Hotel benchmarking intro

1. Introduction

2.  General Introduction
◦ History And Background
◦ Definitions
◦ Types Of Benchmarking
◦ Examples

 Hotel Benchmarking
◦ Why Benchmark Hotels?
◦ Popular Misconceptions
◦ Chain Scales & Star Ratings
◦ Types Of Benchmarking
◦ Benchmarking Cycle
◦ Areas That Can Be Benchmarked
◦ Putting It Together - Sample Focus Areas
◦ Emerging Industry Issues
◦ Group Mini-Benchmarking Exercise Based On Hotel Visits

3.  What is benchmarking?
 Why benchmark hotels?
 The benchmarking process?

4.  “Benchmarking is simply
about making comparisons
with other organisations
and then learning the
lessons that those
comparisons throw up.”
 The European Benchmarking
Code of Conduct

5.  The continuous process of
measuring:
◦ Your products, services and business
practices against your toughest
competitors or industry leaders
◦ Tool to enable a company to perform at
a best-in-class level in any given
business process
◦ Tool to identify, quantify and prioritize
improvement opportunities offering the
greatest potential return, plus highlight
areas at risk.
 Need for consistency in what you’re
benchmarking

6.  The term benchmarking from:
◦ Early surveyors used the term to identify a fixed
point from which all other measurements are
made
 a point of reference on a landmark of known
altitude to estimate the altitude of other objects
 chiselled marks made to ensure that a levelling rod
can be accurately repositioned in the future.
 dimensional height measurements on a workbench
 used by cobblers to measure people's feet
 Frederick Winslow Taylor 1900’s
 Rank Xerox 1960’s
 Benchmarking is mainly used to measure
performance using a specific indicator
 resulting in a metric of performance that is
then compared to others... e.g.
◦ cost per unit of measure,
◦ productivity per unit of measure,
◦ cycle time of x per unit of measure
◦ defects per unit of measure)

7.  Benchmarking is the process of
identifying "best practice" in
relation to both products and the
processes by which those
products are created and
delivered.
◦ The search for "best practice"
 can taker place both inside a
particular industry, and also in other
industries (for example - are there
lessons to be learned from other
industries?).
◦ The objective of benchmarking is
 to understand and evaluate the
current position of a business or
organisation in relation to "best
practice" and to identify areas and
means of performance improvement.
‘the continuous process of measuring
products, services and practices against
the toughest competitors or those
companies recognised as industry
leaders’ (Camp 1989).

8.  Benchmarking is the
process of comparing one's
business processes and
performance metrics to
industry bests and/or best
practices from other
industries.
◦ Dimensions typically measured
are quality, time, and cost.
◦ Improvements from learning
mean doing things better,
faster, and cheaper.

9.  Benchmarking involves
management identifying the best
firms in their industry, or any other
industry where similar processes
exist and comparing the results
and processes of those studied
(the "targets") to one's own results
and processes to learn how well
the targets perform and, more
importantly, how they do it.

10.  A “benchmark” is
◦ a reference or measurement
standard used for
comparison.

11.  “Benchmarking” is
◦ the continuous activity of
identifying, understanding
and adapting best practice
and processes that will
lead to superior
performance.
BENCHMARKING

12.  In groups write your own definition of bench
marking

13.  “Best practice benchmarking" or "process benchmarking", it is
a process used in management and particularly strategic
management, in which organizations evaluate various aspects
of their processes in relation to best practice companies'
processes, usually within a peer group defined for the
purposes of comparison.
◦ This then allows organizations to develop plans on how to make
improvements or adapt specific best practices, usually with the
aim of increasing some aspect of performance.
◦ Benchmarking may be a one-off event, but is often treated as a
continuous process in which organizations continually seek to
improve their practices.

