It is a fact that Hilton Hotels Corporation is a worldwide known company and one of the top companies that target the hospitality of the customers. The company develops, owns, and manages more than 2,000 hotels, resorts and vacation ownership properties. Hilton, Conrad, Doubletree, Embassy Suites Hotels, Hampton Inn, Hampton Inn & Suites, Hilton Garden Inn, Hilton Grand Vacations Company and Homewood Suites by Hilton, some of the best hotels around the world, are owned by this company. However, such greatness cannot be built up by its self and proper strategies are needed to reach such a level. This essay explains the strategies used from the Hilton Hotels Corporation to get the company as high as it is nowadays.
Hilton did not want just to adopt a strategy, but also transform it into action. Moreover, he wanted to arrange the daily tactical activities with strategic objectives. These are the reasons he adopted the Balanced Scorecard methodology in 1997. Balanced Scorecard gave Hilton Hotels the ability to become a hospitality leader after the results of greater profits, satisfaction rates and loyalty of customers. Moreover, the president of Hilton Hotels Corporation, Dieter Huckestein, decided to use a Balanced Scorecard system as a tool throughout the organization. The Balanced Scorecard, the tool of performing a business strategy and providing higher profits, also provides a basis of higher performance for the monitoring the performance. This lead in developing a web – based managerial solution of enterprise performance, instead of the spreadsheet – based three month report to a complete that has being used before.
After embracing the scorecard, Hilton established static spreadsheet reports with metrics implied in red, yellow, and green colours. However, the properties were so any that it was almost impossible to include the Balanced Scorecard system in spreadshits. For that reason, Hilton came to the conclusion that a complete enterprise performance management was needed. Therefore after putting into test some products of performance management and Balanced Scorecard, Hilton ended in choosing an application called CorVu CorStrategy. The use of CorVu seemed to be surprisingly easy to customize when it came to the evaluation of the available packaged solutions. The combination of CorVu’s performance management and the knowledge of Hilton in hospitality, leaded to creating a powerful web-based enterprise performance management solution for hospitality. The company started to work with CorVu as a result of Hilton’s performance management enterprise. Working with CorVu to develop a Balanced Scorecard solution for the hospitality industry, the company was providing online deliveries at any time, business intelligence to hotel management, vice presidents in the field of hospitality and managers in business offices.
Huckestein stated that the Balanced Scorecard was one of the most important parts of the business and the philosophy of functioning. All the brands of Hilton Hotels Corporation embraced the Balanced Scorecard and members of the industry were motivated by staying focused on results to rise to a higher stage of performance. Huckestein also stated that some improvements were made in the Balanced Scorecard. One of the improvements made was enhancing drill-down reports to give the operating department the ability to track individually its scorecard by allowing hotels to extract and aggregate relevant financials. Another improvement was enhancing customer loyalty data while comparing performance with industry benchmarks and the competition.
The Hilton International, which has the responsibility of the brand and properties out of the United States, worked with CorVu to empower its Balanced Scorecard. Hilton International managers employ CorVu to track Customer Service Quality Performance, make a comparison with the performance ratings of other hotels and also share business expertise with other managers. The target of Hilton is remaining the favoured choice of the hotel industry by keeping track of the satisfaction level of the customers, mystery guest customer ratings and questionnaires answered by the supervisors. The Hilton’s Customer Service Performance data is acquired by the CorVu application directly from its Customer Satisfaction Tracking System.
Anthony Harris, chief executive of Hilton International, claimed that combining the operational expertise of Hilton and the CorVu solution leaded into developing a powerful Hospitality Scorecard application. A professor of Harvard Business School and co-creator of the Balanced Scorecard context, Dr. Robert Kaplan, stated that Hilton achieved a great amount of welfares by using the powerful application of the Balanced Scorecard methodology and that Hilton will become the leader of the hospitality industry, by becoming partner of an outstanding solution software vendor. Dr. Robert Kaplan also stated that a successful Balanced Scorecard should tell the story of a company’s strategy, like Hilton’s scorecard does and that Hilton can create a management system focused on strategy implementation.
Hilton, since the time that the Balanced Scorecard was enhanced, dramatically improved its internal customer loyalty and brand measures. In May 2000, Hilton was ranked as number one in customer satisfaction by the Michigan Business School and the American Society for Quality. In addition, the Balanced Scorecard rubric has helped Hilton to achieve the highest operating profit margins versus its competitors. To measure how competitive company is against other companies, Hilton continuously tracks a number of industry and competitor standards within CorStrategy. CorStrategy is also used in all kind of properties of other general or regional managers and hotel owners.
Key information technology components of the Hilton Enterprise Performance Management
system include robust business intelligence functionality, direct connection to heterogeneous data
sources, daily performance reports, online performance portfolios, flexible scoring at all scorecard
levels, interactive cause-and-effect diagrams, strategy modeling, integrated initiative management,
and collaborative communication. It was very important for the system to be 100% web-based
because Hilton needed to integrate the system into its portal.
