The Balanced Scorecard Approach as a Tool for Performance Evaluation in the Hospitality Industry

 Nowadays, hotel organizations endeavor to achieve long-term competitive advantage in the marketplace through the implementation of strategic performance measurement systems. The traditional measure of hotel performance is the hotel’s financial aspects, such as net profit, return on investment, return on assets, and earnings per share. However, such aspects have a serious limitation that they cannot recognize intangible factors. Therefore, professors Robert Kaplan and David Norton developed a strategic management tool called the Balanced Scorecard model (BSC). The BSC enables organizations to translate their mission, vision and strategy into a comprehensive set of performance measures and to provide the framework for strategic measurement and management, hoping that the Balanced Scorecard will supplement traditional financial measures with other three key business perspectives that could be used to measure performance: customers, internal business processes, and learning and growth. This paper aims at identifying the key performance indicators (KPI) in hospitality industry used for performance measurement. It also investigates BSC awareness and use within hotels. In addition, the research aims to discuss how hospitality establishments can reap benefits from implementing the BSC and shows how BSC has the potential to deliver competitive advantage. In order to achieve these goals, a model is developed based on the BSC perspectives. This model has been transformed into a questionnaire. The research sample includes mainly hotels' managers (Regional Managers, Assistant General Managers, and Department Managers).Results have revealed that many hospitality establishments already apply the BSC to measure their performance. Moreover, despite the fact that hotels’ managers strongly support the potential usefulness of the BSC in their business, they still focus on traditional financial measures for measuring hotel performance. Furthermore, the results have showed that the customer attribute is considered the most important among the four given core attributes, followed by the financial perspective, internal business processes perspective, and learning and growth perspective, respectively. This indicates that hotels managements start to take into account other indicators to assess performance than financial dimension. Also, they find out that it is hard to measure performance when it only counts financial aspects due to the uniqueness of hotel products and services.