15.  Reviewing the performance of an
organisation is an important step when
formulating the direction of the strategic
activities.
◦ It is important to know where the strengths
and weaknesses of the organisation lie, and as
part of the ‘Plan –Do – Check – Act’ cycle,
benchmarking plays a key role in quality and
productivity improvement activities.
 The main reasons it is needed are:
◦ To ensure customer requirements have been
met
◦ To be able to set sensible objectives and
comply with them
◦ To provide standards for establishing
comparisons
◦ To provide visibility and a “scoreboard” for
people to monitor their own performance level
◦ To highlight quality problems and determine
areas for priority attention
◦ To provide feedback for driving the
improvement effort

16.  Most used improvement tools
◦ Mission and Vision Statements (77%)
◦ Customer (Client) Surveys (77%)
◦ SWOT analysis(72%)
◦ Informal Benchmarking (68%).
◦ Performance Benchmarking (49%)
◦ Best Practice Benchmarking (39%).
 The tools likely to increase in popularity over the next three years are
◦ Performance Benchmarking,
◦ Informal Benchmarking,
◦ SWOT,
◦ Best Practice Benchmarking.
 Over 60% of organizations that are not currently using these tools indicated
they are likely to use them in the next three years.
 Global Benchmarking Network Survey 2008

17.  No single benchmarking process universally adopted.
◦ various methodologies emerging.
 Kaiser Associates 7-step approach.
 Robert Camp 12-stage approach
 The 12 stage methodology consisted of
◦ 1. Select subject ahead
◦ 2. Define the process
◦ 3. Identify potential partners
◦ 4. Identify data sources
◦ 5. Collect data and select partners
◦ 6. Determine the gap
◦ 7. Establish process differences
◦ 8. Target future performance
◦ 9. Communicate
◦ 10. Adjust goal
◦ 11. Implement
◦ 12. Review/recalibrate
Boxwell R.J. Jnr, “Benchmarking for Competitive Advantage”, New York; McGraw-
Hill 1994

18.  Benchmarking involves looking outward (outside a particular business,
organisation, industry, region or country) to examine how others achieve
their performance levels and to understand the processes they use. In
this way benchmarking helps explain the processes behind excellent
performance.
 When the lessons learnt from a benchmarking exercise are applied
appropriately, they facilitate improved performance in critical functions
within an organisation or in key areas of the business environment.
 Application of benchmarking involves four key steps:
◦ (1) Understand in detail existing business processes
◦ (2) Analyse the business processes of others
◦ (3) Compare own business performance with that of others analysed
◦ (4) Implement the steps necessary to close the performance gap
 Benchmarking should not be considered a one-off exercise.
◦ To be effective, it must become an ongoing, integral part of an ongoing improvement
process with the goal of keeping abreast of ever-improving best practice.

20.  Benchmarking "World Conquest“
◦ What objective measures would YOU use to
compare
 Alexander the Great
 Julius Caesar
 Adolph Hitler;
 Genghis Khan
 Napoleon Bonaparte
◦ Which of them was most sucessful, and why?

21.  The three main types of costs in benchmarking are:
◦ Visit Costs - This includes hotel rooms, travel costs, meals, a token gift, and lost
labour time.
◦ Time Costs - Members of the benchmarking team will be investing time in
researching problems, finding exceptional companies to study, visits, and
implementation. This will take them away from their regular tasks for part of each
day so additional staff might be required.
◦ Benchmarking Database Costs - Organizations that institutionalize benchmarking
into their daily procedures find it is useful to create and maintain a database of best
practices and the companies associated with each best practice now.
 The cost of benchmarking can substantially be reduced through utilizing
the many internet resources that have sprung up over the last few years.
◦ These aim to capture benchmarks and best practices from organizations, business
sectors and countries to make the benchmarking process much quicker and cheaper.

