Tag: Balanced Scorecard

Hotel Performance Measures Evaluation

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What is a universal success recipe in business? Even the most well known business gurus will not give you a definite answer. The problem is that every business is individual and thus requires individual approach. It should be noted that the situation is aggravated by a tough competition. If 30 years ago commercial businesses only had to offer high quality products at competitive prices, now the situation has entirely changed. These days, companies have to win loyalty of their customers. It especially concerns hotels. When vacation season begins hotel start a real fight for customers. Indeed, visitors have a very wide choice of hotels in different price ranges. As already said, hotels compete for customer loyalty. You know that in most cases those hotels win that have well thought and realistic strategy. One of the most common mistakes in strategic planning is that strategy unfortunately remains on paper. There is no problem in designing the most ambitious strategic plan but if they remain on the top management level there is no use in such a strategy. Thats why hotel owners and top managers are strongly recommended to use Balanced Scorecard which is known as one of the tools used for strategic management and performance evaluation purposes. Every strategy in a hotel is definitely customer focused. Sure thing, financial goals matter most of all, but the truth is that they simply cannot be achieved without retention and attraction of new customers. This is the only way a hotel can generate income.

As known, Balanced Scorecard employs very simple principle: it evaluates key performance indicators (KPIs) that represent critical success factors both in internal and external business environment. The four categories of Balanced Scorecard financial, customer, internal business processes, learning and growth cover the most important aspects of inside and outside the hotel. With a Balanced Scorecard it is possible to adjust internal processes in accordance to new market conditions and requirements. It is remarkable that the set of key performance indicators can be changed during evaluation process, as required by external changes. Lets review several key performance indicators used in hotel Balanced Scorecard.

Number of hotel guests per employee. This is a very important indicator that makes it possible to efficiently manage number of hotel employees and optimize personnel quantity. This indicator can also demonstrate group performance of employees. Naturally, the more hotel guests an employee can manage the better.

Net room revenue. This is a very important financial indicator that makes it possible to calculate total revenue for the entire hotel as well as offer valuable information on how to increase revenue without sufficient hike in hotel rates.

Percentage of international guests. This indicator can tell much of hotel quality and services. The more international get choose to visit a hotel that hire its reputation and the international and local community. If there are not many international guests in a hotel, perhaps new services and offers have to be introduced in order to attract such customers that are expected to spend much money.

Key Facts About Hotel Benchmarking

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What is needed for the hotel management to optimize hotel performance? Perhaps, the first thing they need to know is what problems and weaknesses they have a moment. The next thing is to design strategy for future development. Yes, in a modern business world it is impossible to survive without having a comprehensive strategy. This is explained by a tough competition in the markets. Hotel industry is not an exception here. It is possible to say that the competition is even tougher in a hotel industry than in other business areas. Indeed, if business owners do not know where they are driving at it is very difficult to achieve positive results, especially if competitors and rival hotels are looking for a chance to wipe them out. Strategy is a protection method. A strategy is about dealing with problems even before they occur. Strategy helps and organization to focus on most important thing and problems both in internal and external environment. Use of a reliable and effective strategic management tool is a must for every company that wants to achieve success. Perhaps, you will not find a single hotel that is not happy to welcome guests. However, the hotel management wants that these guests will come back next time. In such a way hotel creates customer database which consists mostly of regular customers. It should be noted that Balanced Scorecard is so far the most effective strategic management tool used to drive strategy into action.

There is a very simple principle behind Balanced Scorecard. It consists of four categories: financial, customer, internal business processes, learning and growth. Each category contains key performance indicators, which are measures to be evaluated. KPIs represent critical success factors for various business aspects. Having found the right combination of key performance indicators, the hotel management will possess up to date information on current hotel performance. Choice of key performance indicators is the most important stage of Balanced Scorecard implementation. Every individual business has own indicators, and hotel is not an exception here. Lets review a couple of key performance indicators that are widely used in hotel benchmarking.

Occupancy % of rooms. This indicator will demonstrate efficiency of marketing and advertising campaign. If hotel has 100 rooms and only half of them are regularly occupied, such a hotel will most certainly suffer losses because of expenses for maintenance of all rooms. Evaluation of this indicator will help optimize hotel performance and its booking policy.

Average cleaning costs per room. This KPI is related to the first one since all rooms have to be cleaned and maintained while not all of them are regularly occupied by guests. This indicator will help top management of a hotel optimize cleaning costs and introduce some measures that will save costs.

Average length of stay per guest. This indicator will help top management figure out what services guests would need during their stay and for how long (on average) rooms have to be clean. If guests stay mostly for several nights they would need additional services.

