The Basics of Hotel Management Metrics

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Balanced Scorecard is widely used to measyre hotel management efficiency. In this article we will share a few KPIs applicable in hotel BSC. Check additional information about hotel management metrics.

Evaluation of hotel efficiency is performed not only through analysis of financial results. Sure thing, financial indicators offer much information about efficiency and profitability of adopted decisions or loyalty programs. However, implementation of strategy and strategic goals is rather dangerous if top management and hotel owners are not aware of how their hotel is performing at the moment. Even a nicely developed and chosen strategy can fail because of external changes. The situation and the market can change anytime. The recent financial meltdown is the best prove that previously adopted strategies can fail because of external changes. Customers may simply lack money to afford staying in luxurious hotels. That is why performance evaluation is a must if hotel owners and top managers really want to control the process of strategy implementation.

Why do so many hotel owners and top managers prefer using Balanced Scorecard for performance evaluation and strategic planning purposes? One of the greatest advantages of Balanced Scorecard is its ability to link operational and strategic management. You would agree that in order to maintain competitive advantage every hotel must have a realistic but at the same time ambitious strategy. It sometimes happens that strategy remains on paper since no actions are undertaken to implement it. Balanced Scorecard visualizes strategy, while evaluation of key performance indicators gives valuable information on how well the hotel is doing and terms of implementing strategy.

The four categories of Balanced Scorecard cover the most important success factors for the hotel business, falling into four groups: financial indicators, customer measures, internal processes, learning and growth KPIs. The choice of key performance indicators is perhaps one of the most important stages of Balanced Scorecard implementation. Since hotel industry is customer oriented all strategies are focused on delivering customers top quality services at competitive prices. Balanced Scorecard success pretty much depends on how well key performance indicators have been selected.

When making a choice of key performance indicators it is important that ordinary personnel and employees to whom these indicators concern actually understand how their work is measured and how it can be improved. For example, if Balanced Scorecard shows negative results on work of laundry or kitchen, heads of these business units need to think of the ways to improve performance. The obvious advantage of Balanced Scorecard is that it can give information on time when it is not too late to correct mistakes.

Key performance indicators in the hotel Balanced Scorecard should be developed by top managers, external Balanced Scorecard consultants and even representatives of ordinary personnel. Involvement of the entire hotel personnel in discussion and implementation of Balanced Scorecard increases chances of BSC success. Balanced Scorecard should become an everyday routine for everyone working in the hotel. Of course, hotel personnel need to be properly motivated, as well as be aware of why they have to use Balanced Scorecard and how they can improve own performance to contribute to implementation of company strategy.

Successful implementation of Balanced Scorecard will inevitably result in optimization of expenses, introduction of new services and improvement of existing ones.

If you are interested in hotel management metrics, check this link to find out more about hotel management metrics. Also, you can check other articles in General category.

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