22.  Process benchmarking - the initiating firm focuses its observation and investigation of business processes with
a goal of identifying and observing the best practices from one or more benchmark firms. Activity analysis will
be required where the objective is to benchmark cost and efficiency; increasingly applied to back-office
processes where outsourcing may be a consideration.
 Financial benchmarking - performing a financial analysis and comparing the results in an effort to assess your
overall competitiveness and productivity.
 Benchmarking from an investor perspective- extending the benchmarking universe to also compare to peer
companies that can be considered alternative investment opportunities from the perspective of an investor.
 Performance benchmarking - allows the initiator firm to assess their competitive position by comparing
products and services with those of target firms.
 Product benchmarking - the process of designing new products or upgrades to current ones. This process can
sometimes involve reverse engineering which is taking apart competitors products to find strengths and
weaknesses.
 Strategic benchmarking - involves observing how others compete. This type is usually not industry specific,
meaning it is best to look at other industries.
 Functional benchmarking - a company will focus its benchmarking on a single function to improve the operation
of that particular function. Complex functions such as Human Resources, Finance and Accounting and
Information and Communication Technology are unlikely to be directly comparable in cost and efficiency terms
and may need to be disaggregated into processes to make valid comparison.
 Best-in-class benchmarking - involves studying the leading competitor or the company that best carries out a
specific function.
 Operational benchmarking - embraces everything from staffing and productivity to office flow and analysis of
procedures performed.
◦ http://www.nuesoft.com/news-events

23. Type Description Most Appropriate for the Following
Purposes
Strategic Benchmarking Where businesses need to improve overall
performance by examining the long-term
strategies and general approaches that have
enabled high-performers to succeed. It involves
considering high level aspects such as core
competencies, developing new products and
services and improving capabilities for dealing
with changes in the external environment.
Changes resulting from this type of
benchmarking may be difficult to implement
and take a long time to materialise
Re-aligning business strategies that
have become inappropriate
Performance or Competitive
Benchmarking
Businesses consider their position in relation to
performance characteristics of key products and
services. Benchmarking partners are drawn from
the same sector. This type of analysis is often
undertaken through trade associations or third
parties to protect confidentiality.
Assessing relative level of performance
in key areas or activities in comparison
with others in the same sector and
finding ways of closing gaps in
performance
Process Benchmarking Focuses on improving specific critical processes
and operations. Benchmarking partners are
sought from best practice organisations that
perform similar work or deliver similar services.
Process benchmarking invariably involves
producing process maps to facilitate
comparison and analysis. This type of
benchmarking often results in short term
benefits.
Achieving improvements in key
processes to obtain quick benefits
Functional Benchmarking Businesses look to benchmark with partners
drawn from different business sectors or areas
of activity to find ways of improving similar
functions or work processes. This sort of
benchmarking can lead to innovation and
dramatic improvements.
Improving activities or services for
which counterparts do not exist.

24. Type Description Most Appropriate for the Following
Purposes
Internal Benchmarking Involves benchmarking businesses or operations from
within the same organisation (e.G. Business units in
different countries). The main advantages of internal
benchmarking are that access to sensitive data and
information is easier; standardised data is often readily
available; and, usually less time and resources are
needed. There may be fewer barriers to implementation
as practices may be relatively easy to transfer across the
same organisation. However, real innovation may be
lacking and best in class performance is more likely to
be found through external benchmarking.
Several business units within the same
organisation exemplify good practice and
management want to spread this expertise
quickly, throughout the organisation
External Benchmarking Involves analysing outside organisations that are known
to be best in class. External benchmarking provides
opportunities of learning from those who are at the
"leading edge". This type of benchmarking can take up
significant time and resource to ensure the
comparability of data and information, the credibility of
the findings and the development of sound
recommendations.
Where examples of good practices can be
found in other organisations and there is a
lack of good practices within internal
business units
International Benchmarking Best practitioners are identified and analysed elsewhere
in the world, perhaps because there are too few
benchmarking partners within the same country to
produce valid results. Globalisation and advances in
information technology are increasing opportunities for
international projects. However, these can take more
time and resources to set up and implement and the
results may need careful analysis due to national
differences
Where the aim is to achieve world class
status or simply because there are
insufficient "national" businesses against
which to benchmark.

