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The Effectiveness of Hospitality Service Operations: Measurement and
Implementation Concerns
Article in International Journal of Contemporary Hospitality Management · October 2007
DOI: 10.1108/09596110710818301
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The Effectiveness of Hospitality Service Operations: Measurement and
Implementation Concerns
Carlos F. Gomes
University of Coimbra
Faculty of Economics
Institute of Systems and Robotics
Coimbra - Portugal
Mahmoud M. Yasin
East Tennessee State University
Department of Management & Marketing
P.O. Box 70625
Johnson City, TN 37614
João V. Lisboa
University of Coimbra
School of Economics
Institute of Systems and Robotics
Coimbra - Portugal
This is a post-print (i.e. final draft post-refereeing) of an article published in International Journal of
Contemporary Hospitality Management (ISSN: 0959-6119), available online at:
http://www.emeraldinsight.com/doi/abs/10.1108/09596110710818301?journalCode=ijchm
Citation: Gomes, Carlos F., Yasin, Mahmoud M. e Lisboa, João V. (2007), “The Effectiveness of
Hospitality Service Operations: Measurement and Implementation Concerns”, International
Journal of Contemporary Hospitality Management, 19(7), pp. 560-573.
The Effectiveness of Hospitality Service Operations: Measurement and
Implementation Concerns
ABSTRACT
Classification: Research Paper
Purpose
The objective of this research is to propose a systematic approach to measuring, tracking,
monitoring and continuously improving service efficiency, availability and quality in hospitality
operational settings.
Design/methodology/approach
The proposed measure of service operational effectiveness (SOE) consists of three indicators.
They include the availability indicator, the quality indicator, and the efficiency indicator.
Findings
The proposed operational performance approach based on the SOE is consistent with the themes
of performance measures and measurement reported in the literature.
Research limitations/implications
The proposed service operational effectiveness approach represents a serious attempt at
quantifying the key facets of service effectiveness in hospitality operational settings. The
validation of this performance assessment and measurement approach is worthy of future
research.
Practical implications
The approach advocated by the SOE has operational and strategic relevance to decision-makers of
hospitality organizations. Field interviews with hospitality operating managers in different
operating base cultures confirmed this.
Originality/value
This research presents a practical, systematic approach to the problem of enhancing service
operational effectiveness in hospitality organizations. Relevant implementation issues associated
with the proposed approach are also addressed. Interviews with operational managers
representing different types and sizes of hospitality organizations in different operational cultures
were utilized to provide initial validation of the proposed approach and to shed some light on
relevant practical implementation issues.
Keywords
Performance Measurement, Hospitality Organizations, Decision-Makers, Service operational
effectiveness, Implementation issues
The Effectiveness of Hospitality Service Operations: Measurement and
Implementation Concerns
1. Introduction
New markets and competitive realities are forcing service organizations to take the
process of tracking, monitoring, and improving operational and organizational
performance, in order to meet the growing challenges posed by the customers, very
seriously. Theses challenges have been unmistakable in recent years, as they encompass
key performance facets, which shape the relationships between the customer and the
service operational system. In this context, key performance facets focusing on improving
the service encounter and the customer-orientation through paying close attention to service
efficiency, quality, and availability are becoming critical components of organizational
performance. Improvement aimed at these key service performance dimensions are critical
toward enhancing the service value offered to customers. Thus, the systematic
measurement, tracking, monitoring and continuous improvement of service efficiency,
quality, and availability is the first step in the road toward enhancing the customersorientation and service value.
Most services operational systems are organized based on two stages. The first stage is
labeled the “front-stage”, while the second stage is labeled the “back-stage” (Yasin and
Yavas, 2001). The front-stage includes all operational tasks and activities, which the
customer directly interact with. An example of such tasks and activities is the process of
checking-in a guest in a hotel. The back-stage, on the other hand, includes all operational
tasks and activities, which take place without direct interaction with the customers. An
example of such tasks and activities is the room cleaning service in a hotel.
