performance: the case of
Department of Management, Long Island University, Brookville, New York, USA
Purpose – To present an actual case study that was carried out to investigate and benchmark the
operational performances of two hotels in a large city.
Design/methodology/approach – The study involves the comparison of the hotels’ performances
with each other as well as their respective benchmarks on the basis of data on monthly costs and
revenues. The benchmark operations are stated in terms of target costs and revenues that are derived
from industry standards for comparable hotels and corporate strategic goals. For performance
measurement a new non-parametric performance measurement method called Operational
Competitiveness Rating Analysis (OCRA) is used for its relative simplicity, ﬂexibility, and ability
to allow for differences in hotels’ guest proﬁles and competitive priorities.
Findings – The areas of strength and weakness are revealed in the measured performances of the
two hotels’ operations. While the hotels’ performances converge near the end of the study period, they
both fall short of reaching their respective benchmark performance levels. This may be partly due to
benchmark cost/revenue levels being set unrealistically high. OCRA is shown to be an appropriate tool
for measuring and comparing hotels’ operational performance.
Research limitations/implications – While OCRA can also incorporate the intangible dimensions
of performance, this study has not taken into consideration the quality dimension of hotel performance.
Practical implications – It is shown that a service operation’s performance can be proﬁled and
benchmarked using cost/revenue data.
Originality/value – This paper demonstrates a ﬂexible approach to measuring operational
performance in service organizations, which can be used by non-specialists.
Keywords Productivity rate, Competitive advantage, Performance measurement (quality),
Paper type Case study
In this paper we present a study that was carried out to compare and benchmark the
operational performances of two hotels in a very large city. We shall refer to the hotels
as Hotel 1 and Hotel 2. The hotels belonged to a family-owned company that will be
called “the Company” in this paper. Because of the differences in their locations, the
hotels’ guest proﬁles were different. The Company acquired Hotel 1 in July of Year 1
and owned Hotel 2 for a number of years. Each hotel had its own management team.
Hotel 1 catered mainly to business travelers who tended to hold middle level
managerial positions, stayed in the hotel, on average, two nights, and had modest
travel budget. The guests of Hotel 2 tended to be mostly tourists who stayed in the
hotel, on average ﬁve days.
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Received April 2004
Accepted February 2005
International Journal of Productivity
and Performance Management
Vol. 54 No. 8, 2005
q Emerald Group Publishing Limited