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Article by David Lund

Hospitality Financial Leadership - Ego is Not Part of the Recipe

The Hotel Financial Coach - 17 July 2017
"If you want to be more than a flash in the pan, you must be prepared to focus on the long term. We will learn that though we think big, we must act and live small to accomplish what we seek. Because we will be action and education focused, and forgo validation and status in their pursuit, our ambition will not be grandiose but iterative--one foot in front of the other, learning and growing and putting in the time." Ryan Holidays - Ego is the EnemyIn the financial leaders' world, ego will not serve them well. Ego will put distance between them and their audience. Ego would have a leader being the star of the show and there would only be one act in the play.A secret weapon: Knowing how to get non-financial leaders to produce amazing results through their creativity and leadership support to manufacture this product on a continuous stream.If one succumbs to ego they take themselves out of the game as if they were once a star but now they are too important to engage and really find out what the other leaders need. Being ego driven means the financial leader is hiding out. He or she wears the ego like a thin suit of armor to deflect any legitimate acknowledgement that maybe they do not have all the answers after all. Ego serves to tell them they are too important to go to that level of engagement. This is a big mistake because they miss seeing what is really going on and miss the opportunity to change it. "Can't fix what we can't see."Einstein said, "More the knowledge lesser the ego, lesser the knowledge more the ego."This quote really sums things up quite well. Egotistical people really lack the knowledge because they have shut down. They are closed for business. They cannot learn and grow if they are shut down. The game is an incremental day in day out, conversation after conversation, idea after idea, support after support, financial leadership is a relationship-building deposit-based enterprise. Leaders out-give constituents. That is what makes them tick successfully. Ego has no place in this environment.I once worked with a financial leader who made it a point and even verbalized the fact that he only spoke with members of the executive team. He was too important to speak to anyone else. According to him the idea of communicating with anyone else was a waste of time and beneath him.Well, the truth was he was hiding out. He was not comfortable communicating with anyone who might challenge his way of seeing the world of his business. What a waste to leave out so many inputs that are there to help shape and grow a vibrant, continually evolving and growing business landscape!The other interesting aspect of this example is the chief executive allowed and even condoned this behavior. Information is the currency of leadership. If leaders want more currency, they need to embrace leadership practices that allow for its accumulation.Ego and hiding out will not produce more currency.What are egotistical people afraid of? They are afraid of the very real possibility that they do not have all the answers, some of the answers, or even the answer. Rather than giving up their fake self-image they hold onto it and believe in it. Ego is not who they really are and inside they know this is the case. Yet it is too scary to let go, or seemingly to scary. However, ego is only a habit. This is the good news. Let go and have that next conversation and acknowledge that maybe "I don't know everything and I'm willing to learn."If you want a copy of my Rooms Productivity spreadsheet send me an email david@hotelfinancialcoach.comTo get a copy of my financial leadership recipe F TAR W send me an email david@hotelfinancialcoach.comTo get a copy of my Flow Thru cheat sheet send me an email david@hotelfinancialcoach.comVisit my website today for a copy of my guidebookThe Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotelwww.hotelfinancialcoach.com

Hospitality Financial Leadership - The Lily Pad

The Hotel Financial Coach - 11 July 2017
When you get promoted to a department head and executive committee position it's an exciting time in your career. This story is about my experience as a first-time controller.It all started when the phone in my office rang. At the time, I was the assistant controller at the world-famous Banff Springs Hotel, The Castle in the Rockies. It was my "BIG" boss, the General Manager and Regional Vice President, on the line. It was about 10 a.m. and he asked me if I could come to the sister hotel in his region, Kananaskis for lunch. I said, "I think so, I just need to ask the controller here if it's ok." He replied, "Don't worry about her, just get your ass down here." He said it in a way that made me think he had already talked to her and she was pissed. But he's the boss so he won this one. I like the way our GM operated, no BS and you knew who was in charge. His nickname was the Commander. We all liked his style, well most of us.About two hours later I hopped out of my car at the hotel and headed for the accounting office where I met with someone I did not expect, our corporate controller from Toronto. He was a great guy but why was he here and where was my GM.The corporate controller and I went to lunch. He explained what was going on. The previous controller was fired that morning for not ensuring that a basic internal control system was in place. The chief engineer was ordering supplies from a local hardware store. He would produce purchase orders for typical engineering supplies like light bulbs and filters. Then the hardware store would send a new color TV to the engineer's house and mail the hotel an invoice for light bulbs and filters. The hotel would pay the invoice because it matched the purchase order; however, the controller was omitting a crucial step.All goods received by the hotel required verification by someone other than the person who ordered them. In this case, the controller trusted the chief engineer's word as he handed in the invoices. This kind of stuff happens more often than you would think.It is funny how the engineer got caught. He told someone in a local bar what he was doing. He was drunk and bragged about his little scheme. Small towns are not good places to share secrets in a bar. A friend of the person who heard the story was best friends with the wife of the new General Manager of that hotel. The new GM learned about this a few weeks later and he flat out asked the chief engineer what was going on. The engineer vehemently denied any involvement or knowledge. Two weeks later the engineer had not been back to work and the rumor was that he fled to the Caribbean.My