models

and tools (Lohman et al., 2004; Chenhall, 2005). In this context, organizations in

hospitality industry still have a long way to go, before they can have effective integrated

performance measurement systems.

The performance measurement literature reviewed tends to suggest that two types of

organizational performance evaluation platforms are needed. The first platform maintains a
4
measure-specific perspective. This platform defines the relationship between specific

measures and the organizational units responsible for them. Under this evaluation platform,

individual performance measures can be used to evaluate the reliability, availability,

efficiency, and quality aspects of the operational system and its different processes. To

accomplish this goal, diverse individual measures should be utilized individually and/or in

small groups. These measures are critical to detecting and dealing with specific

inefficiency-related problems. The key to improving performance under this measure-

specific platform is training and development of employees to promote responsibility and

accountability. Thus, investments on the part of hospitality organizations to promote

operational efficiency and employees’ productivity appear to be consistent with this

performance improvement platform. However, such investments may not be sufficient to

improve the overall performance of the operational system.

The second performance evaluation platform is focused on an organizational-wide or

system-wide management-perspective. As such, this platform focuses on mainly few

performance measures which reflect critical organizational performance dimensions. These

measures should be consistent with the executives’ individual cognitive capacities (Lipe e

Salterio, 2000, Garg et al., 2003). This platform stresses an organizational effectiveness

approach to organizational performance measures and measurement. As such, the measures

of this platform should be consistent with indicators designed to gage the competitiveness

of the organization in the marketplace (Basu and Wright, 1997; Chenhall, 2005). The

emphasis under this platform is on the effective flow of products/services to markets. Such

effective flow has positive impact on the profitability of the hospitality organization

(Goldratt and Cox, 1993). Under this platform the involvement of the executive is viewed

to be critical to the success of the organizational performance measurement process (Gomes

5
et al., 2003). Investments and effects to improve organizational performance on the part of

service hospitality organizations consistent with this platform appear to be not sufficient.

While the above two platforms focus on different aspects of operational and

organizational performance, nevertheless they should be integrated under one performance

measurement system. In this study, the services operational effectiveness (SOE) measure is

introduced forward that end. This measure is consistent with the two platforms addressed

above. As such, it can be used in a way consistent with the organizational-wide (system-

wid) platform to measure and track overall organizational performance. However, it can

also be used in a way consistent with the measures-specific platform to measure key

specific performance characteristics of the hospitality system and its processes.

The SOE development is based on concepts related to machine effectiveness.

Nakajima (1988) is accredited for the conceptualization of an overall, machine

effectiveness performance measure (Blanchard, 1997). However, since that time, several

authors (Raouf, 1994; De Groote, 1995; Al-Najjar, 1996; Dal et al., 2000; Eti et al, 2004;

Kenyona et al., 2005) have provided insights into the operationalization of the machine

effectiveness measures and measurement. The SOE measure proposed in this research

transposes the performance concepts, from a narrowly-defined system (the machine) with

specific components and well-defined work procedures, to a more complex system (the

hospitality organization and its service system). The SOE value incorporates the values of

three important hospitality operational performance dimensions which include availability,

quality, and efficiency. The proposed SOE can be utilized to either the support of the

measure-specific platform, or the system-wide platform of the hospitality operational

system. As such the management of hospitality organizations has the flexibility to utilize

SOE measure and performance measurement approach associated with it as an integrated

performance system, or as a narrowly focused operational measurement process.

6
3. The SOE Approach
The proposed SOE measure consists of three indicators, which are Availability (A),

Quality (Q) and Efficiency (E). This measurement approach was originally used in

association with a closed system (machine) (De Groote, 1995), where the system

components are well-defined. Therefore, cause-effect relationships can be assessed with

some certainty. However, the proposed SOE approach, as advocated in a hospitality service

setting, utilizes these three indicators in association with an open, complex system (the

hospitality organization and its operational system).

A justified argument can be easily made regarding the applicability of a machine-based

performance approach to a people-oriented, service-based operational system, such as in

the case of a hospitality service operational system. However, two counter arguments can

be easily made. First, the components of measurement are both applicable and relevant to

both operational environments. Second, the notion of benchmarking best measurement

practices and procedures is not restricted by operational and environmental similarities. As

a case in point, service organizations, in different services sectors, have successfully

benchmarked the practices of there manufacturing counterparts. In this context, service

organizations have extracted valuable lessons from the experiences of manufacturing

organizations with regard to customer satisfaction and quality improvements initiatives.

Thus the application of the SOE approach in hospitality service operational settings is not

only relevant but perhaps very much needed. Thus the practical justification for such

application is established and justified.

The SOE approach, as advocated in hospitality operational service settings represents a

modification of the approach, originally proposed by De Groote (1995). This modification

is required due to the unique and open nature of the hospitality service operational system.

In addition, such modifications take into consideration the intangible, yet important people-

7
orientation of this service operational system. In such system, operational activities, tasks

and resources (people, technology and know-how) are blended systematically to ensure the

effectiveness of the service encounter from the unique perspective of each customer (see

Figure 1). Thus, the customer is an integral part of the service operational system.