25.  Internal
◦ a comparison of internal operations and processes
 Competitive
◦ specific competitor to competitor comparisons for a
product or function
 Functional
◦ comparisons of similar functions within the same
broad industry, or to industry leaders
 Generic
◦ comparisons of business processes or functions
that are very similar, irrelevant of the industry

26.  Identify your problem areas
◦ Because benchmarking can be applied to any business process or function, a range of
research techniques may be required.
◦ They include: informal conversations with customers, employees, or suppliers;
exploratory research techniques such as focus groups; or in-depth marketing
research, quantitative research, surveys, questionnaires, re-engineering analysis,
process mapping, quality control variance reports, or financial ratio analysis.
◦ Before embarking on comparison with other organizations it is essential that you
know your own organization's function, processes; base lining performance provides
a point against which improvement effort can be measured.
 Identify other industries that have similar processes
◦ For instance if one were interested in improving hand offs in addiction treatment
he/she would try to identify other fields that also have hand off challenges.
◦ These could include air traffic control, cell phone switching between towers, transfer
of patients from surgery to recovery rooms.
 Identify organizations that are leaders in these areas
◦ Look for the very best in any industry and in any country.
◦ Consult customers, suppliers, financial analysts, trade associations, and magazines
to determine which companies are worthy of study.

27.  Survey companies for measures and practices
◦ Companies target specific business processes using detailed
surveys of measures and practices used to identify business
process alternatives and leading companies.
◦ Surveys are typically masked to protect confidential data by
neutral associations and consultants.
 Visit the "best practice" companies to identify leading edge
practices
◦ Companies typically agree to mutually exchange information
beneficial to all parties in a benchmarking group and share the
results within the group.
 Implement new and improved business practices
◦ Take the leading edge practices and develop implementation
plans which include identification of specific opportunities,
funding the project and selling the ideas to the organization for
the purpose of gaining demonstrated value from the process.

28.  What’s the difference between risk and
uncertainty?
◦ Are there quantitative methods that aid decision
making under uncertainty?
◦ Are there qualitative methods that aid decision
making under uncertainty?
 How can decision makers effectively combine
qualitative and quantitative methods?

29.  Key purposes of benchmarking:
◦ Create a better understanding of the
current position
◦ Understand performance relative to
peers
◦ Track performance on a common basis
◦ Identify areas with high potential for
improvement/investment
◦ Evaluate “good”, “average” and “poor
performance
◦ Increase awareness of changing
customer needs
◦ Encourage innovation
◦ Develop realistic, challenging goals
◦ Establish realistic action plans

30. Thoughts, Ideas, Measures, Processes

31. The theory makes sense, but how
does it work in practice?

32.  Benchmarking is not
ritual black magic
 Benchmarking is only
one of a range of
management tools

33.  Vital to match like against like

34.  Luxury
◦ Four Seasons, Ritz Carlton, Fairmont
 Upper Upscale
◦ Embassy, Hilton, Marriott, Sheraton
 Upscale
◦ Hilton Garden Inn, Courtyard, Crowne Plaza
 Mid with F&B
◦ Holiday Inn, Ramada, Best Western
 Mid no F&B
◦ Hampton Inn, Holiday Inn Express, Comfort Inn
 Economy
◦ Guesthouse, Red Roof, Days Inn

35.  Systems that rank hotels
according to quality.
◦ Intended to serve as guidelines
for guests
 Vary greatly from country to
country & from city to city
 NO standardized star rating
system
 NO uniform measure or criteria
 In Europe- scale from one to
four stars-
 USA - scale from one to five
stars, sometimes with ½ star
increments.
◦ Can be conferred by
various/several organizations
 Usually determined by
government and/or independent
organizations,

36.  5-Star Rating:
◦ Very luxurious hotel, offering the highest degree of personal service.
 4-Star Rating:
◦ Formal, large hotels, with above-average service as well as shopping,
dining and entertainment.
 3-Star Rating:
◦ Usually located near a major expressway, business center and/or shopping
area, these hotels offer nice, spacious rooms and decorative lobbies
 2-Star Rating:
◦ Generally part of a chain that offers consistent quality and limited
amenities
 1-Star Rating:
◦ small hotel managed and operated by the owner. The atmosphere will be
more personal and the accommodations basic.