friend the corporate controller and one of his staff had been at the hotel for a few days and it was clear that something was up with the hardware store. The size of the accounts payable file and the amount of spending with this one little store were incredible. When confronted, the previous controller said he was aware that there was no proof of delivery, but he said he was not involved in the apparent fraud. The RCMP was also now involved and there was a criminal investigation. With that, he told me he was heading back to Toronto and my job was to babysit until a controller was found. If I wanted the job it was mine - all I needed to do was apply.I settled in as best I could. Things in the accounting office were a mess, to say the least. People and processes were not being used efficiently and several other internal controls were missing (or only partly functioning). It was the type of mess one would expect to find in a hotel where the controller was asleep at the switch.About the same time that this was going on and I was getting my feet wet so to speak, word came down that the previous General Manager (who had transferred to a property in Ontario) had been fired for telling one of the owners to F off! I did not know the guy but some of the stories I heard around the hotel made it sound like he was a handful and up to no good - affairs with staff in the suites, parties, and use of the hotel for his own personal playground. After a while, some things never surprise me. By no means are all GM's like this but it only takes a few to spoil the batch. Word then followed that this GM was suing the hotel company for wrongful dismissal (which they all do).The fraud investigation from the maintenance department was quieting down a bit and I was getting some of the mess cleaned up. One thing that was very odd was the way the capital was being handled. I found a big pile of returned checks and odd invoices. It was unusual that the checks were handwritten and several of the invoices were from the hardware store. There was something fishy about one other invoice; it was for six numbered Robert Bateman prints from an art gallery located in the hotel. That was odd because usually hotels buy art in bulk, not six at a time, and the invoice was a restaurant type, handwritten invoice with the print numbers on it. Well, more stuff for the cops to look at.The next day I received a very special package in the mail. It was from our corporate law department and it contained a legal form that I referred to as a marital list of common assets. The fired GM was also in the process of getting a divorce. The note on the document said: Have a look at the contents of the common assets, does it look strange? Well, the list read like the inventory of a 25-room hotel. He had literally dozens of VCRs and TVs, several satellite TV systems, and the clincher....He had six Robert Bateman numbered prints and the asset list had the numbers. Could this be any easier? Just yesterday I was looking at an odd invoice for six prints sold to the hotel from a local art shop. Would the numbers be the same?Sure enough - SIX matches. Holy crap what was going on here?That was only the tip of the iceberg. Following my discovery, the company sent the one and only internal fraud auditor to our hotel for a thorough investigation along with the RCMP. The investigator spent weeks at the hotel and found several dozen invoices for a host of items that the GM had fraudulently obtained. The total was almost $100,000. The former GM was eventually found guilty of fraud.This little episode showed me a few things. For one, if people are left on their own, they can do some major damage. Internal controls are critical for ensuring that you know what is going on. We were not able to find any fraud committed by the controller, just sloppy work. The maintenance guy disappeared forever and the former GM got out of jail and was running some rundown hotel on the strip in Banff.Life in the mountains.If you want a copy of my Rooms Productivity spreadsheet send me an email: david@hotelfinancialcoach.com.To get a copy of my financial leadership recipe F TAR W send me an email: david@hotelfinancialcoach.com.To get a copy of my Flow Thru cheat sheet send me an email: david@hotelfinancialcoach.com.Visit my website today for a copy of my guidebookThe Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotel www.hotelfinancialcoach.com
Article by David Lund

Hospitality Financial Leadership - Measuring Labor Productivity Part 1

The Hotel Financial Coach - 6 July 2017
In hospitality, the measurement and management of productivity is hit and miss and miss again. Time and time again hotels are using ineffective measures to try and capture labor productivity measurements.It is important from the beginning to establish the goals for measuring productivity in your operations. This article will focus on rooms and Part 2 will be F&B.The goal in measuring productivity in the rooms division is to see, monitor and ultimately improve on the number of hours of work it takes to service a room. The expression to use is "hours per room occupied."Hours worked divided by the number of rooms sold. This labor productivity statistic is the most important tool available to manage your biggest expense in the rooms division.If you were making cars, you would want to know and continually improve on how many hours and minutes of labor it takes to make a car. Regarding rooms, labor comes down to how many hours it takes to service one room. You want to see this at the total rooms level as well as how it stacks up.The "rooms stack" is best laid out with the following sub totals: front office, housekeeping, room attendants, reservations and bell/door. These categories must be separate to see where there are productivity wins and challenges. To be able to see labor categories separately, use proper departments and job codes to fall into the different stacks. In addition to the separation of the stacks, you need to know the difference between hourly and management positions in each stack.To do this effectively and consistently there must be a payroll dictionary. Establishing a consistent way to segregate labor is not difficult. Start by defining the difference between management and hourly positions. For consistency, ignore salaried vs. hourly and union vs. nonunion. These are ignored because they differ greatly from location to location. Instead focus on job title. The word manager is critical. If the word manager or higher appears in the title, they fall into the management category. If supervisor or a lower title appears in the job title, they fall into the hourly category. Here is an example for "front office." It is important to recognize that management or hourly terminology is only a