Implementing a Balanced-scorecard Approach to Managing Hotel Operations

White Lodging Services, which manages primarily Marriott-brand limitedservice properties, developed its own version of a measure called the balanced scorecard to gauge the effectiveness of hotel operations. The balanced scorecard takes into account the objectives of both owners and managers in assessing a hotel's success. The scorecard tallies financial data, but it also accounts for the customers' assessment of the hotel and examines the extent to which the organization maintains effective func tions and develops its human resources. After implementing its balanced scorecard in 1997, White Lodging Services recorded financial results stronger than those of its competitive set, and the firm was able to reduce turnover and dramatically increase adherence to internal processes and "best practices." During that two-year period, however, guest-satisfaction scores did not meet targeted levels of improvement, which were to achieve an extremely aggressive goal of consolidated average guest score levels within the top-20 percentile of the respective brands. While that is not the desired result, such a score serves as an early warning of potential difficulties that management can address long before the situation affects the bottom line. Most important, the balanced scorecard creates an agreed-upon mechanism that gives both owners and managers a quick indication of how well each property is doing.