37. Benchmarking
Internal Benchmarking External Benchmarking
Market related
(Competition analysis)
Generic Processes
(Best Practice)
Plant related
Branch related
(Trend research)
e.g., safety performance measures

38. Identify
internal/exter
nal
benchmarkin
g partners
Compare
measures,
processes and
practices
Identify,
implement
and monitor
changes
Decide what to
benchmark
Map and
measure the
process
THE
BENCHMARKIN
G
CYCLE
Identify
processes and
success factors

39. OPERATIONS
Salaries
&Turnover
Productivity
Ratios
RevPAR Revenue Per
M2
REVENUE,
SALES,
MARKETING
Distribution
Channels –
GDS
& Internet
Future
Prices
On internet
Marketing
Spend
Yield
Premium
& Market
share
FINANCE
Cost
Structures
CAPEX
Expenditure
Operating
Performance
Asset
Utilisation
CUSTOMERS
Guest
Satisfaction
Brand
Awareness
Customer
Value
Customer
Loyalty
Can be used at any level – department, property or head office

40. Where?
Basic issues:
Where are you now?
Why is your organization at
this position vs the other?
What can be improved?
112
10
30
90
min mean Company max
Why?
What?
Measure

41.  Operational Performance:
◦ Improve revenue and occupancy rates
 Customer Service Excellence:
◦ Formalize and codify processes for
customer service to establish specific
quality standards for staff behavior and
guest expectation.
 HR Management:
◦ Direct employees to desired performance
levels with personal, hands-on coaching
techniques and milestone-setting
activities.
 Rewards and Recognition:
◦ Personalize rewards and simplify
requirements in incentive programs to
make them meaningful and important to
employees.

42.  Rooms
◦ Are my occupancy levels any good?
◦ How do my average rates compare to my competitors?
◦ How is my week versus weekend business?
◦ Am I growing my share of the market?
◦ Am I going to get my bonus?
◦ Is my revenue strategy right ?
◦ Does my Sales & Marketing effort need changing?
 Other operating departments
◦ Do my F&B outlets generate as much revenue as my competitors?
◦ How efficient is the hotel at converting revenue to profit?
◦ How does my payroll compare with the industry norm?
◦ Do I need to revise my budgets for next year?
 Guest service
◦ How did our guests rate their experience?
◦ Could our service standards be improved?

43.  Depends on the users requirements
◦ Hourly
 prices your competitors selling at online
◦ Daily
 last nights performance
 Forward looking rates and availability
◦ Weekly
 split of mid week and weekend business
 review GDS bookings
◦ Monthly
 variance against budget
◦ Quarterly
 customer satisfaction reports
◦ Annually
 profit and loss performance

44. OCCUPANCY No. of rooms sold %
No. of rooms available
ADR Net Room Revenue $
Rooms sold
REVPAR Net Room Revenue $
No. of rooms available
MARKET INDICES MPI, ARI, RGI
FINANCIAL IBFC, EBITDA
MPI - Market Penetration Index (your occupancy results versus the average occupancy of your competitors)
ARI - Average Rate Index (your ARR versus the average ARR of your competitors)
RGI - Revenue Generator Index (your revenue share of the market, the market being your hotel and the hotel competitors).

47. Country
Location -
City v
Resort
Visitor
Trends
Socio-
Economic
Variables
National +
Commercial
Activity
Local
Politics
Employment
Trends
ASSESSING
THE
MARKET
Supply v demand equilibrium impacts hotel pricing

48. Internal
Benchmarking
SEC
2007
month
2008
Company
Spread Sheet
Mon Energy Product
Jan
Feb
Mar
Comp1
Competitive
Benchmark Comp2
Comp3

49. Importance of Benchmarking
Objective Without Benchmarking With Benchmarking
To become more adaptive Evolutionary change Understanding of
competition ideas from
proven practices
Implement industry best
practices
Few solutions, frantic catch
up activity
Many options, superior
performance
Defining customer
requirements
Based on history, gut feeling
or perception
Market reality, objective
evaluation
Establishing effective goals
& objectives
Lacking external focus,
reactive
Credible unarguable,
proactive
Developing true measures
of productivity
Pursuing projects,
strength/weaknesses not
understood, route of least
resistance
Solving real problems,
understanding output based
on industry best practices