way to organize data and is not an indication of any regard.Front Office Stack"Front Office Hourly" - Front Office Clerks, Reception Clerks, Front Office Cashiers, Front Office Supervisor, Reception Supervisors, Night Audit Clerks, Secretary, Admin Assistant"Front Office Management" - Front Office Manager, Reception Manager, Assistant Manager, Front Office Director, Rooms Division Director, Night Manager & Assistant Night Mgr.Repeat the same exercise and organize rooms department and positions into the different stacks and by the "hourly and management" classifications.Once the classifications are established, track the hours worked in each stack. In turn, divide the hours worked in each stack by the total number of rooms sold for the entire hotel: for 1 day, 1 month or 1 year. Anytime you can capture the number of units of labor (hours of labor) it takes to sell the rooms and divide this by the number of units sold, you have rock solid data.The "hours per room occupied" measurement can be used everywhere. Starting with the annual budget. You will want to know the "hours per room occupied for the year" goal. If the total hours for the rooms division in the budget is 45,978 and the total number of rooms occupied in the budget is 37,525 then the hours per rooms occupied is (45,978 / 31,525 = 1.4585). This number 1.4585 is gold!In everything you do with rooms labor, you now know the measure of success. Meet or beat the productivity goal of 1.4585 hours per room occupied and you win. If you can use this target in your daily schedule, weekly schedule and monthly forecast you can continually adjust the course to track to your target. It is a simple and effective way to track to the goal.As the operations manager, you cannot have any effect over pricing or wages; they are out of your control. Any measurement that looks at labor as a percentage of sales in noteworthy but you cannot control it. As the operations manager, what you have control over is the schedule and hitting the productivity target if sales volume is down or up. The hours per room occupied is your speedometer and you can tell what stacks are up to speed or not and see if it is an hourly or management issue.The chart below looks at a monthly and year-to-date report for the rooms division:Note that all classifications do not have management positions. In the example above, room attendants and bell/door do not have any management positions.When you measure and track productivity this way you give leaders and managers on the ground a simple and effective tool. There will be days when you lose big on productivity goals. Days like Mondays in a leisure hotel. Challenging productivity days are heavy arrival or departure days, multiple occupancy, and low occupancy. On the other side of the coin, you will have days where productivity is naturally high: stay overs, long stay guests, business travelers, groups with heavy programs, and single occupancy guests.What operations managers need to see is the hours per room occupied goal. Knowing there will be losses and wins in the days and weeks is natural. Hitting or beating the monthly productivity target is the magic result for them to see and get excited about. Hours per room occupied is the only productivity measure they need to focus on. Get each manager in the rooms division to do their monthly forecast, weekly schedule and daily log all referencing their productivity target and the actual result. Like tacking on a sailing ship, you are constantly moving from a loss to a win and a win to a loss all the time keeping an eye on the desired final destination. Use hours per room occupied in addition to the number of arrivals and departures and room credits on your schedules.If you are interested in how you can set this productivity measurement in your financial statements, email me and request my article on "Do Your Hotel Financial Statements Pass the Test?" or visit my website, blog page. Having these measurements in your finical statements is critical.To get a copy of my financial leadership recipe F TAR W send me an email david@hotelfinancialcoach.comTo get a copy of my Flow Thru cheat sheet send me an email david@hotelfinancialcoach.comVisit my website today for a copy of my guidebook: The Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotel - www.hotelfinancialcoach.com
Article by David Lund

Hospitality Financial Leadership - Separating Group and Local Sales in Banquets

The Hotel Financial Coach - 27 June 2017
If your hotel has a reasonable amount of meeting space (+10,000 ft) and your banquet business is a significant contributor in your Food and Beverage Department (+20% of F&B revenue), you are going to want to separate local banquet business from group banquet business on all of your financial statements, forecasts, budgets and daily reporting.At this moment you may be asking, "Why would I want to do that? That sounds like a lot of work." There are some very good reasons to make this practice a standard in your hotel. I see many hotel financial statements and most are missing the boat because they do not separate group and local banquet revenues. Separating this reporting and setting it up properly provides powerful information you can use in your hotel to make better decisions and ultimately be more profitable. When you take the process apart and look at each piece, it is not complicated. It just requires someone who wants to do it. That begs a question: "Why would I want to set up separate revenue reporting for groups and locals inside my banquet department?"The first reason is to track the revenue and follow the profitability.You want to know how much banquet revenue is generated by groups in-house who occupy your bedrooms vs the revenues generated by local customers who use your hotel's meeting rooms and banquet facilities, but don't occupy rooms.We normally refer to the business coming from in-house groups as Conference Service. We call the business that comes from customers who do not occupy rooms as Catering and we also call them Group and Local.If a significant portion of your F&B revenue comes from banquets, there is a very good chance that you have two competing elements inside this revenue stream. You want to know how much revenue comes from each separate element. In rare circumstances (like a remote resort without significant local business), this separation may not be necessary. All other hotels that have a good mix of business would benefit from reporting this data separately.You want to know the revenue separation for all types of sales in the banquet department. The following areas need separate reporting: food, beverage, room rental, audio visual, gratuities and miscellaneous.Groups vs. LocalYou need to understand the spending characteristics of these