University of Delaware hospitality professor Ali Poorani teamed up with Bill Sullivan, managing director of the Marriott Courtyard Newark, to create a new set of metrics for evaluating “human capital performance” in the hotel industry.
“The current metrics, such as average daily rates, occupancy percentages, revenue per available room, and various labor costs that hotels use to measure performance, though well-established, do not adequately quantify return on human capital investment,” Sullivan said.
Poorani has long wanted to develop metrics that factored in human capital, but he didn’t think the data would be available. That’s when he approached the Marriott, which is located on the college’s campus.
The team then applied the Vienna Human Capital Performance Index to the Marriott over a span of three years.
According to a press release from the University of the Delaware, the index calculates:
• Entire investment in human capital: Employee costs, costs in support of employees and costs in lieu of employees.
• Human capital productivity: The amount of revenue generated for each dollar invested in human capital after adjusting for the costs of material.
• Profit sensitivity: The ratio between profit-driven incentives and profit goals determined by the organization.
Sullivan said the study “provides evidence for the ties between financial returns and human capital performance at strategic levels.”
In the future, the hotel will continue to use this data to explore the role of human capital investment in factors like profit and productivity.