50. 1. Consultant companies
◦ Deloitte, The Bench, STR,
HotStats, PKF, etc…
◦ No affiliation to any hotel
brand
2. Stakeholders
◦ Engage participation from
major hotel groups
 Intercontinental, Accor, etc..
 Technical advisory groups
formed for each metric sector

51.  Select a set of competing hotels
◦ Take agreed aspects of performance
◦ Include those performance measure in third party
benchmarking survey
◦ Compare performance ratios, market share and
rank position

52. Contemporary Annual
Deloitte Hotel Benchmark Deloitte Annual Profitability
HotStats PKF Hotels {Country} 2009
The Bench TRI Hotels 2009 - {Country} Hotel
Industry 2006

53.  Performance based
benchmark
◦ Same basic process and
principles… But
◦ Effectively builds custom
benchmarks for each
company/property
based on agreed metrics
◦ Doesn’t create
“normalised” figures
◦ A more flexible system

54. Phase 1
BENCHMARK
Start
1. Agree On
Benchmarking Topic
2. Finalise On Scope;
Measures & Definitions
3. Data Collection : Survey
4. Share Strengths
Phase 3
IMPROVEMENT
9. Plan to Adapt Best Practices
10. Implement Best Practices
11. Monitoring Result
12. Standardization
13. Daily Control
Continue Existing Project?
New Area
Yes
No
Phase 2
BEST PRACTICES
5. Plan for Site Visit
6. Data Collection
7. Recommend
Improvement
Yes
2nd
Site Visit
(Focus Visit)
8. Share Findings

55.  Gather data
◦ Comprehensive
spreadsheets developed
for information gathering
 Background information
 Size, facilities, hours,
operations
 Energy, water
information etc…
http://www.tamarindtreedominica.com/Benchmarking%20Assessment%20Report%20-
%20Tamarind%20Tree%20Hotel%20&%20Restaurant%20Oct07.pdf

56.  Simulation analysis
◦ For factors that are important but can’t be derived
statistically; or there are no measured data for
◦ Simulate representative areas/factors to derive
correction factors

57.  Median equation assesses median
performance for site with the same facilities
as your site
◦ Median is set to X – e.g. 2.5 stars
◦ Evaluate % difference from median
◦ Calculate rating from % difference
 10-20% below 1 star,
 20% at 4 star,
 10% at 5 star
m=2.5
- 20% -10% 0% + 20% + 10%

58.  For example Business hotels:
 Rooms
 Number of rooms: Simple count - Correction for
unavailability
 Conference facilities
 maximum capacity
 Laundries
 number of rooms provided with full laundry service
 Restaurants
 Energy and water rating
 Covers all energy used
◦ 2 star through to 5 star AAA ratings

60. Sector e.g. Hospitality
Industries e.g. Hotels
Clusters
e.g. Luxury, Up-Scale, 4 Star
Processes: Customer
Complaints - HRM
Function: Marketing, HRM

61. Other Industry Focus
Problem Solution
Customer surveys indicate long wait times for hotel
rooms, especially for repeat Customers.
Benchmarked admittance process with hospital
emergency room departments resulting in
dramatically reduced check-in times. Also netted less
employees needed, automation for frequent hotel
guests, and many more process improvements.
Routine maintenance on aircraft between flights
such as refuelling, cleaning, tire checks taking too
long. Plane on the ground means more planes and
personnel are required to maintain high level of
service and schedules. Need to reduce ground time
required in between flights without sacrificing
quality or safety of passengers.
Brainstormed and discovered Indy 500 racing team
pit crews have a similar maintenance process and a
similar requirement to get their vehicle back on the
track as quickly and safely as possible. After
benchmarking pit crews maintenance turn-around-times
for aircraft between flights were reduced by
more than half saving/making the airline millions of
dollars within the first few years.

