How to use the balanced scorecard to speed up the recovery

25 November 2021
The commercial manager is responsible for the revenue growth during the recovery. Hotels should evaluate any tools or management systems that could make this job more manageable. The balanced scorecard is a great way to focus on the critical areas to speed up the recovery.
More than half of major companies in the US, Europe, and Asia use the Balanced Scorecard (BSC) initially developed by Dr. Robert Kaplan of Harvard University and Dr. David Norton to measure organizational performance using a more balanced set of performance measures. This strategic planning and management system is a perfect fit for the hospitality industry since it would help top management with communication, alignment, prioritization, and measuring progress towards the company's overall vision.
 
The idea is to examine an organization from four perspectives, enabling companies to develop objectives, measures, targets, and initiatives aligned with the overall vision. The foundation is learning & growth, which includes people, knowledge, technology, and culture. The following perspective is about processes. The third perspective handles guests and customers. The final one is the financial perspective, which is the result of all actions with people, processes, and customers. Now let's apply the Balanced Scorecard on the commercial organization in a hotel company.

The four perspectives

Learning & Growth

Hotel companies struggle to find the right talents for commercial work. To strengthen the human capital, hotels need a plan for attracting talents, building skills and knowledge by training and education. Another area where hotels need to invest is in systems and quality data to make better decisions. A third part is to create an organization for teamwork and to maximize each person's knowledge. All these aspects are essential to breakthrough performance. Without a solid base, the commercial team will struggle, which means the hotel will have a hard time recovering.

Internal processes

The day-to-day work to attract and acquire guests and customers should be as productive as possible. There are at least 15+ major workflows that need streamlining and development to become more effective. The primary purpose is to free up time from tedious manual work to be spent on creative work to find better ideas to attract revenue. There are also vital processes to enhance customer value, such as offering packages and additional products and services. From a commercial perspective, this process could be about finding new customer needs.

Guests and customers

This perspective is about the customer value proposition, which consists of products and services, price, quality, availability, and brand strength. All hotels want to create a compelling value proposition so guests will stay in the hotel and not with the competition. The commercial team controls the price and availability but depends on the operations to deliver the promised quality guest experience.

Financial

The final perspective consists of productivity and revenue growth. Productivity means that the commercial team should acquire guests and customers at the lowest possible cost as a percentage of the revenue. The KPI Customer Acquisition Cost can easily track this. Revenue growth is about enhancing customer value and expanding revenue opportunities. The recovery of demand for hotel overnight stays will more or less automatically increase revenue. The commercial team should continue to develop new revenue sources to increase revenue beyond recovery.

Objectives and measurements

The commercial department needs a couple of objectives for each perspective and can then decide how to measure the result. Hotels will have different objectives, and therefore, each hotel will have customized KPIs.