“take in Figure 1”

The SOE operational approach as advocated in service hospitality operational settings,

consist of three key service performance indicators. Since the performance of a hospitality

operational system is multi-faceted in nature, availability, quality, and efficiency constitute

important facets of such performance. These indicators have operational organizational, and

customer implications.

The SOE measure is defined below:

SOE = A × Q × E

The service performance indicators of the SOE are summarized below. These include

the following indicators:

1. Service availability
2. Service quality
3. Service efficiency
Space limitations and readership interest prevent us from presenting the detailed

mathematical development of these indicators.

The conceptual framework presented in Figure 2 is formulated based on field

interviews conducted with a sample of twenty hospitality operating managers in the US and

8
fifteen Middle Eastern managers, representing different sizes and type of hospitality service

organizations.

4. The Implementation and Utilization of SOE in Hospitality Organizations

If implemented systematically, the SOE has the potential to be very useful to

executives and operating managers of hospitality organizations. In this context, not only the

SOE can be used to monitor the performance of the different aspects of the hospitality

service system, but it also can provide a performance-oriented context for continuous

improvement initiatives and efforts. The conceptual framework in Figure 2 is designed to

offer a road map towards the effective implementation and utilization of the SOE in

hospitality service operational settings. The stages of this framework are highlighted below.

“take in Figure 2”

STAGE I - Initialization

The implementation of the SOE approach begins with the initiation of its relevant

indicators (Availability, Quality and Efficiency). This initiation process involves

determining the initial values, and establishing target benchmarks for the indicators.

Although the theoretical target for the SOE, and its indicators is one (1), the initial practical

target(s) will be dependent on a given organizational operational history and/or benchmark

values available from industry associations.

STAGE II – Resource identification and process improvement

During this stage, needed procedural modifications can be made in ways consistent

with existing organizational practices, or based on methodologies presented in the

9
literature. Such methodologies include statistical quality control procedures, theory of the

constraint (Goldratt and Fox, 1986), and simulation. Upon the completion of this effort, a

continuous improvement cycle focusing on performance aspects to be improved is

launched.

The continuous improvement cycle should allow for the verification of progress of the

improvement efforts. In this context, it is critical for the hospitality organizations to be

willing to commit the resources needed to foster the improvement efforts. The involvement

of employees, management and customer in this process is stressed.

STAGE III – Monitoring and evaluation

In this stage, it is critical to make available the relevant information needed to evaluate

the SOE measure and relevant indicators. As such, the role of organizational information

systems in providing the required information is critical. Based on the evaluation

performed, performance gaps are identified and plans to address them are formulated and

implemented

The monitoring of the implementation efficiency of the SOE approach is extremely

important. This is need, not only to maintain high levels of motivation, but also to identify

opportunities for improvement. If the implementation process is inefficient and takes to

much time, this may encourage dysfunctional behavior (Almgren, 1999). Thus, every time

a new value of SOE is obtained, it should be compared to previous values in order to verify

progress and aware for improvement. Thus, serving as further justification and motivation

for the implementation process.

The utility of the SOE approach can be illustrated through simulation, or actual

operational data. The results of the data analysis pertaining to the overall SOE measure and

its three indicators will clearly reflect the state of operational effectiveness of the
10
hospitality organization at any given period. Undesirable results of such analysis should

present some concern to the management of the hospitality organizations. In this case

corrective managerial actions will be need needed. To take the right corrective action, a

more detailed, systematic analysis of the three indicators of SOE measure over a period of

time maybe needed. Toward that end, a graphical analysis is helpful, especially in

association with historical operational data. See Figure 3, as an example of such graphical

analysis. The graph can be structured to show the SOE values, the target line, and the line

representing the average value of SOE for a period of time. Based on this graph,

management can verify two important aspects of service operational effectiveness, which

represent the gap between the target and actual values, as well as the extent of variability in

the behavior of the service system. According to the interviewed hospitality operating

managers, such analysis will be extremely useful to take corrective actions aimed at

bringing the operational system under control, as well as implementing performance

improvement initiatives. These initiatives are designed to improve operational service

quality, efficiency and availability. According to the managers interviewed, the collective

improvement of these service operational dimensions is instrumental to the enhancement of

the competitive position of the hospitality organization.

“take in Figure 3”

The graphical analysis shown in Figure 4 for the three indicators of the SOE measure

may indicate that the high variability in the SOE can be attributed to efficiency problems.

This, in turn can be attributed to planning problems, inaccurate service demand forecast, or

even low productivity. The graphical analysis of planned operational service capacity

relative to delivered services capacity can be used as a first step toward the diagnosis and
11
resolution of this problem. In any case, the graphical analysis provides management with

visual aid that makes it feasible to think of performance from a practical rather than abstract

perspective.

“take in Figure 4”

The success of the SOE implementation approach is very much dependent on the

availability of needed information. Therefore, in the early phases of implementation, the

precision of the indicators may be traded for more procedural and informational simplicity.