62. 1. Below are nine dots arranged in a set of three rows.
2. Your challenge is to draw four straight lines which go through
the middle of all of the dots without taking the pencil off the
paper.
3. If you were using a pencil, you must start from any position
and draw the lines one after the other without taking your
pencil off the page.
4. Each line starts where the last line finishes.
Try this now by quickly drawing nine dots on a piece of paper and
have a go with a pencil.
Place your pencil somewhere, draw four straight lines without
taking your pencil off the page.
Each line must start where the last line finished.

63. Solution to the nine dot
puzzle:
The picture below will show you a solution to this
problem. It rotates through the solution so
please wait until it starts with an empty grid of
dots.
How did you solve the
puzzle?
Think back to how you were solving the puzzle.
Did you solve it by trial and error or did you think
through a strategy? Spend 30 seconds thinking
about how you solved it and what changes in
your thoughts you needed have to get you there.

64.  Customer perceptions regarding service quality are
central to evaluating performance.
◦ Parasuraman et. al. (1985) SERVQUAL model, identifying
five dimensions of service quality as perceived by
customers:
 SERVQUAL is an empirically derived method that may be to
improve service quality.
1. External Characteristics or Tangibles (tidy workplace,
employee appearances)
2. Reliability (meeting deadlines, consistency in interactions)
3. Responsiveness (providing service promptly)
4. Assurance or Consideration (personnel who are courteous,
friendly, and polite: trustful and helpful).
5. Empathy (giving individual care and attention:
comprehensible transactions)

65. DIMENSION WHAT
TO MEASURE
CUSTOMER
NEEDS
HOW
Tangibles
Reliability
Responsiveness
Assurance
Empathy

66. ◦ Documenting performance on these dimensions can
lead to changes in procedures that affect customer
attitudes.
◦ The method involves the development of an
understanding of the perceived service needs of
target customers.
◦ These measured perceptions of service quality for
the organization in question are then compared to
an organization that is “excellent”.
◦ The resulting gap analysis may then be used as a
driver for service quality improvement.

67.  Advantages:
◦ Surveys can reveal performance gaps and identify areas of concern.
◦ Customer complaints provide a direct indicator of consumer perceptions.
◦ Disaggregating complaints by type of customer, location, and type of complaint can help
managers identify problem areas.
◦ In addition, trends over time can be used by regulators and policy-makers to evaluate utility
performance.
 Disadvantages:
◦ Many other factors are relevant for the efficient provision of services.
◦ Prospective customers not receiving service are not likely to be surveyed.
◦ Also, the use of difference scores in calculating SERVQUAL contributes to problems with the
reliability.
 Caution should be exercised in the use of SERVQUAL scores.
◦ Finally, SERQUAL assumes that the results of market surveys are accurate, and it also
assumes that customer needs can be documented and captured, and that they remain
stable during the whole process.
 Application:
◦ Many companies use surveys to determine customer attitudes and concerns and examine
lists of complaints to identify areas in need of improvement.
 Parasuraman, Zeithaml and Berry (1985) “A Conceptual Model of Service Quality and its implications for future
research,” Journal of Marketing 49 (4), Fall, 41-50.

68.  The Balanced Scorecard
◦ Approach to strategic management developed in the early 1990s by Dr.
Robert Kaplan and Dr. David Norton (Harvard Business School)
◦ Provides a clear indication as to what companies should measure in order
to ‘balance’ the financial perspective (usually comprehensively measured),
with other aspects of business performance.
 Management system that enables organisations to clarify their
vision and strategy, and translate them into action
◦ provides feedback around both the internal business processes and
external outcomes in order to continuously improve strategic performance
and results.
◦ transforms strategic planning from an academic exercise into a powerful
and pragmatic approach to improve performance.
 This benchmark uses carefully selected internal measures to
◦ provide a balanced view of your performance
◦ link cause-and-effect issues to help determine those practices that are
contributing to superior performance and those that are not.