The overall performance of the service system is very much influenced by the
performance of both service stages (Dorsch et al., 1997). Therefore, any attempt to improve
1
the overall performance of the service system must systematically incorporate and integrate
the service performance aspects related to service efficiency, quality, and availability of the
two service stages. In this context, the service operational system of a hospitality
organization is no exception. The two service stages of hospitality operational system must
be measured and monitored to ensure the overall service operational effectiveness. This
requires close attention to service efficiency, quality and availability.
Hospitality service organizations are facing increasing competitive pressures due to
recent environmental changes (Lovelock and Wirtz, 2004 in Gursoy and Swanger, 2006).
In recent years, the significance of hospitality related services has increased significantly in
developing countries (Tsaur and Lin, 2004; Barros, 2005). Overall, the hospitality industry
is becoming a truly competitive, global industry (Claver et al., 2006). Due to increasing
level of competition in the global hospitality industry, organizations in this industry are
becoming more aware of the need to customize services and service performance to the
emerging requirements of the sophisticated global customers. Thus, monitoring, tracking
and improving service quality, availability and efficiency are becoming more critical than
ever before in hospitality operational service settings.
Motivated by above discussion, the objective of this research is to introduce a
systematic approach to the measurement, tracking and improvement of key aspects of
service performance in hospitality operational settings. The proposed approach utilizes a
measure called service operational effectiveness (SOE) to monitor, track and improve
service quality, availability and efficiency. The development and components of this
measure are presented and discussed from a practical perspective. In the process, the
operational and strategic benefits of the proposed approach are presented in the context of
the effective implementation of the proposed SOE approach.
2
2. Background
Based on an extensive literature review concerning performance evaluation, measures
and related implementation issues (Gomes et al., 2004b), two distinct themes emerged. The
first theme may be labeled as the “universal” theme. The second theme, on the other hand,
may be labeled as the “contingency” theme.
The first theme includes approaches to performance measurement and implementation
efforts which advocate transferability across organizations and operating environments
(Cross and Lynch, 1988-1989; Lynch and Cross, 1991; Kaplan and Norton, 1992, 1993;
Ghalayini et al. 1997; Kloot and Martin, 2000; Kaplan and Norton, 2004, Moullin, 2004,
Chand et al, 2005). The second theme includes approaches which stress the unique
characteristics of the organizations, functions, or business units involved, when considering
and/or implementing performance measures and measurement (Dixon et al., 1990; Eccles
and Pyburn, 1992; Crowther, 1996; Neely et al., 1995; Waggoner et al., 1999; Neely et al.,
2001, 2002; Gunasekaran et al., 2004; Bourne, 2005). The performance measurement
approaches advocated in the literature under these two themes highlighted above have
practical relevance to hospitality operational systems.
While the approaches advocated under these two themes tend to differ with regards to
their treatments of different organizational and environmental contexts, they tend to clearly
point out the increasing importance of the non-financial aspects of organizational
performance (Dempsey et al., 1997; Gomes et al., 2004a; Abdel-Maksoud et al., 2005;
Hoque, 2005).
Despite the fact that organizations in the hospitality industry have been slow in
focusing on performance measurement (Witt and Witt, 1989), they have attempted to adopt
similar practices found in other industries. In this context, the hospitality organizations have
utilized specific performance measurement approaches, as in the cases of service quality
3
(Stank et al., 1999, Brady et al., 2002, Chow et al, 2006) and human resources (Eaglen et
al., 2000, Tsaur and Lin, 2004; Haber e Reichel, 2006, Cho et al., 2006). In addition to the
measure-specific approach, some hospitality organizations have also utilized an
organization-wide approach to performance measurement (Huckstein and Duboff, 1999;
Denton and White, 2000). These organization-wide approaches are, somewhat, consistent
with the Balanced Scorecard approach (Harris and Mongiello, 2001). Such approaches,
however have been characterized by their small scale and limited scope (Atkinson and
Brown, 2001). In general, managers of hospitality organizations appear to remain,
primarily, focused on traditional financial measures (Chung and Parker, 2006). This narrow
focus has been attributed to the limited understanding of operations' managers in the
hospitality industry of techniques and their positive impact on productivity in hotels
(Ingram and Fraenkel, 2006). This limited understanding of service operational
management has led to adoption of performance measurement approaches which lack and
integrated, systematic perspective.