Thus, leaving the achievement of more precise results for later phases of the

implementation process. At that point in time during the implementation process, the

organization should have already successfully created an organizational culture in support

of the SOE approach. Thus, the emphasis can be shifted to the refinement of measures and

measurement in order to obtain very precise results.

STAGE IV- Organizational changes

In relation to the optimal frequency of measurement of the SOE measure, two

complementary approaches are suggested. These include the monitoring orientation and the

verification orientation. The monitoring orientation constitutes a synchronous activity. It

stresses obtaining the information needed to quantify, and evaluate the SOE measure on a

weekly-basis. Thus, it is a cyclical activity, aimed at improving the effectiveness of

operational system. The verification orientation is to be used, in an asynchrony way. Thus,

whenever changes aimed at improving are made to the hospitality service operational

system are made, the effectiveness of these changes is evaluated.

12
5. Conclusion and Implications
Environmental and competitive challenges are forcing hospitality service operational

systems to pay closer attention to the different aspects of performance (Yasin and Yavas ,

2001; Yasin et al, 2003; Tsaur and Lin, 2004; Yasin et al, 2004; Barros, 2005; Claver et al.,

2006). The performance measurement literature stresses the utility of individual measures,

aimed at measuring and tracking specific facets of the performance of a hospitality

operational system performance (measure-specific). However, the literature also stresses

the utility of aggregate measures, aimed at measuring and tracking the overall performance

of such service operational system. The SOE approach proposed in this study lends itself to

both measure-specific and aggregate-measure performance measurement orientations.

The proposed SOE approach utilizes key indicators, which includes services

availability, quality, and efficiency. While these indicators are operational in nature, they

tend to have strong customer-orientation, service value, and service encounter implications

to customers. In addition, the collective value of these indicators, as reflected in the overall

value of the SOE has competitive strategic implications.

Hospitality managers interviewed appear to think that information on the SOE

indicators is readily available in their organizations. However, if this type of information is

unavailable, modifications to the existing organizational information systems and

procedures can be made to ensure the availability, accuracy, and availability of such

information. While the actual SOE implementation process will require serious

commitment and support from management and employees, the anticipated performance

improvements, especially the financial and costumers-related aspects should justify the

implementation effort and investment

The implementation approach outlined in Figure 2, which is supported by interviewed

hospitality managers tend to provide hospitality organizations with a road map toward

13
providing the organizational context needed to support a systematic, organizational

approach to performance measurement. Hospitality organizations are unique operational

systems were people serve people. Thus, the effective performance of this unique

operational system has strong consequences and implications to the organizations, the

people who work for it, and its customers. The SOE approach advocated in this article

contributes to better measurement, tracking, and improvement of operational performance

in hospitality organizations. In today marketplace, the customer is the ultimate judge of

effective organizational performance. Hospitality organizations must be aware of their

performance and how it is perceived by their customers.

14
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 Figure 1 – Service operational system and the effectiveness

SERVICE OPERATIONAL
SYSTEM

Service Operational
FRONT-STAGE BACK-STAGE
Effectiveness (SOE)
OPERATIONS OPERATIONS
Approach

OPERATIONAL SERVICE
EFFECTIVENESS

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Figure 2 – A conceptual framework for the implementation of the service operational
effectiveness (SOE) approach

STAGE I – Initialization

- Gather information
- Define SOE parameters
- Establish benchmark targets
- Start the SOE process

STAGE II – Resources identification and

process improvement

- Identify key resources and processes

- Select processes to improve
- Set priorities.

STAGE III – Monitoring and evaluation

- Gather relevant data

CONTINUOUS IMPROVEMENT

- Evaluate the SOE and relevant parameters

- Verify the existence of performance gaps

STAGE IV – Organizational changes

- Modify actions as needed

- Select new processes to improve
- Modify target performance benchmarks

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Figure 3 – A graphical evolution of the service operational effectiveness (SOE) values
over time

1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00
38 39 40 41 42 43 44 45 46 47 48 49 50

Period
SOE TARGET MAVG

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 Figure 4 – A graphical evolution of the service operational effectiveness (SOE) graph
including their indicators

1.20

1.10

1.00

0.90

0.80

0.70

0.60

0.50
38 39 40 41 42 43 44 45 46 47 48 49 50
Period

Availability Quality Efficiency SOE TARGET

Indicators Definitions Examples

Ta - Ts Usually, the stoppages are
A= attributed to energy
Availability Ta
breakdowns, shortages of key
Ta – Available operational time. raw materials, or needed
equipments. Although these
Ts – Time when all operational processes stoppages tend to be infrequent
are stopped.
and have short duration, they
can lead to significant damages
to customer satisfaction
NS c The number of meals which
Q= were prepared according to the
Quality NS c + NS nc
chef specifications relative to
NSc – Number of services delivered the number of all meals that
according to service quality were effectively prepared in
specifications. hotel’s restaurant represents an
example of this indicator.
NSnc – Number of services considered
non-conform to standards

Se The number of meals which

E= were planed to be prepared
Efficiency Sp relative to the number of meals
Se – Number of services delivered. that were effectively served in
hotel’s restaurant represents an
Sp – Number of services planned to be example of this indicator.
delivered.

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