Written by Robin Williams, owner of Hotel Synergies
Over my 25 years in financial control I have learnt that there are several key points that will help the profitability of any hotel regardless of size or category. I’m sure all those reading this article will have their own view on this and I would hope that for many this will only serve as a confirmation of what they already believe but for me these are the six key points:
1 – Forecasts – when I say forecasts, I include budgets. For me a budget is just a long-range forecast, your roadmap to give it a simile and then your monthly forecasts are your GPS that help you keep direction when you’re on your journey. A good forecast should be built bottom up with occupancy, average rates, capture rates, covers predictions and average spends for all areas of the business. Only in this way can you really plot where you expect your business to grow and where your pressure points will be.
I use a 365 day Forecast document. This may sound excessive at first but, I don’t regularly update the whole year, I have a 365 day budget as my base and will then update forecasts regularly for at least two months ahead so I can plan short term sales initiatives and staffing levels. Once you are collecting the data correctly and have built the initial budget, the forecasting process becomes easy and means you are always looking ahead rather than being stuck in a rabbit warren.
2 – Daily Reports – by this I don’t just mean some occupancy stats and a few revenue figures, nor do I mean a 6-page book that few will attempt to read. What I have found works is a good brief but detailed revenue report which is easy to take in and compares Actual with Forecast and Budget (also Last Year if it interests you). I usually use a page for top line figures and a revenue breakdown and then a second for statistics both for Rooms and F&B. Make it draw attention to the variances, some use smiley faces, I prefer colours, that way all the team can interpret the results easily. Don’t just stop at Daily Revenue either, Food Cost and Payroll Costs are a big chunk of your variable profit. Once you’ve mastered Forecasting and Daily Revenue tracking, it is not too difficult to incorporate these figures in some form a tracking system that will allow you to check on these key costs every day and, just as importantly, will allow your team to plan activity to future revenue to ensure you meet your targets.
3 – Customer feedback – almost as important as monetary results, are customer feedback results. In today’s world of social media, tripadviser etc. there are now some good systems out there to track customer feedback and all hotels should be maximising the use of these to ensure they pick up on where improvement is needed. It is recommended that a hotel try to respond to the majority of feedback whether they be positive or negative. By responding diplomatically to the customer feedback, the hotel shows it cares about what their guests have to say.
4 – Full Detail P&Ls – the hotel industry must be one of the few where we do a full yearend procedure every monthend to ensure we get an accurate picture of our business. The resulting P&L reports should emphasise the key KPIs to ensure your business is maintaining profitability whether sales are above or below budget. Also make sure it is geared towards each department as per USALI so your team can concentrate on their part of the business.
5 – Team Briefings – now that you have all of the above, they are worth little to your business if you don’t share that knowledge with your team. There are few things more motivating to them than the feeling they are part of something and sharing the figures with your team constructively will mean you are all working in the same direction. I am often surprised with some of the positive ideas that come from even the most junior team members. A problem shared is a problem halved.
6 – Sales & Marketing Planning – now you may ask why I have put this one at the end when a good Sales & Marketing plan is what can make or break a business. The reason is that I have learnt from experience that without all the above, any action in your plan may be erroneous. If you don’t know where you want to go and where you are, if you don’t know what your client thinks and you don’t have ideas and buy in from your team, you can’t design an effective plan for your business and implement this effectively.
Again all the above is my own humble opinion and there a lot more aspects to good financial control in any hotel however, having worked with large and small hotels of various categories, I believe I have gained an understanding of where most hotels fall down in their financial control and hope that by sharing this knowledge I can help to improve your profitability. As always, I welcome constructive feedback on my opinions.
Robin Williams is the owner of Hotel Synergies, which offers financial control support to the independent hotelier across the UK. www.hotelsynergies.com.
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