The performance measurement literature underscores the notions that the future of
performance measurement systems will not be judged only based on their aggregation or
integration features, but also on their abilities to incorporate the dynamic relationships
among efficiency-specific and effectiveness-oriented organizational measures (Gomes et al,
2004b). Thus, organizational performance measurement initiatives and efforts must be
viewed as a complete organizational system, rather than a collection of stand-alone models
and tools (Lohman et al., 2004; Chenhall, 2005). In this context, organizations in
hospitality industry still have a long way to go, before they can have effective integrated
performance measurement systems.
The performance measurement literature reviewed tends to suggest that two types of
organizational performance evaluation platforms are needed. The first platform maintains a
4
measure-specific perspective. This platform defines the relationship between specific
measures and the organizational units responsible for them. Under this evaluation platform,
individual performance measures can be used to evaluate the reliability, availability,
efficiency, and quality aspects of the operational system and its different processes. To
accomplish this goal, diverse individual measures should be utilized individually and/or in
small groups. These measures are critical to detecting and dealing with specific
inefficiency-related problems. The key to improving performance under this measurespecific platform is training and development of employees to promote responsibility and
accountability. Thus, investments on the part of hospitality organizations to promote
operational efficiency and employees’ productivity appear to be consistent with this
performance improvement platform. However, such investments may not be sufficient to
improve the overall performance of the operational system.
The second performance evaluation platform is focused on an organizational-wide or
system-wide management-perspective. As such, this platform focuses on mainly few
performance measures which reflect critical organizational performance dimensions. These
measures should be consistent with the executives’ individual cognitive capacities (Lipe e
Salterio, 2000, Garg et al., 2003). This platform stresses an organizational effectiveness
approach to organizational performance measures and measurement. As such, the measures
of this platform should be consistent with indicators designed to gage the competitiveness
of the organization in the marketplace (Basu and Wright, 1997; Chenhall, 2005). The
emphasis under this platform is on the effective flow of products/services to markets. Such
effective flow has positive impact on the profitability of the hospitality organization
(Goldratt and Cox, 1993). Under this platform the involvement of the executive is viewed
to be critical to the success of the organizational performance measurement process (Gomes
5
et al., 2003). Investments and effects to improve organizational performance on the part of
service hospitality organizations consistent with this platform appear to be not sufficient.
While the above two platforms focus on different aspects of operational and
organizational performance, nevertheless they should be integrated under one performance
measurement system. In this study, the services operational effectiveness (SOE) measure is
introduced forward that end. This measure is consistent with the two platforms addressed
above. As such, it can be used in a way consistent with the organizational-wide (systemwid) platform to measure and track overall organizational performance. However, it can
also be used in a way consistent with the measures-specific platform to measure key
specific performance characteristics of the hospitality system and its processes.
The SOE development is based on concepts related to machine effectiveness.
Nakajima (1988) is accredited for the conceptualization of an overall, machine
effectiveness performance measure (Blanchard, 1997). However, since that time, several
authors (Raouf, 1994; De Groote, 1995; Al-Najjar, 1996; Dal et al., 2000; Eti et al, 2004;
Kenyona et al., 2005) have provided insights into the operationalization of the machine
effectiveness measures and measurement. The SOE measure proposed in this research
transposes the performance concepts, from a narrowly-defined system (the machine) with
specific components and well-defined work procedures, to a more complex system (the
hospitality organization and its service system). The SOE value incorporates the values of
three important hospitality operational performance dimensions which include availability,
quality, and efficiency. The proposed SOE can be utilized to either the support of the
measure-specific platform, or the system-wide platform of the hospitality operational
system. As such the management of hospitality organizations has the flexibility to utilize
SOE measure and performance measurement approach associated with it as an integrated
performance system, or as a narrowly focused operational measurement process.
