PERFORMANCE MEASUREMENT IN SMALL MOTELS Sue Bergin-Seers, Leo Jago, John Breen & Jack Carlsen PERFORMANCE MEASUREMENT IN SMALL MOTELS Technical Reports The technical report series present data and its analysis, meta-studies and conceptual studies and are considered to be of value to industry, government and researchers. Unlike the Sustainable Tourism Cooperative Research Centre’s Monograph series, these reports have not been subjected to an external peer review process. As such, the scientific accuracy and merit of the research reported here is the responsibility of the authors, who should be contacted for clarifications of any content. Author contact details are at the back of this report. Editors Prof Chris Cooper University of Queensland Editor-in-Chief Prof Terry De Lacy Sustainable Tourism CRC Chief Executive Prof Leo Jago Sustainable Tourism CRC Director of Research National Library of Australia Cataloguing in Publication Data Performance measurement in small motels. Bibliography. ISBN 1 920704 86 8. 1. Motels - Australia - Management. 2. Small business - Australia - Management. 3. Industrial efficiency - Australia - Evaluation. I. Bergin-Seers, Sue. II. Cooperative Research Centre for Sustainable Tourism. 338.47647940994 Copyright © CRC for Sustainable Tourism Pty Ltd 2006 All rights reserved. Apart from fair dealing for the purposes of study, research, criticism or review as permitted under the Copyright Act, no part of this book may be reproduced by any process without written permission from the publisher. Any enquiries should be directed to Brad Cox, Communications Manager ([email protected]), or Trish O’Connor, Publishing Manager ([email protected]). ii PERFORMANCE MEASUREMENT IN SMALL MOTELS Contents ABSTRACT_____________________________________________________________________________ V ACKNOWLEDGEMENTS ________________________________________________________________ V SUMMARY ____________________________________________________________________________ VI CHAPTER 1 INTRODUCTION ____________________________________________________________1 BACKGROUND __________________________________________________________________________1 AIMS OF THE STUDY______________________________________________________________________1 CHAPTER 2 METHOD ___________________________________________________________________2 THE EXPERT REFERENCE PANEL ____________________________________________________________2 CHAPTER 3 RESULTS – DEVELOPING A TYPOLOGY FOR SMALL MOTELS _________________4 CONJOINT ANALYSIS _____________________________________________________________________4 Conjoint Model _______________________________________________________________________4 Interpreting the results__________________________________________________________________5 CHAPTER 4 RESULTS – DEVELOPING A PERFORMANCE MEASUREMENT SYSTEM FOR SMALL MOTELS ________________________________________________________________________6 THE PERFORMANCE CONSTRUCT ____________________________________________________________6 THE PROPOSED PERFORMANCE MEASUREMENT MODEL __________________________________________7 BUILDING A PERFORMANCE MEASUREMENT SYSTEM ____________________________________________7 Enablers – The Key Dimensions That Drive Performance ______________________________________8 Results – Outcomes of the Drivers_________________________________________________________9 Refining the Performance Measurement System ______________________________________________9 Confirmation of Performance Measurement System and Identification of Key Practices ______________15 CHAPTER 5 SUMMARY AND RECOMMENDATIONS ______________________________________21 A TYPOLOGY FOR SMALL MOTELS _________________________________________________________21 IDENTIFICATION OF THE KEY DIMENSIONS OF PERFORMANCE_____________________________________21 DEVELOPMENT OF A PERFORMANCE MEASUREMENT MODEL FOR SMALL MOTELS ____________________22 THE MODEL AS A PERFORMANCE IMPROVEMENT TOOL__________________________________________22 APPENDIX A: CONJOINT ANALYSIS QUESTIONNAIRE____________________________________23 APPENDIX B: INTERVIEW GUIDE FOR SMALL MOTEL OPERATORS ______________________27 APPENDIX C: A FRAMEWORK FOR A CORPORATE MARKET STRATEGY FOR SMALL MOTELS _______________________________________________________________________________36 REFERENCES __________________________________________________________________________37 AUTHORS______________________________________________________________________________38 iii PERFORMANCE MEASUREMENT IN SMALL MOTELS List of Figures Figure 1: The basic constructs of a business performance model _____________________________________ 6 Figure 2: A performance measurement system for small motels _____________________________________ 8 Figure 3: Modifications to