A Guide On Managing Hotels Kpi

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KPI management is as important as implementation process of Balanced Scorecard. Sure thing, the choice of the right key performance indicators and development of the right strategy is vital for BSC success. At the same time maintenance of Balanced Scorecard and management of key performance indicators is a critical success factor for efficient use of Balanced Scorecard. By the way, improper management of key performance indicators is one of the most common mistakes in implementation and maintenance of Balanced Scorecard. Just having a set of key performance indicators is not enough. It is necessary to adequately measure them, exchange obtained information between different managerial levels, as well as use evaluation results in decision making and strategy revision. This also concerns hotel Balanced Scorecard. Hotel industry is known as being extremely competitive. Indeed, there is no lack of options when looking for the hotel to spend the night there or the entire vacations. Hotels are eager to use
Balanced Scorecard since this system can certainly help transform strategic plans into real actions. This is only possible if all rules and norms of Balanced Scorecard maintenance and KPIs management are observed.

As known, Balanced Scorecard consists of four categories: financial, customer, internal business processes, learning and growth. What makes Balanced Scorecard unique? Unlike similar performance evaluation systems of Balanced Scorecard evaluates nonfinancial indicators as well. In terms of a hotel industry these indicators refer to customer satisfaction, improvement of hotel personnel professional level, optimization of internal processes, for example laundry, dining services, housekeeping and cleaning, reception services etc.

No less imagine such a situation hotel top managers have developed a strategy and selected a set of key performance indicators that fall into the above mentioned four categories. Now is the time to start using Balanced Scorecard and evaluate the selected KPIs. It needs mentioning that key performance indicators should be measurable and understood. As time passes by the first results are obtained. This is perhaps the most important stage since top managers have to find out whether are not they have made the right choice and assigned the right weights for indicators. For instance, such a key performance indicator as room occupancy may not matter much as visitors tend to stay for more than three days in a hotel and maintenance of vacant rooms requires little expenses. This is just a hypothetical example.

Having obtained the first results, top management needs to analyze them. KPI evaluation results show progress or regress of a hotel on its way to implement strategic goals. Thus, hotel managers and owners locate problematic areas and make decisions as to necessary improvements. For instance, if your kitchen performance prevents hotel from optimize an overall performance, relevant decisions need to be made (e.g. hiring new chef, changing food supplier etc.). Balanced Scorecard will work only in case the information it provides is actually used to initiate changes. Balanced Scorecard will not change the situation by itself but rather offer important and valuable information for top managers and business owners.

How To Measure Hotel Security Performance

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Hotel industry is a very competitive one. One high season comes hotel owners begin real wars to win loyalty of customers. Indeed, there is a wide choice of hotels in any country. Customers are free to choose hotels according to their preferences and budgets. Sure, everyone wants to get the most value for his or her money. Every minor detail matters in the hotel. Security measures are of exceptional importance since when visitors miss their personal things they will never come to that hotel again. Moreover, if such a theft becomes public the hotel reputation will most certainly suffer. For this reason, evaluation of security measures in the hotel is as importance as measurement of its business performance. Top security is an inseparable part of the hotel top rate service. These days, hotel owners and managers use the most popular performance evaluation tool which is known as Balanced Scorecard. Having developed strategic goals and chosen a set of key performance indicators, hotel managers can evalua
te current performance as well as locate problems.

Hotel security is provided through various services, from surveillance and installment of cameras to regular checkups of corridors, lobbies and other rooms and areas. Without proper evaluation it is very difficult to say whether or not hotel security measures are efficient. Of course, one can use statistic information such as theft or incidents rates. However, these figures information on what has already happened. It is impossible to plan ahead without having figures on current performance of Security Service.

Thus, in order to get such information as set of relevant key performance indicators has to be developed. To begin with, it needs mentioning that key performance indicators are not just numbers. KPIs represent critical success factors for various aspects of running business, hotel security in our case. Thus, top managers and those responsible for implementation of Balanced Scorecard in a hotel should consider the most important factors that directly influence top performance of a hotel in terms of security. At that, the hotel should take care of safety of both visitors, own personnel, and protection of hotel property.

Key performance indicators used to measure security performance have to be understood for ordinary security officers. If security guards do not understand the purpose of using Balanced Scorecard and key performance indicators they are likely to offer fake figures just to fulfill the tasks. Key performance indicators have to be measurable. For example it is reasonable to measure such indicator as percentage of time corridors and lobbies are not checked by security guards. Logically, the more often security officers checked up rooms and lobbies, the less probable incidents are. Two other relevant key performance indicators for hotel security we can refer number of checkups performed outside, percentage of time that security guards are not working or unable to prevent accidents, number of security officers per storey etc.