6
3. The SOE Approach
The proposed SOE measure consists of three indicators, which are Availability (A),
Quality (Q) and Efficiency (E). This measurement approach was originally used in
association with a closed system (machine) (De Groote, 1995), where the system
components are well-defined. Therefore, cause-effect relationships can be assessed with
some certainty. However, the proposed SOE approach, as advocated in a hospitality service
setting, utilizes these three indicators in association with an open, complex system (the
hospitality organization and its operational system).
A justified argument can be easily made regarding the applicability of a machine-based
performance approach to a people-oriented, service-based operational system, such as in
the case of a hospitality service operational system. However, two counter arguments can
be easily made. First, the components of measurement are both applicable and relevant to
both operational environments. Second, the notion of benchmarking best measurement
practices and procedures is not restricted by operational and environmental similarities. As
a case in point, service organizations, in different services sectors, have successfully
benchmarked the practices of there manufacturing counterparts. In this context, service
organizations have extracted valuable lessons from the experiences of manufacturing
organizations with regard to customer satisfaction and quality improvements initiatives.
Thus the application of the SOE approach in hospitality service operational settings is not
only relevant but perhaps very much needed. Thus the practical justification for such
application is established and justified.
The SOE approach, as advocated in hospitality operational service settings represents a
modification of the approach, originally proposed by De Groote (1995). This modification
is required due to the unique and open nature of the hospitality service operational system.
In addition, such modifications take into consideration the intangible, yet important people7
orientation of this service operational system. In such system, operational activities, tasks
and resources (people, technology and know-how) are blended systematically to ensure the
effectiveness of the service encounter from the unique perspective of each customer (see
Figure 1). Thus, the customer is an integral part of the service operational system.
“take in Figure 1”
The SOE operational approach as advocated in service hospitality operational settings,
consist of three key service performance indicators. Since the performance of a hospitality
operational system is multi-faceted in nature, availability, quality, and efficiency constitute
important facets of such performance. These indicators have operational organizational, and
customer implications.
The SOE measure is defined below:
SOE = A × Q × E
The service performance indicators of the SOE are summarized below. These include
the following indicators:
1. Service availability
2. Service quality
3. Service efficiency
Space limitations and readership interest prevent us from presenting the detailed
mathematical development of these indicators.
The conceptual framework presented in Figure 2 is formulated based on field
interviews conducted with a sample of twenty hospitality operating managers in the US and
8
fifteen Middle Eastern managers, representing different sizes and type of hospitality service
organizations.
4. The Implementation and Utilization of SOE in Hospitality Organizations
If implemented systematically, the SOE has the potential to be very useful to
executives and operating managers of hospitality organizations. In this context, not only the
SOE can be used to monitor the performance of the different aspects of the hospitality
service system, but it also can provide a performance-oriented context for continuous
improvement initiatives and efforts. The conceptual framework in Figure 2 is designed to
offer a road map towards the effective implementation and utilization of the SOE in
hospitality service operational settings. The stages of this framework are highlighted below.
“take in Figure 2”
STAGE I - Initialization
The implementation of the SOE approach begins with the initiation of its relevant
indicators (Availability, Quality and Efficiency). This initiation process involves
determining the initial values, and establishing target benchmarks for the indicators.
Although the theoretical target for the SOE, and its indicators is one (1), the initial practical
target(s) will be dependent on a given organizational operational history and/or benchmark
values available from industry associations.
STAGE II – Resource identification and process improvement
During this stage, needed procedural modifications can be made in ways consistent
with existing organizational practices, or based on methodologies presented in the
9
literature. Such methodologies include statistical quality control procedures, theory of the
constraint (Goldratt and Fox, 1986), and simulation. Upon the completion of this effort, a
continuous improvement cycle focusing on performance aspects to be improved is
launched.
The continuous improvement cycle should allow for the verification of progress of the
improvement efforts. In this context, it is critical for the hospitality organizations to be
willing to commit the resources needed to foster the improvement efforts. The involvement
of employees, management and customer in this process is stressed.
