Hotel BenchmarkingIntroduction
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
AGENDA
What is benchmarking? Why benchmark hotels? The benchmarking process?
Overview
“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
What is benchmarking?
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
What is benchmarking?
History 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)
Definitions 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 measuringproducts, services and practices
against the toughest competitors or those companies recognised as industry leaders’ (Camp 1989).
Definitions 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.
Definitions 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.
A “benchmark” is ◦ a reference or measurement
standard used for comparison.
Definitions
“Benchmarking” is ◦ the continuous activity of
identifying, understanding and adapting best practice and processes that will lead to superior performance.
Definitions
BENCHMARKING
In groups write your own definition of bench marking
Exercise
Scope and Purpose “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.
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
Part of Performance Management and Total Quality Management
Popularity and benefits from benchmarking
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
Procedures 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
The Benchmarking Process 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.
Mini Exercise 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?
Cost of benchmarking 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.
Types of benchmarking 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
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.
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.
Four key types of benchmarking 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
Example of a benchmarking methodology:
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.
Example of a benchmarking methodology: 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.
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?
Why?
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
Why benchmark?
Hotel BenchmarkingThoughts, Ideas, Measures, Processes
The theory makes sense, but how does it work in practice?
Benchmarking is not ritual black magic
Benchmarking is only one of a range of management tools
A Couple of Misconceptions
Vital to match like against like
Apples and pears
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
Hotel Chain Scales
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,
Hotel Star Ratings
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.
Typical Star Classifications:
Benchmarking
Market related(Competition analysis)
Internal Benchmarking External Benchmarking
Generic Processes(Best Practice)
Branch related(Trend research)
Plant related
e.g., safety performance measures
Types of Benchmarking
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
Identifyprocesses andsuccess factors
THEBENCHMARKI
NGCYCLE
The Benchmarking Cycle
Areas That Can Be Benchmarked…
OPERATIONS
Salaries &Turnover
ProductivityRatios
RevPAR Revenue Per M2
REVENUE,SALES,
MARKETING
DistributionChannels –
GDS& Internet
Future Prices
On internet
MarketingSpend
Yield Premium& Market
share
FINANCECost
Structures CAPEX
Expenditure
Operating Performanc
e
Asset Utilisation
CUSTOMERS
Guest Satisfaction
Brand Awareness
Customer Value
Customer Loyalty
Can be used at any level – department, property or head office
Basic Issues
Where?
Basic issues:
Where are you now?
Why is your organization atthis position vs the other?
What can be improved?
112
10
30
90
Company maxmin mean
Why?
What?
Mea
sure
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.
Typical Review Areas
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?
Value of benchmarkingQuestions to consider?
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
Frequency of benchmarking…
Benchmarking – Basic Metrics
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).
External Influences Affecting Performance
Country
Location - City v Resort
Visitor Trends
Socio-Economic Variables
Commercial
Activity
Employment Trends
National + Local Politics
ASSESSING THE
MARKET
Supply v demand equilibrium impacts hotel pricing
InternalBenchmarking
SE
Cmonth
2007
2008
CompanySpread Sheet
Energy ProductMon
Jan
Feb
Mar
CompetitiveBenchmarkComp2
Comp3
Comp1
Benchmarking : An Overview
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
Importance of Benchmarking
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
The Benchmarking Process
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
Consultants - Simplified Overview
How do you get hold of it? …
Contemporary Annual
Deloitte Hotel Benchmark Deloitte Annual Profitability
HotStats PKF Hotels {Country} 2009
The Bench TRI Hotels 2009 - {Country} Hotel Industry 2006
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
Competitor Comparison Benchmarking
Benchmarking ModelPhase 1
BENCHMARK
Start
1. Agree On Benchmarking Topic
2. Finalise On Scope; Measures & Definitions
3. Data Collection : Survey
4. Share Strengths
Phase 3IMPROVEMENT
New Area
9. Plan to Adapt Best Practices
10. Implement Best Practices
11. Monitoring Result
12. Standardization
13. Daily Control
Continue Existing Project?Yes
No
Phase 2BEST PRACTICES
5. Plan for Site Visit
6. Data Collection
7. Recommend Improvement
8. Share Findings
Yes
2nd Site Visit
(Focus Visit)
Gather data◦ Comprehensive
spreadsheets developed for information gathering Background information
Size, facilities, hours, operations
Energy, water information etc…
The Benchmarking Process
http://www.tamarindtreedominica.com/Benchmarking%20Assessment%20Report%20-%20Tamarind%20Tree%20Hotel%20&%20Restaurant%20Oct07.pdf
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
The Benchmarking Process
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
Putting it together
m=2.5
- 20% -10% 0% + 20%
+ 10%
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
Sample Focus Areas
Clusters e.g. Luxury, Up-Scale, 4 Star
Industries e.g. Hotels
Sector e.g. Hospitality
Processes: Customer Complaints - HRM
Function: Marketing, HRM
Benchmarking Community of Practices (CoP)
Problem SolutionCustomer 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.
Other Industry Focus
Creative thinking puzzle - The nine dot problem to help you "think out of the box"
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.
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.
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)
Customer Service Benchmarking
DIMENSION
WHATTO MEASURE
CUSTOMER NEEDS
HOW
Tangibles
Reliability
Responsiveness
Assurance
Empathy
Customer Service Benchmarking
◦ 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.
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.
SERVQUAL Customer Service Benchmarking
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.
Winning measuresYou can’t manage what you don’t measure
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.
Process Benchmarking
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.
Process Benchmarking
http://www.businesstools.failteireland.ie/Accommodation/Hotels/Benchmarking-tool.aspx
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
You can’t improve what you don’t measure
• 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
Industry Issues
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
Key Capabilities For Hospitality
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.
Barriers To Best Practices
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
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
Further Reading & References
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