Balanced Scorecard and Strategy Map – Part II

Archival context: The original text, historical figures, and company examples below reflect their original period. The new applications and evaluation framework are contemporary methodological examples, not measured outcomes or current market estimates.

4. Product main categories.

Most hotels appeal to multiple consumer segments, anyway it is important to state the main segments used in the industry: service level, physical and functional characteristics, location and price.

Full-service hotels offer a wide range of services, including valet parking, luggage assistance, concierge services, gift shops, fitness centers, business centers, three-meal restaurants, and room service. Limited-service hotels encompass diverse property types and price points. They do not usually offer valet parking, luggage assistance, or concierge services but may provide compact fitness centers, business centers, and complimentary high-speed Internet access.

Convention hotels have a minimum of 400 rooms and large (but divisible) meeting and banquet facilities. Such properties are often physically connected or adjacent to the convention centers. They usually include several eating establishments of varying styles and price ranges. Many also include a business center and substantial amounts of retail space. Large lobbies are needed to handle the check-in and check-out functions that occur in a concentrated period at the beginning and end of every convention. Conference centers are usually branded, but many are privately owned and managed. Such properties tend to be located in the suburbs or exurbs, and they offer onsite or nearby recreational amenities such as golf courses, tennis courts, and spas. They are used for high-end corporate training and sales meetings, as well as trade and professional association functions. Boutique or specialty hotels are small, intimate, urban, upscale, and trendy; great emphasis is placed on unusual interior design and room décor. Bed-and-breakfast inns operated by individual entrepreneurs also appeal to a niche market, but they have even fewer rooms and do not offer a full array of services. They appeal to leisure travelers because of their historic character and ambience.

Resorts are often branded, but many are privately operated. They are similar to full-service hotels but are typically situated in a scenic area and either provide or are near activities that attract leisure travelers. Resorts generally offer an extensive menu of spa services and recreational activities. It is typical for resorts to have significant meeting space and to compete for group business.

Urban or downtown properties are located in the central business district or a densely populated neighborhood in a large metropolitan area. Suburban hotels are typically found at or near interchanges along heavily traveled highway routes or beltways in metropolitan suburbs.

Luxury hotels, located in large metropolitan areas or high-end resorts, are frequented by visitors who are willing to pay a premium price for accommodations. Such hotels are distinguished by high-quality furnishings, amenities, and a high degree of personal service. Many luxury properties house fine restaurants and shops. Upscale commercial hotels are full-service properties that target individual business travelers during the week and leisure travelers on weekends. While meetings may represent an important part of their business, the groups that are served generally are smaller than those that use convention hotels. Mid-price properties include most of the limited-service chains. They do not provide the same array of personal services as luxury or upscale properties, and they have limited shopping, dining, exercise, and meeting and banquet facilities.

5. Demand drivers.

For most types ofreal estate development, the market area for supply and demand is either identical or overlapping. For hotel development, however, the two market areas are distinctly different, with considerable variation in geography. To determine the boundaries of the market area, it is essential to identify four items: the location of competitive hotels; the proposed lodging’s likely major sources of business; the proximity and scope of these demand generators; and trends in travel patterns for vacation, commercial, and convention visitors to the metropolitan area as well as the extent to which each demand segment is attracted to the local area.

Room demand is affected by local, regional, and national economic trends in both the household sector and the business community. Employment growth and income gains affect consumer confidence, which in turn influences leisure travel demand. Business travel policies are periodically revised as profitability rises and falls.

Historical occupancy patterns and room rate changes in a particular hotel market make a good proxy for how demand shifts in response to economic changes.