70.  Many organizations have started working with Process Benchmarking since the
framework fits nicely into an operational approach to improving performance.
◦ focuses on selected production processes in the business rather than on the business as a
whole.
◦ by identifying best practice processes and comparing actual processes that firms utilize,
managers can improve the performance of sub-systems—leading to better overall
performance.
 The goal of process benchmarking is to improve different stages of the production
process and to increase efficiency by “learning from others”.
◦ Sharing experiences is crucial for the success of the technique.
◦ For example, by comparing specific core indicators best practice can be hopefully identified
and transferred to weaker performers
 Process Benchmarking involves the comparison of one’s own utility with other
similar utilities, with the purpose of self-improvement through adopting
structures or methods that happen to be successful elsewhere.
 It allows a firm to find out how others do business, whether they are more
efficient or not and, if so, whether the firm can understand and use those methods
to its own advantage.

71.  Metric benchmarking identifies areas of weak performance where
changes need to be made to the way things are done
 Process benchmarking is a vehicle for achieving this change.
◦ Advantages:
 includes comparisons of practices, data collection procedures, routines and
performance indicators for each of the processes under study.
 Flow diagrams can capture key relationships and assist managers in
identifying areas for improvement.
◦ Disadvantages:
 The focus on specific procedures is very management-oriented, which means
that an external monitor must depend on the information provided by
utilities.
◦ Application:
 Ritz Carlton, Four Seasons, Marriott etc., have used process benchmarking to
identify and isolate areas for improvement.
http://www.businesstools.failteireland.ie/Accommodation/Hotels/Benchmarking-tool.
aspx

72.  Essential a framework
exists to enable you to
collect the data for
each of the measures
identified in each of
the key areas of your
business...
1. Opportunity to assess
performance
2. Able to judge strong
and weak areas
3. Identifies connections
between ‘cause’ and
‘effect’,
4. Helps answer
questions

73. • Rising Costs – Energy (Gas), Insurance, Labour (visa caps)
• Condo Hotels – “Building” Lawsuits?
• Amenity Creep – “Bed Wars”
• Rising Interest Rates
• Airline Capacity Problems
• Hiring from Outside (Sr. Level) - Coke, Schweppes, Kraft
• Demand Leakage – Condo Hotels, Cruise, Timeshare
• Demand Growth…where are we in the cycle?
• Benign Supply Growth… but “Old Habits Hard to Break” ?
• Terrorists Threats / Global Travel – The Perfect Storm?
• Construction Costs – Concrete, Steel, Timber

74. 1. Customer focused goals,
2. Planning and control,
3. Partnering and networking,
4. Internal and external communication,
5. Achieving consistent standards,
6. Strategic workforce management,
7. Cash flow and performance management.
 Li-Jen Jessica Hwang, Andrew Lockwood, (2006) "Understanding the challenges of implementing best
practices in hospitality and tourism SMEs", Benchmarking: An International Journal, Vol. 13 Iss: 3, pp.337
- 354

75. 1. Changing demand,
2. Limited resources,
3. Lack of skilled labour,
4. Lifestyle,
5. Lack of competitive benchmarking and
6. Location,
 all of which could create turbulence in the
operational environment.
Li-Jen Jessica Hwang, Andrew Lockwood, (2006) "Understanding the challenges of implementing
best practices in hospitality and tourism SMEs", Benchmarking: An International Journal, Vol. 13
Iss: 3, pp.337 - 354

76.  Camp, Robert C. (1989) Benchmarking: The Search or Industry Best Practices
That Lead to Superior Performance. White Plains, NY: Quality Resources.
 Deming, W. Edwards. (1993) The New Economics for Education, Government,
Industry. Cambridge, MA: Massachusetts Institute of Technology.
 Leibfried, Kathleen and McNair, C.J. (1991) Benchmarking: A Tool for
Continuous Improvement. New York: Harper Collins.
 McNary, Lisa D "Thinking about excellence and benchmarking". Journal for
Quality and Participation, The. FindArticles.com. 12 Jul, 2010.
http://findarticles.com/p/articles/mi_qa3616/is_199407/ai_n8709935/
◦ http://www.itmconference.org/assets/PostEvent/RoomForMore.pdf
◦ http://www.businessballs.com/dtiresources/TQM_implementation_blueprint.pdf