The design of a balanced scorecard framework in a 5-star hotel

Abstract

Purpose: A hotel is a business that relies on many intangibles, given that it is a service-oriented business. Consequently, a hotel would greatly benefit from a balanced performance measurement system, such as the Balanced Scorecard. By taking a Maltese perspective, the primary objective of this study is to design a Balanced Scorecard for a 5-star hotel. This is then followed by an evaluation of the current performance measurement system and the Balanced Scorecard, resulting in a comparison between the two systems. The evaluation and comparison contribute towards highlighting the advantages of switching to the Balanced Scorecard. Design: To reach the objectives of this study, a purely qualitative approach has been taken, in the form of a case study. This methodological choice resulted in an in-depth analysis in a specific setting, that of a 5-star hotel. Interviews have been conducted with the General Manager and high-ranking officers of the departments that make up the room operations of the case hotel. The findings obtained have been analysed using a thematic analysis. Findings: The case hotel adopts a KPI Dashboard for all its departments. The KPIs obtained from the interviews were grouped according to Kaplan and Norton’s four perspectives, with each perspective having its objectives, measures and initiatives. This was followed by a visualisation of the cause-andeffect relationship between the perspectives. The evaluation and comparison of the KPI Dashboard and the Balanced Scorecard resulted in multiple advantages that the hotel can benefit from when switching systems. Conclusions: This study concludes that the transition from the current KPI Dashboard to a Balanced Scorecard is feasible and advisable for the case hotel. This is derived from the fact that the hotel already communicates to lower-tiered employees through KPIs. Therefore, the same communication channel can be used to cascade the hotel’s strategic objectives paired with their respective measures. Additionally, this results in a lack of resistance when switching to the Balanced Scorecard. Value: The study is of value to the 5-star hotel since it provides a balanced performance measurement system that the hotel can benefit from. Furthermore, all aspects of the Balanced Scorecard can be applied by other hotels, both local and foreign. Lastly, this study makes a significant contribution to management accounting given the lack of research on the implementation of the Balanced Scorecard in the hotel industry.