Maverick Lodging Case Analysis

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Maverick Lodging Case Study Notes
* 1/2000: VP of Asset Management (Cindy Baum) was reviewing the 1999 balanced scorecard results for Maverick Lodging; she had developed & implemented the balanced scorecard throughout 1998 * 1999: first full year of results using the balanced scorecard approach * Designing a balanced scorecard had been a considerable challenge because of the complicated nature of the hotel industry * Maverick Lodging: managed hotels on behalf of 3rd party owners who had franchise agreements with Marriott * Maverick concentrated on managing 3 specific types of Marriott properties: Fairfield Inns, Courtyards, & Resident Inns * Fairfield & Courtyards: offered typical variety of hotel rooms * Residence Inns: offered “suite arrangements” that incl. a kitchen, sitting room, & 1 or 2 bedrooms * Courtyards: typically had a restaurant (the other 2 did not) * Fairfield & Residence Inns: had a gatehouse area that served complimentary breakfast * Because 3rd party owners had many choices among hotel management companies, Maverick believed that adopting a balanced scorecard might help differentiate its services * Additionally, Baum believed that a good balanced scorecard would be particularly useful to her because she was a principal liaison between the hotel owners & Maverick * Therefore, she had primary responsibility for ensuring that contract terms & both parties’ objectives were met * Maverick was one of the earliest hotel management companies to implement a balanced scorecard management system * Successful results from the balanced scorecard could help Maverick attract more hotels to manage, which would increase Baum’s responsibilities * In addition, the hotel managers were counting on the scorecard to work properly, as it was their performance assessment & compensation would be affected by the results Hotel Industry

* Hotel industry: characterized by complexity & competition * Baum felt that implementing a balanced scorecard in a hotel management company was particularly challenging owing to the multiple parties involved in the hotel industry * Incorporating the perspectives & balancing the various economic benefits of each of the 3 parties would be necessary in order for the balanced scorecard approach to be successful Maverick Lodging

* End of 1999: Maverick managed 38 hotels w/total revenues of $140 million; majority of hotels ranged in size between 75 & 140 rooms; hotels were primarily located in & around relatively large cities in FL, IL, IN, & TX * In comparison with Marriott International, Maverick was quite small; Marriott International owned, managed, or franchised 1,880 hotels w/355,900 rooms & had plans to double the number of rooms over the next 5 years * 2001 target: managed 65 properties w/$225 million in sales * Maverick had 2 types of stated objectives:

1. Objectives concerning Maverick:
15% annual compound growth in managed revenues;
$300 mil in managed revenues by 2004;
achieve annual budgets;
deliver a 15% ROI to franchisees/owners;
retain management employees by achieving <20% turnover;
retain 100% of franchisees/owners
2. Objectives concerning each managed hotel:
Exceed brand average yield (ratio of hotel’s revenue per available room to local competitors’ revenue per available room); grow RevPAR (hotel’s room revenue/# of available rooms) at a specified rate > local competitors; exceed profitability levels of Marriott-branded hotels;

be in top 20% of brand in guest-satisfaction scores;
retain non-management employees by achieving <60% turnover * At the time the balanced scorecard was developed, the typical hotel managed by Maverick was 4 years old; in general properties older than 5 years experienced a decline in guest-satisfaction scores *...
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