two different customers so you can choose your customers wisely. If you are running a full-service banquet and meeting facility and, on top of it, you have a few hundred bedrooms to sell, you want to use the meeting and banquet facilities to drive room nights. When you do not have opportunities to fill your hotel with groups, you want to be able to sell your space to local customers who want to hold meetings and events without staying at your hotel.Understanding the spending and profit potential that each different element produces will help you develop your strategy for selling to groups vs local business. What does the average customer spend in local catering vs in-house groups? What are your minimum food and beverage sales per room occupied for your in-house groups? What is the minimum amount spent on food and beverage to release the main ballroom or other anchor rooms in your hotel? An essential element to properly manage your hotel is understanding these characteristics and the corresponding seasonality. Separating the revenues is the only way to go.When you review your financials, your budgets and forecasts you need to understand the makeup of the entire revenue picture in your hotel. Groups vs transient and corporate room revenue and local vs. in-house banquet business create a different picture each month, week and day in your hotel.Understanding what it will take to drive the maximum revenues and profits starts with understanding the piece of business that is going to bring you the greatest contribution of both and what time of year. In most hotels with significant meeting space, it is group business; when these group opportunities are minimal, like summer, holidays and weekends, you want to sell your space to local catering customers. Therefore, you need separate financial revenue reporting within the banquet department to measure your effectiveness. If you lump it all together as many hotels do, you are missing a huge opportunity to better understand and manage your business.The second reason is to organize your team: sales, conference services and catering so you can sell and service the business most effectively. This is where the water quite often gets murky.Depending on how you organize your efforts in catering and conference services, you probably have people dedicated to one or the other or, in some cases, both group and local elements. In your sales department for rooms, you have sales managers with segments to sell into, quotas to meet, and bonuses to earn. These sales quotas must contain food and beverage spending minimums. This is a critical hook that many hotels waiver on with groups in certain "need periods."In conference services, you want to know how much revenue each seller and each group is generating. You want to have Intel so you can see the overall spending of each in-house group. You want to know how much revenue is produced by each catering manager. These leading indicators help you maximize your revenues and profits. If you do not know how much revenue each seller in the various areas is producing, how will you know how effective they are and what is possible.Are you leaving money on the table by not having enough sellers in each area? Are the efforts of each seller today producing enough revenue to justify their positions? Are your F&B spending parameters effective and do they adjust seasonally to reflect your change in business mix? Do your catering minimums and room rental policies reflect the most up-to-date data? Most hotels cannot tell you these important statistics. The main reason is that they do not separate group and local business reporting.On top of all of this is the 6,000-pound rhinoceros in any hotel that has significant group business mixed with local banquet demand. How and who controls the meeting space in your hotel? What tools do they have to help them decide when to release banquet space for local business and when to hold onto it to sell to groups?Are you organized to make the best decisions for the hotel?In most hotels, this is a hotly contested subject. Most hotels have some guidelines but when you dig into the policy for meeting space vs room nights, vs room revenue, vs banquet revenues, vs group spending, vs local spending ,vs the profitability for each element, you are not going to find much in the way of evidence to win your case. You will find a lot of opinions but not a lot of facts to back them up.Having these spending and room night guidelines, by season, by day of the week, and by segment with an effective review process is the picture you want to build. By building this structure in your banquet department you will start to develop your revenue management muscles. The combined rooms and banquets, groups and local revenue management intelligence in your hotel is the result.You need to create the system to separate these two revenue streams in your banquet department to see what is really going on; and it is not difficult. It begins with how you organize your selling and servicing of groups, their corresponding banquet event orders "BEO's" and separate codes for group vs local. Next, it is a point of sale system "POS" that has separate revenue buckets for the group and local sales. These are easily set up. You need floor staff who are trained to "post" the banquet sales to the corresponding codes from the BEO's. You need to review and ensure that all revenues are posted correctly.Next, you need to set up daily reporting for the group and local sales on your daily flash reports. Your monthly financial statements and general ledger need to be programmed to have separate codes and reporting for the group and local sales inside the banquet department. Monthly forecasts and annual budgets that include analysis and reporting are also necessary.Summing it all up.Track and report your banquet group and local business separately. Do this on all your financial reports, daily, monthly and annually. Budget and forecast these revenue streams separately. Track and manage these revenue streams by the seller. These disciplines will lead you to full-blown revenue management processes that integrate rooms with banquets.Understand your business better with the right data and you will make better selling decisions and increase your overall hotel profitability.It is not complicated. What are you waiting for? To get a copy of my financial leadership recipe F TAR W send me an email:david@hotelfinancialcoach.com.To get a copy of my Flow Thru cheat sheet send me an email:david@hotelfinancialcoach.com.Visit my website today for a copy of my guidebook: The Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotel. www.hotelfinancialcoach.com
Article by David Lund

Hospitality Financial Leadership - What is the Financial Communication System?

