Maverick Lodging Case Solution

1. Introduction

Maverick Lodging is a hotel management company that handles the operations of the company for a fee. Maverick Lodging focuses on three main things when determining the success of a project, which are based on its attempt to put forward its services as an improvement on any franchised hotel’s current operations.

2. The Balanced Scorecard and its Issues

The first is the particular hotel’s brand image and outlook. According to Maverick Lodging, brand development is an extremely important part of hotel management and is calculated using an internally developed formula called ‘brand yield’.

The second is a particular hotel’s customer satisfaction level. Since the hotel business is a service-oriented industry, customer satisfaction is an integral part of the entire business process. As a result, it forms the very core for any reviews and appraisals of the performance of the management. At Maverick Lodging, these performance reviews are based on a customer survey, described in Exhibit 5, which is scored on hundred point scale.

The third is the consequence of the first two aspects. Based on Maverick Lodging’s philosophy, as explained in Exhibit 1, a hotel’s brand image and customer satisfaction levels translate directly into its financial condition. Since, how much of the hotel’s brand recognition and customer feedback is translated into financial output is partially under the management’s control, Maverick Lodging uses this as an indicator of performance on its hotels. In order to separate part of the financial success that is under the management’s control form that which is not, the company has devised a thorough analysis technique based on controllable and uncontrollable costs and revenues called the flow through flexible budget technique.

The flow-through flexible budget technique is not complicated considering the fact that the people handling it have at least a college degree. Lack of experience is not an issue since it is something that can be easily taught via training sessions. Its use as a management tool is something that cannot be denied. Its current use in Maverick Lodging is a perfect example of how a flexible budget and its comparison can help in evaluating the business’ performance.

The fourth and fifth criteria are the operational effectiveness or efficiency of the hotel in question and its talent retention respectively. Operational Effectiveness is measured via an internal process audit. This audit is conducted by an independent audit team, which then evaluates the hotel’s operations on a scale of one to ten. Talent retention is weighed in on the basis of Associate Turnover, which is the turnover rate of associate-level employees in the concerned hotel. In the end, the relative scale points of all five criteria are added according to predefined weightages, to come with the final evaluation score.

3. Performance in 1999

Given the performance review criteria above, it is now possible to evaluate the performance of Maverick Lodging in 1999 through their own perspective. Looking at the brand yield, there are two separate criteria depending on whether the hotel’s Brand Yield is above or below the market average. Based on the data given, all the different types of hotels under Maverick’s business had a brand average yield above the market average. For courtyards, it was 121.1% as compared to the market average of 116.5%. This amounted to 103.95% of the market average, which was a growth of 3.77% as compared to the previous year’s percentage of brand average yield. Similarly, for Fairfield Inns, the yield amounted to 115.1% as compared to the market average of 111.0%. This was 103.69% of market yield, growing by 2.22% from the previous year. For Residence Inns, the figure was 127% as compared to the market’s 124.3%. This was 102.17% of the market average, growing by 3.5% from the previous year.

All of the above-mentioned stats are showing that the company did as expected in 1999.