STAGE III – Monitoring and evaluation
In this stage, it is critical to make available the relevant information needed to evaluate
the SOE measure and relevant indicators. As such, the role of organizational information
systems in providing the required information is critical. Based on the evaluation
performed, performance gaps are identified and plans to address them are formulated and
implemented
The monitoring of the implementation efficiency of the SOE approach is extremely
important. This is need, not only to maintain high levels of motivation, but also to identify
opportunities for improvement. If the implementation process is inefficient and takes to
much time, this may encourage dysfunctional behavior (Almgren, 1999). Thus, every time
a new value of SOE is obtained, it should be compared to previous values in order to verify
progress and aware for improvement. Thus, serving as further justification and motivation
for the implementation process.
The utility of the SOE approach can be illustrated through simulation, or actual
operational data. The results of the data analysis pertaining to the overall SOE measure and
its three indicators will clearly reflect the state of operational effectiveness of the
10
hospitality organization at any given period. Undesirable results of such analysis should
present some concern to the management of the hospitality organizations. In this case
corrective managerial actions will be need needed. To take the right corrective action, a
more detailed, systematic analysis of the three indicators of SOE measure over a period of
time maybe needed. Toward that end, a graphical analysis is helpful, especially in
association with historical operational data. See Figure 3, as an example of such graphical
analysis. The graph can be structured to show the SOE values, the target line, and the line
representing the average value of SOE for a period of time. Based on this graph,
management can verify two important aspects of service operational effectiveness, which
represent the gap between the target and actual values, as well as the extent of variability in
the behavior of the service system. According to the interviewed hospitality operating
managers, such analysis will be extremely useful to take corrective actions aimed at
bringing the operational system under control, as well as implementing performance
improvement initiatives. These initiatives are designed to improve operational service
quality, efficiency and availability. According to the managers interviewed, the collective
improvement of these service operational dimensions is instrumental to the enhancement of
the competitive position of the hospitality organization.
“take in Figure 3”
The graphical analysis shown in Figure 4 for the three indicators of the SOE measure
may indicate that the high variability in the SOE can be attributed to efficiency problems.
This, in turn can be attributed to planning problems, inaccurate service demand forecast, or
even low productivity. The graphical analysis of planned operational service capacity
relative to delivered services capacity can be used as a first step toward the diagnosis and
11
resolution of this problem. In any case, the graphical analysis provides management with
visual aid that makes it feasible to think of performance from a practical rather than abstract
perspective.
“take in Figure 4”
The success of the SOE implementation approach is very much dependent on the
availability of needed information. Therefore, in the early phases of implementation, the
precision of the indicators may be traded for more procedural and informational simplicity.
Thus, leaving the achievement of more precise results for later phases of the
implementation process. At that point in time during the implementation process, the
organization should have already successfully created an organizational culture in support
of the SOE approach. Thus, the emphasis can be shifted to the refinement of measures and
measurement in order to obtain very precise results.
STAGE IV- Organizational changes
In relation to the optimal frequency of measurement of the SOE measure, two
complementary approaches are suggested. These include the monitoring orientation and the
verification orientation. The monitoring orientation constitutes a synchronous activity. It
stresses obtaining the information needed to quantify, and evaluate the SOE measure on a
weekly-basis. Thus, it is a cyclical activity, aimed at improving the effectiveness of
operational system. The verification orientation is to be used, in an asynchrony way. Thus,
whenever changes aimed at improving are made to the hospitality service operational
system are made, the effectiveness of these changes is evaluated.
12
5. Conclusion and Implications
Environmental and competitive challenges are forcing hospitality service operational
systems to pay closer attention to the different aspects of performance (Yasin and Yavas ,
2001; Yasin et al, 2003; Tsaur and Lin, 2004; Yasin et al, 2004; Barros, 2005; Claver et al.,
2006). The performance measurement literature stresses the utility of individual measures,
aimed at measuring and tracking specific facets of the performance of a hospitality
operational system performance (measure-specific). However, the literature also stresses
the utility of aggregate measures, aimed at measuring and tracking the overall performance
of such service operational system. The SOE approach proposed in this study lends itself to
both measure-specific and aggregate-measure performance measurement orientations.