The Hotel Financial Coach - 21 June 2017
"Systems are everything to a business. Don't change the people. Change the system." - Steve ChandlerWhen people understand and use the business system well we get a superior result. When people don't understand the business system and can't follow the business system we get a poor result. What's the business system in your hotel?By definition, a system produces something. In the hotel business, we have lots of systems we create, manage and follow. In operations, we have many great examples of systems we use to effectively manage. One good example is the system housekeeping uses to turn the house. We wake up every day with hundreds of dirty occupied rooms and we move through our system to check out and clean these rooms and ultimately sell them again a few hours later. It's not rocket science but there is a system to follow; to manage and to ensure its ongoing health is paramount to our prosperity. Room inventory is established, sections are assigned, staff is deployed, the cleaning is done, one by one the rooms come back, maybe we inspect them and we're ready for the next guest. Every day that we work the system, we learn what worked and we adjust and innovate where it didn't work."I cannot say whether things will get better if we change; what I can say is they must change if they are to get better." - Georg C. LichtenbergWith the financial piece in our hotel, we don't naturally see the process as a system we can develop and evolve. The reason we don't readily see this is because the system is hidden and it's not used by most leaders. Most hotels don't produce a monthly forecast and they don't get their managers to participate in the financial system. The system in most hotels is that the controller or director of finance produces the forecast and reviews it with the GM and then it is sent to corporate.In some cases, the departmental numbers are shared with the operations managers with the hope that they will aspire to hit these targets. Very rarely do we find hotels that have forecasts and budgets that have been created by the line managers. This line manager creation is the level you should be aspiring to in your hotel. Imagine your department managers know how much revenue is expected this month. At the same time, they know the corresponding expenses planned for the same period in detail from a zero base. With their payroll, they know their staffing formula and its fixed and variable components. Lastly, imagine your managers tracking their revenues in the month for the month and then, in turn, they adjust their expenses and payroll to control their flow through.When we don't have a system to follow this is impossible and it results in the tail wagging the dog. When we face a challenging month, revenue wise, we are largely unable to react. We are unable to react because no one knows what's in the middle of his or her statements. You might be reading this and shaking your head. Why is this the case? Why is it so hard to get my hotels and their department managers to know their numbers?The answer is: they don't have a system to follow. There is not a good system for financial communication in the hotel. We roll the dice every month. We roll the dice hoping the revenues materialize and when they do we expect a certain profit picture to emerge. When it does, this is great. When it does not happen, we are surprised. What happened to the revenues and why are the costs so high? Didn't anyone see this coming and didn't anyone react? The answer 19 times out of 20 is, that's right, no one knows what the HE double hockey sticks LL is going on financially in their hotel. Department managers don't know if they are making their revenues or not, and they have no plan for the day when the phone stops ringing.All of this is because the hotel does not have a financial leadership system. The executives have not created the system in the hotel. You can't buy this system. It must be created and maintained by the; GM, the director of finance, the executives and by each departmental manager. There is no other way. The attention to this system is an ongoing daily function that needs to be the obsession of the entire team lead by the GM. It's as essential to the hotel's health as being obsessed with great guest service and outstanding employee engagement. Without this financial obsession, the patient, the hotel is on its own, left up to chance. Chance is the development of events in the absence of any design.Create a financial leadership system in your hotel. It starts with the monthly forecast. Every leader who produces revenue, consumes expenses and schedules labor participates in the forecast creation. The forecast is produced by the department managers and consolidated by the director of finance. Inevitably changes will be needed to the details of the forecast to reach the overriding financial goals of the hotel. When this happens, we cannot just make changes and add a little revenue here and pinch a little expense and payroll over there. Leaders must make these changes to their forecasts to ensure any buy in. In the absence of this buy in your leaders are literally thumbing their middle finger at you. Don't make this critical error. Ensure all leaders start the month knowing what their numbers are and ensuring that they created their own numbers. Do not make the fatal mistake that so many make and skip this step.The second part of the system is that we give the numbers a voice, the right voice and we ensure everyone hears it every day. I can't tell you how many times I go to a hotel and ask the managers how room revenue is coming along this month or how banquet revenues are. They look at me like I just asked them how their ballet lesson was. Financially engaged leaders need to know their numbers and to help with this we make the numbers just as important as guest service and colleague engagement in all our daily communications. Leaders need to know every day what the sales were yesterday and month to date for rooms and food and beverage. They need to know the pickup in both areas and the bridge to make the forecasted revenues for the month. We make sure every communication meeting and lineup includes the financial update. Knowing where our business stands from a revenue point each day is critical for our entire leadership team.Tracking the revenue build in the month for the month is essential as it allows the leaders who have planned their expenses and payroll to adjust their spend according to how the revenue picture is emerging. Adjusting payroll and expenses is the quintessential action we want our leaders to be able to accomplish. To pivot when we're down 10% on the top line to forecast is the move we train for. If we don't teach our managers to adjust their spend to the projected revenues in the month for the month we miss the ability to manage the flow through. It is completely inadequate to leave it up to someone else to sound the alarm bell. It's inexcusable to have a look mid-month and see how things are "coming along." We need to hear the numbers daily, the pickup, the bridge and the latest projections so we can adjust our spend in the month we are in. In the month for the month is our battle cry!The fourth part is the review of the month-end financials by the same leaders and managers who produced the forecast, tracked their progress and made their adjustments. They review the freshly printed P&L and general ledger detail to ensure that their lines have the values they managed and not some other numbers. This ensures that we complete the circle and each manager and leader has the tools and processes to own their own piece of our financial process. This ownership is the key to the ongoing monthly financial exercise we take on.The last part of the financial leadership system in the hotel is that each manager and leader who participates in the system writes their own commentary, detailing the planning and execution of their part of the forecast and the month's business. Note what worked and what didn't. Learn every month and know that the job will never be done or mastered.Managing the operating financial piece in your hotel is not difficult. What makes it challenging is there are many people and departments involved and time marches on. To combat that, we need a simple effective system for financial leadership. We need a hospitality financial leadership communication system.What are you waiting for?To get a copy of my financial leadership recipe "F TAR W" send me an email at david@hotelfinancialcoach.comTo get a copy of my Flow Thru cheat sheet send me an email atdavid@hotelfinancialcoach.comVisit my website today for a complimentary copy of my guidebook"The Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotel" www.hotelfinancialcoach.com
Article by David Lund

Hospitality Financial Leadership - Why Doesn't My Director of Finance Step Up?

