The Hilton Balanced Scorecard

Process Evaluation & Improvement

Dennis KociSVP- Operations SupportHilton Hotels Corporation

Operations SupportKey Internal Functional Support

Safety &

Security

Front OfficeFood & Beverage

PerformanceMgmt

Hskping

PropertyOperations

Leasing

TechnicalServices

Overview: Performance Leadership

Balanced Scorecard: –Align the Organization–Measure Results

Continuous Improvement Process:–Use BSC to target Opportunities–Raise the Bar

Results: Is it working?

Where We Wanted To Be

‘Balance’ financial and customer dataCreate new Focus: Pay at RiskMeasure to reward/supportAlign Corp Objectives with Hotel goalsEasy to understand (RYG)/ Results OrientedTools to ImproveStandardized Process/ Flexible measuresAutomate

Hilton Balanced ScorecardValue Drivers KPIs

Financial OutcomesFinancial

Outcomes

Customer ObjectivesCustomer Objectives

Internal Business

Processes

Internal Business

Processes

Learning & Growth

Learning & Growth

Operational Effectiveness

Rev MaxCustomer Retention

Quality

Training

LoyaltyLoyalty

Guest/Team member

Brand MgmtBrand

Standards

Learning & Growth

Diversity &

Org Development

Revenue GrowthCash Flow/GOP

RevPAR

Hilton: Organizational Alignment

Clearly State VisionDevelop Corporate Business StrategyAlign overall Strategy with SBUsMeasure - Balanced ScorecardValue thru Continuous Improvement

Strategic

Tactical

BSC

VISION“ To be the First Choice of the World’s Travelers

VALUE DRIVERSOperational Effectiveness,Rev Max

Loyalty,Brand ManagementLearning & Growth

Key Performance Indicators

Measure Performance ResultsReward & Support

Continuous Improvement

Drill-down

Team Member Loyalty by Department

Culinary/Cooks has the lowest Team Member LoyaltyLet’s investigate further.

Team Member Loyalty within Department

Only 50% of our Culinary / Cooks team members feel this is an above average place to work

Team Member LoyaltyBest Practices

Hotel Team membersFocused & Aligned

Hilton CIP vs Six Sigma & Kaizen

Linking BSC to Continuous Improvement Process

BSC/Prioritization

Act

Proposal

Root Cause/Solutions Test

MeasureImplement

CheckDoPlan

Target

Situation

Results: Creating Value

2002 JD Power Results -Upscale Segment

99

101

103

103

107

109

109

114

117

110

Embassy Suites

Renaissance Hotels

Westin Hotels

Hyatt Hotels

Marriott Hotels

Omni Hotels

Hilton Hotels

Wyndham Hotels

Doubletree Hotels

Sheraton Hotels

2002 Upscale Average = 105

Mgd=109.9

3rd Party=98.4

Hilton- Corporate Mgd

Hilton-3rd Pty

RevPAR IndexCorp Mgd vs 3rd Party Mgmt

96

98

100

102

104

106

108

110

2002 2001

ManagedFranchise

108.7

103.2106.6

100.6

Hilton Brand Flash Rept Nov 02 YTD

Managed: CPOR down $4.14 or 3.44%Owned: CPOR down $5.97 or 3.80%

Cost ContainmentCost Per Occupied Room- ’02 vs ‘01

YTD Nov 30

$36 Million

Lessons LearnedThe Balanced Scorecard to:

• Align Corp Strategy w/hotel •Set Goals/Measure Results

Use the CIP to reach higher levels of performance

Raise the Bar

Hilton Performance Culture

Operations Support

RewardRecognition

BalancedScorecard

ContinuousImprovement

KPIGoals

Performance Management: Next Steps

Enterprise

Area/Region/Owners

Hotel

Dept/Individual