This article lays emphasis on the relevance of using the Balanced Scorecard (BSC) as a performance management system in the hotel industry. It presents a model BSC for the hotel industry and provides three examples of companies which have implemented the same within their organizations. Considering that the hotel industry is a service industry that gives utmost importance to customer satisfaction and people-related practices, the BSC helps in overcoming the shortcomings of performance management systems based solely on financial outcomes.

The Balanced Scorecard (BSC) was developed by Kaplan & Norton during the early 1990s. Since then, this performance management system has been implemented within several organizations of different kinds across the world with varying degrees of success. It was found that an overemphasis on the financial performance leads to an unbalanced view of organizational performance. Therefore, the BSC was developed to overcome this deficiency and to place equal emphasis on other key aspects of organizational performance. The BSC focuses on four parameters of performance, which include a number of leading and lagging indicators tied to long-term as well as short-term objectives.

The BSC serves the purpose of broadening the performance measures beyond the financial measures by including non-financial measures, enabling managers and organizational leaders to monitor salient processes, and link key business processes to the organizational strategy. The BSC can also play a key role in change management by changing the goal posts and the key result areas by reinforcing changes in people behavior and activities. They provide an opportunity to develop leading indicators, contrary to the traditional lagging indicators based on past financial performance.

Hotel Industry, Performance management system, Labor-intensive service industries, Asset management, Carlson Hotels Worldwide, Ecommerce, Balanced Scorecard, BSC, Kaplan & Norton, Organizational strategy, BSC management system, Management information system, MIS.