The Hotel Financial Coach - 12 June 2017
Your DOF is a great accountant. They do a solid job running the accounting department and they are very efficient. Your monthly financials are timely and overall the accuracy is high. The internal audit reports are very strong and they manage the accounting staff and departmental communications well. What's the problem then? What you really want and what your business really needs is a DOF that's a "financial leader". The kind of DOF that's going to teach and lead the non-financial managers in your hotel. You want the DOF to be as effective with the forecasts and commentaries as they are with the day to day accounting. You want your DOF to be the financial quarterback that calls the plays that move the money ball down the field. Not the recordkeeper who hides out in their office avoiding the world and your business. You want a financial leader that's going to tackle the issue your business faces and the trailblazer that gets results.So, what's missing? This article explores the other side of the DOF's role. It's the side that is not a natural place for most accounting types to be in. It's the side that required the accountant to be a leader that serves his/her constituents."If serving is above you then leadership is beyond you" AnonymousI learned what it means to serve 10 years ago while I was the DOF of a large hotel in Toronto. I had been there for only a few months in my new role and things were not going well. I could not get the non-financial leaders in the hotel to meet any of my deadlines. Forecast, month end accruals, monthly commentary, budget time. You name it and they missed it. It was like pulling teeth to get the information I needed to do my job. In the hotel business you cannot sit in your office and dream up what's going to happen next month in the; kitchen, in sales, at the front desk. The hotel business does not work very well when you try and run it this way. As a result, I was putting out forecasts that were off by hundreds of thousands of dollars. Month end statements were a disaster that contained invoices from prior periods and accruals that were wrong. My month end commentaries made little sense. Does this sound familiar? In short, I was sure this gig was not going to last. I was either going to get fired, quit or have a nervous breakdown. The owner's asset manager and corporate would ask me, David what's going on? My response was, "we're working on it". All the while knowing that it's not working.I had tried all the moves I knew to get the other managers to do their part. Monthly schedules, department head meeting reminders, emails, I even brought this up at the executive committee meetings all too little avail. Coincidently at the same time we had a new GM join us. We sat down shortly after they started and we discussed how things were going in finance and accounting. I explained my challenges with getting timely information and cooperation form the other managers. My GM had an idea. They said, "let's create a hotel finance workshop, we can call it hotel finances for dummies". To which I replied, "I'm not a teacher and look at my desk, I'm already here 10-12 hours a day". We discussed this idea a couple of more times in the next week and then they said to me, "David, it's the right thing to do and I'm making it part of your bonus criteria" Now it's going to cost me if I don't do it.I really didn't want to do this workshop. I was pretty sure it would suck and so would I. I mean getting up in front of a room full of leaders to talk about accounting all day was not my idea of fun. It would mean I was out there, exposed and all alone and the thought of that scared the crap out of me. Human resources "inva-told" 35 leaders, the worst offenders to attend the day long workshop. I somewhatbegrudgingly set about to create the content for the workshop, putting ideas and concepts together to hopefully show the participants what all the noise was about with the financials.The day arrived and class started on time and the room was full. The day went off OK and I didn't die. Overall, I thought it was pretty good. There were a few shaky moments. A couple of the exercises could have been clearer. Some of my content could have been explained better. But in all I thought the participation and interest from the leaders was good. I wrapped things up with a short 10 question survey and thanked everyone. The next thing that happened totally blew my mind. Two leaders came to see me to hand in their surveys and they both thanked me for putting on the workshop. They said; finally, someone explains the P&L, why don't we get this training from day one, I never knew what you did with my numbers. Before I knew it, there was a pretty good-sized line-up of managers waiting to talk to me, to share their experience from the day. WOW!In the following weeks, we scheduled another workshop and it was full without any conscription. In the short run in my hotel something very wonderful happened. I was now receiving most of the manager's forecasts, accruals, commentaries on time and the quality was vastly improved. I literally had leaders coming to see me with ideas on how to save on expenses and labor and ideas on generating new revenues. All of this was because of the workshops. Inside this I learned a powerful lesson. And that lesson is Service. If you want someone to serve you, you need to serve them first. Serve them first meant I was education and sharing with the leader's important information. The workshop showed the leaders that the P&L is not hard to understand. I showed them what we did with their information. They could clearly see that they were an important part of the financial machine. A new found understanding that they make a difference in our business.So where was the pivot for me? The pivot was on one hand the creation and delivery of the workshop. The second and most important part of that was the change in my approach. Prior to the workshop I send out schedules, memo's, directives, deadlines, department head meeting sermons, executive committee meeting winnings. These seemingly innocent acts were nothing more than me, The Director of Finance, demonstrating my "expectations" to the non-financial leaders. There was no serving going on. Just my misguided and ugly expectation. People hate expectations