The proposed SOE approach utilizes key indicators, which includes services
availability, quality, and efficiency. While these indicators are operational in nature, they
tend to have strong customer-orientation, service value, and service encounter implications
to customers. In addition, the collective value of these indicators, as reflected in the overall
value of the SOE has competitive strategic implications.
Hospitality managers interviewed appear to think that information on the SOE
indicators is readily available in their organizations. However, if this type of information is
unavailable, modifications to the existing organizational information systems and
procedures can be made to ensure the availability, accuracy, and availability of such
information. While the actual SOE implementation process will require serious
commitment and support from management and employees, the anticipated performance
improvements, especially the financial and costumers-related aspects should justify the
implementation effort and investment
The implementation approach outlined in Figure 2, which is supported by interviewed
hospitality managers tend to provide hospitality organizations with a road map toward
13
providing the organizational context needed to support a systematic, organizational
approach to performance measurement. Hospitality organizations are unique operational
systems were people serve people. Thus, the effective performance of this unique
operational system has strong consequences and implications to the organizations, the
people who work for it, and its customers. The SOE approach advocated in this article
contributes to better measurement, tracking, and improvement of operational performance
in hospitality organizations. In today marketplace, the customer is the ultimate judge of
effective organizational performance. Hospitality organizations must be aware of their
performance and how it is perceived by their customers.
14
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Figure 1 – Service operational system and the effectiveness
SERVICE OPERATIONAL
SYSTEM
Service Operational
FRONT-STAGE
OPERATIONS
Effectiveness (SOE)
BACK-STAGE
OPERATIONS
Approach
OPERATIONAL SERVICE
EFFECTIVENESS
20
Figure 2 – A conceptual framework for the implementation of the service operational
effectiveness (SOE) approach
STAGE I – Initialization
- Gather information
- Define SOE parameters
- Establish benchmark targets
- Start the SOE process
STAGE II – Resources identification and
process improvement
- Identify key resources and processes
- Select processes to improve
- Set priorities.
CONTINUOUS IMPROVEMENT
STAGE III – Monitoring and evaluation
- Gather relevant data
- Evaluate the SOE and relevant parameters
- Verify the existence of performance gaps
STAGE IV – Organizational changes
- Modify actions as needed
- Select new processes to improve
- Modify target performance benchmarks
21
Figure 3 – A graphical evolution of the service operational effectiveness (SOE) values
over time
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
38
39
40
41
42
43
44
45
46
47
48
49
50
Period
SOE
TARGET
MAVG
22
Figure 4 – A graphical evolution of the service operational effectiveness (SOE) graph
including their indicators
1.20
1.10
1.00
0.90
0.80
0.70
0.60
0.50
38
39
40
41
42
43
44
45
46
47
48
49
50
Period
Availability
Indicators
Availability
Quality
Definitions
A=
Ta - Ts
Ta
Ta – Available operational time.
Ts – Time when all operational processes
are stopped.
Quality
Q=
NS c
NS c + NS nc
NSc – Number of services delivered
according to service quality
specifications.
NSnc – Number of services considered
Efficiency
SOE
TARGET
Examples
Usually, the stoppages are
attributed to energy
breakdowns, shortages of key
raw materials, or needed
equipments. Although these
stoppages tend to be infrequent
and have short duration, they
can lead to significant damages
to customer satisfaction
The number of meals which
were prepared according to the
chef specifications relative to
the number of all meals that
were effectively prepared in
hotel’s restaurant represents an
example of this indicator.
non-conform to standards
Efficiency
E=
Se
Sp
Se – Number of services delivered.
Sp – Number of services planned to be
The number of meals which
were planed to be prepared
relative to the number of meals
that were effectively served in
hotel’s restaurant represents an
example of this indicator.
delivered.
23
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