The CorVu solution has already improved Hilton’s customer ratings, helped to achieve operational effectiveness, increase the loyalty level of customers, increase the income and the power of the Hilton brands. The system and the principal users, have the ability to hold management on its best performance. The principal users, who are over three thousand, are the president, executives with elder expertise, hotel managers and managers of other operations.
The leaders and designers of the Hilton Enterprise Performance Management system were executives with elder expertise at Hilton. Dieter Huckestein was an early titleholder of the Balanced Scorecard initiative at Hilton, and the scorecard system was developed with the help of CorVu mentors. Scott Farr, Hilton’s Director of Performance Management, supervises system management and updates. It is known to everyone that each user of a company have an important role in the management of the system, since their efforts are essential to the results of the performance.
Scott Farr stated that with such a big number of users, a simple, easy for using, practical solution had to be used and by choosing a web-based solution was very easy for the user requirements to be scaled. Therefore, once the company experimented with a variety of scorecard vendors, ended up by choosing to use the CorStrategy and CorBusiness. The reason the company used these applications was because they offered a full-inclusive creative performance management solution. Even though CorVu was experienced in the field of performance management, with low risk entry point and an extensible progress path, CorStrategy offered a 100% web-based creative performance management solution with a combined strategy management, scorecard and accounting. Hilton soon had the ability to run its initial national project and then entered the international business. Presently, Hilton has more than 400 scorecards, more than 3000 operators and at more than 300 international locations. Scott Farr added that the company needed a performance management with high flexibility and customizable solution. Farr also stated that to control the performance-based operative compensation, local and enterprise scorecards were needed to gather data from distinct hotel scorecards. Thanks to the direct connection to a lot of data sources CorVu had, performance management data was gathered from a variety of systems on schedule. In addition, CorStrategy was providing performance reports every day, scorecard presentations, and online performance cases to senior management, giving the company the information needed to make better business decisions. The scorecards were so energetic that gave the ability to study in bigger depth primary evaluations and reports. Seeing that Balanced Scorecard embraced the system with greater effectiveness, it was implanted in all Hilton hotels.
A big difficulty Hilton came head on with was disparate data. The overcoming of this difficulty by coordinating an effort to organise the data and regulating a method for data reliability was one of the biggest challenges. Thus the Balanced Scorecard became recognized as one of the most trusted and completed company wide information sources.
The organizing of scorecards for the Managed and Operations Department of Owned properties by the enterprise advanced to including scorecards for specific departments like ‘Sales & Diversity’ and other qualified properties. As soon as the initial structure was applied, almost anything that had been developed could be either copied or edited to build new situations. This led to saving plenty development time and regulating the development to make the direction much simpler.
Long distance plans was not part of the original strategy but it was expected to be contained within the near future. Therefore, Hilton’s operators can now access the scorecard through the web, where includes their business plan and other company applications. Moreover, Hilton is trying to create a stronger web base to provide further Balanced Scorecards and conference records to its users.
Scott Farr added that the Balanced Scorecard program gave the ability to expand the company’s accountability to the individual level for every team member of our organization. The web-based platform allows team members to check how they are doing in terms of their own individual measures in real time. Whether they sit in a corner office or work for housekeeping, team members now have a clear view of how their daily activities link to the company’s overall health – and ultimately their own paycheck.” NOT DONE
The Hilton Enterprise Performance Management solution is organized on one Windows NT Server to support the system development and maintenance and the Hilton’s web site is held by a second Windows NT. In addition, the Internet can be used for the Balanced Scorecards and the Graphical Analysis data entree. All users can access CorVu via a browser to a significant web server using their given Hilton login passwords. Information is often updated and the users can access this information by using their own browsers. Users can fully access Hilton’s Balanced Scorecard system by just using a browser.
The Hilton Enterprise Performance Management solution has helped the company satisfy a
significant need for standardized and centralized hotel information. This has provided several
other reporting opportunities, as well. Once it was known that the information was readily
available, requests flowed in. This has created other areas of opportunity within the organization
for additional scorecarding and business intelligence requirements. The solution has significantly
changed how Hilton interacts with its third party vendors, allowing automation of many of the
third party vendor data gathering and information analysis processes in many areas as opposed to
the previous manual exchange. For example, vendor data exchange processes, such as with
Guest Survey and Mystery Shopper Information, have been greatly simplified.
Hilton has reaped the following benefits two years after Balanced Scorecard implementation:
Hilton Hotels’ market revenue index increased from 104% to 106% *
Guest loyalty climbed from 48% to 53% and post-stay loyalty rose 12% *
Guest satisfaction rose to 6.25 on a 7-point scale
Customer retention increased 6% to 56%
Revenue per available room (RevPAR) increased 2.7%.
EBITDA margin for Hilton was 300 basis points above the industry average *
Hilton has delivered a 3% higher profit margin than other full-service hotels. Over the
past two years this increase has translated to a 100% increase in stock price. *
* The figures were noted in the Balanced Scorecard Collaborative Hall of Fame Case Study on Hilton Hotels Corporation.
Now even individual hotel managers are
armed with powerful performance information, which links and aligns their operational activities
with the corporate strategy.
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