being placed on them. By serving them with the workshop I was able to turn this financial ship around. Leaders need a way to feel safe and welcomed in the financial arena. What can your DOF do to create their own safe place? What can your DOF do to serve your non-financial leaders. It's the secret sauce to create hospitality financial leadership in your hotel.If your DOF likes the comfort of their office and email to conduct business and uses MO that to engagement with your non-financial leaders with their forecasts, budgets and commentaries. If the state of these living documents is not where you want them to be, you now have the answer as to why this is the case. If you want to create the financial engagement with the leaders in your hotel "someone" needs to serve them first. Leaders naturally don't want anything to do with their numbers. They have a predisposed fear around the financials. Someone needs to show them that it's not so hard and that there is a system to follow. Show them that you or someone is there to train, lead and support them and they will engage financially. Once your managers see; that they can do this, that your there to provide the system, and it's safe to step into the financial arena they will want to do this. They will want to do this because being part of the financial "in crowd" is cool. They also know that these financial skills arethe ticket to greater career prosperity. Without financial leadership skills, their hotel career trajectory is severely limited.Time and time again, I ask budding non-financial leaders what they want from their career in our one-one coaching sessions. Hands down its to be a leader that has a financial aquiem. Chef's, F&B managers, spa managers, housekeepers, front office managers, etc., They all say the same thing. "I know my job, with the guests, the colleagues, the operation, but what I really want are the skills, the abilities, and the comfort with the numbers". They all want to be the leader that excels with their departmental and hotel financials. They know it's the way forward in their career.What you need to do is provide the environment in your business where this can happen. The key to doing this is having a DOF that wants to be that financial leader. Time and time again in my coaching sessions I ask the DOF's, "what's missing in your world? A high rate of response to that question is, "I want to have a greater leadership role in my hotel" but inevitably that's not happening. When I hear this it's like magic to my ears because I know I can help this person create the financial leadership if they are willing to create their own version of service. I also hear a lot of financial leaders tell me they are just fine the way they are. To which I reply, great!So, who will be that financial leader in your hotel? It won't happen by itself. It needs someone to step up! Do your part and help them help you.To get a copy of my financial leadership recipe F TAR W. Send me an email 2david@hotelfinancialcoach.com
Article by David Lund

Hospitality Financial Leadership - The Russians

The Hotel Financial Coach - 6 June 2017
When heads of state come to visit your hotel they usually make a bit of a show. The Russians are no exception, they even bring their own warship, the KGB and a wad of cash!I had the pleasure of witnessing the Russian President Dmitriy Medvedev arrival in San Francisco in June of 2010. He flew in the presidential plane, meanwhile his missile cruiser Varyag sailed into San Francisco Bay to accompany his visit. Heads of state often have a ship accompany them on their state visits.The first and previous last time a Russian warship entered San Francisco Bay it was almost 150 years earlier during the American Civil War. The Russians sent two warships to America during the civil war to show the Union their support at a time when the English and France were thought to be supports of the Southern Confederacy.The Russian Presidents team took over two whole floors of the main building of the hotel. Almost 100 rooms in total for his staff and hangers on. Upon his arrival, the President was greeted in the lobby of the hotel by former secretary of state, George Schultz and the then current California Governor, Arnold Schwarzenegger. The Russian President arrived with a rather long line of military and support staff including a couple of beautiful younger ladies. It was quite a show and I was quite surprised that it all took place in the very public lobby. Usually, these meet and greets are behind closed doors. The typical modus operandi is the head of state arrives at the hotel and he or she is usually greeted by the General Manager and then quickly escorted to their private reception where the politicians and public figures greet them. The show that day was very public and there was no press, just unassuming hotel guests that were now witnessed to the international meet and greet.The Russians stayed 3 nights and racked up a pretty good bill, just north of $600,000. Most of the bill was for food and beverage with some incredibly lavish items. When groups come to your hotel they quite often ask for credit. In the hotel business, this is a common practice that is one of the hallmarks of our industry. Direct billing, we like to call it and we still do this and it's a direct result of our business being so old and competitive. All hotels would love to stop granting credit but we can't because we would lose a competitive feature. In order to ascertain your group or companies credit worthiness, we use certain credit reporting agencies and also our own sister hotels credit history. Having a group like this in-house can be high risk as it is political in nature and anything can happen. Having no deposit, no credit references and no credit card on file would normally be a potential disaster waiting to happen. When its government, especially a government with the label power of the Russian President you just hold your breath.Word came after day 2 that the account would be paid upon departure, in cash. This is incredibly unusual for an account of this size. In my entire 30+ plus year career I only had one other group pay their group account in cash at it was $250,000. The Russians had requested a simple receipt for their payment in the form of a hotel folio with the total amount indicated and an embossed