the PMS for small motels _____________________________________________ 10 Figure 4: The feed-back and feed-forward process for business improvement__________________________ 15 Figure 5: Using the model to understand how to use results and measures to identify management issues ____ 20 List of Tables Table 1: Conjoint model showing each factor and its ratings (generated via SPSS)_______________________ 4 Table 2: Conjoint analysis results for the overall sample and individual respondents _____________________ 5 Table 3: Characteristics of small firms which affect performance ____________________________________ 7 Table 4: Stakeholder wants and needs ________________________________________________________ 11 Table 5: Capabilities ______________________________________________________________________ 12 Table 6: Processes________________________________________________________________________ 13 Table 7: Results__________________________________________________________________________ 14 Table 8: Profile of the operators _____________________________________________________________ 15 Table 9: Strategy classifications _____________________________________________________________ 16 Table 10: Financial and non-financial measures_________________________________________________ 18 Table 11: Processes and systems_____________________________________________________________ 19 iv PERFORMANCE MEASUREMENT IN SMALL MOTELS ABSTRACT This report considers current issues relating to the management of performance in small motels. Specifically, it focuses on the development of a performance measurement system for small motel owner-operators to better understand the dimensions which affect business results. Additionally, it is intended that the model will be the basis of a blueprint for a benchmarking and business improvement tool. The report initially overviews the literature to identify the key dimensions (drivers and results) of performance in small motels. Then, details are provided of the data collection methods. The results section summarises the outcome of the study relating to the development of a typology for small motels as well as the development and confirmation of a performance measurement system for these firms. The report concludes with recommendations for future uses of the typology and indicates how this model could be used to assist the business performance of small motels. ACKNOWLEDGEMENTS The Sustainable Tourism Cooperative Research Centre, an Australian Government initiative, funded this research. Thanks are extended to the following industry experts who provided invaluable information and support for the project. • Dennis Winchester CEO, Hotel Motel and Accommodation Association • Paul Constantinou General Manager, Quest Apartments • Bob McCormick Principal, Tourism and Hospitality Brokers Australia • Rod Clarke Motel owner-manager • Tracey Matthies Motel owner-manager • Wayne Peters Executive Manager, Industry Services, AAA Tourism • Dean Kubank Business Manager, Bankwest v PERFORMANCE MEASUREMENT IN SMALL MOTELS SUMMARY This study was driven by a need to better understand small tourism enterprises (STEs) and how they manage performance. The key aim was to develop a model of the management dimensions that drive business performance in small motels, with the central focus of better understanding the performance construct in relation to small firms and specifically small motels. The model developed in this process will be the basis of a blueprint for a benchmarking and business improvement tool. During this project, data was collected in three phases, outlined in the second chapter, to provide details on the potentially unique management dimensions of high-performing small motels that drive performance. The specific objectives of the study were to: • Develop a typology for small motels; • Identify the key dimensions (drivers and results) of performance in small motels; • Develop and confirm a performance model for small motels; and • Indicate how this model could be used to assist the business performance of small motels. Through a combination of convergent interviews, conjoint analysis and in-depth interviews, data was gathered about the performance measurement activities of small motels, the management dimensions that drive performance, and other demographic factors which may also affect performance. Important to the study was an Expert Reference Panel (ERP) that consisted of eight domain experts. Development of a Typology for Small Motels The study focused on small motels, yet these enterprises vary in many ways such as size, location, business structure and age. In the early stages of this study interviews with industry experts indicated that there was confusion regarding which motels were the focus