stamp that said, PAID. We actually had such a one-handed stamp that looked like a pair of pliers with what would appear to be two large coins on each end. they were not interested in the reams of paper that would normally accompany the master account. All they wanted was this one piece of embossed paper!On the day of departure, our chief of security informed me that the money would be delivered to the executive office at 3:30 pm. Subsequent to learning this I arranged to have our bank on notice that we would be making a large cash deposit that afternoon and they were ready to receive it. Banks today do not have much cash on hand and the manager was quite intrigued by our call asking if it would be OK to deposit $600,000 in cash. My communication with the Russians was through our hotel's chief of security. He, in turn, would speak with the American secret service officer in charge of the visit who would, in turn, speak with the head Russian presidential security service, their version of the secret service.Three PM came and went and no money and no word from the Russians. At this point, the President was gone, off on the next leg of his journey to Washington and with him went the delegation of hangers on that stayed in the hotel. I am beginning to feel the burn. Five PM came and went and still no Russians and no money. I knew it, you can smell these a mile away, especially once the customer fails on their commitment, in this instance 3 pm. Nothing but silence permeated from the Russians through our security department and in turn through the secret service. At 6:30 my office phone rang and it was our chief of hotel security. He informed me that word had come that the money would be delivered at 7:30 pm and that he had requested the meeting take place in the executive office. He said the money would be coming from the ship and the KGB would be the one's delivering it. Holly crap! What to do now?At 7:30 at night having 600k in cash in my hotel is not a good thing. The bank is closed and I must keep this money overnight in the hotel. My imagination quickly gets to work and I can see the Russian underworld at 2 am strong arming my night staff, jumping the desk and quickly getting the cash. We have limited facilities to keep a small amount of cash, it's called the safe and its way to obvious a place to leave the cash. The safe is in the general cashier's area behind the desk and it's a small modern safe. Easily taken by a couple of determined thieves. The hotel has a huge safe that's over 100 years old that we use for safety deposit boxes, the main door to the safe is 6" thick and the safe is 7 feet tall and 4 feet wide, the problem is the safe is locked out, combination and working life long gone. One of the safety deposit boxes could work but popping these boxes is child's play for a gang of determined thieves that know the hotel just got a large payment.That's it, that's the game they are playing, it's all clear now! Pay in cash, pay late in the day so we cannot get the money to the bank, set it up with their Russian Mafia friends and get all the money! It's so simple and easy. The hotel is such a soft target we don't stand a chance. Putting the night staff in jeopardy is a bad idea. What to do? It's 7:30 and my credit manager and I are waiting in the executive office.7:45 and still no visitors and suddenly the door to the office opens and it's our chief of security with two heavy set gentlemen in suits and a little old lady who was dressed in a vintage pencil skirt and suit jacket, Audrey Hepburn style. She is the one with money. She comes unescorted from the reception area in the office to the inner office and closes the door. She sits down and opens her purse. The purse is the shape of a small doctor's bag and its vintage Louis Vuitton. She opens the bag and with one hand pulls out $600k, still wrapped in plastic you can see the open end of the package that once held a million. She plunked the $600k on the desk and asked, "how much more". I replied, "39,000". She pulled another smaller wad out and started counting $1,000 bills. She counted to herself and then passed the small stack to me. I passed them to my credit manager and I, in turn, said to the Russian lady, "do you mind if I have a look at the package?" "No, I don't mind, it's yours now..." With that, I examined the package closer and it had 6 stacks of factory bound $1000 dollar bills. I held this package which was barely the size of a box of salt. An incredible site to see.My credit manager confirmed the count of 39 and I, in turn, handed her the folio which was presented in a hotel letter envelope. She opened it and look at it quickly and said, "Thank you, this is all we need." With that she stood up, nodded her head, I thanked her and she turned and left the office. There were some quick words in Russian to her escorts and then they were gone.We're left in the office with the money and I have a very strange feeling that this is just too easy, too simple. Who shows up at 7:45 pm at night to pay a hotel bill for the Russian President in cash to the tune of $639,000 dollars, all with $1000 bills and it's all done by a little old lady who is a KGB agent.Now I need to decide what I do with money. I contemplated taking it home but that would be risky and anything could happen on the way home and back, not to mention that's not something I want in my home. I thought again about the safe, the safety deposit boxes. If we're are going to be hit tonight its way to obvious, they will get the money, it's like you're robbing a house, you're going to look in the top drawer of every dresser. With our business complete I put the money in my bicycle side bag and we left the executive office. The immediate feeling, I had walking down the corridor to our offices was, we could be a target any moment. This is crazy. Once in my office my credit manager was not long getting ready to leave, she asked me what was going to do with the money. I am going to drop in in the night wallet, I said. OK, see you tomorrow. She left and I'm now alone with more than a half a million dollars in brand new, unmarked cash.I unpacked the plastic and moved the stacks of $100,000 through my hands. I thought about Mexico or a South American country where I could hide out and live life on the lamb. Na! That's crazy, I would be too paranoid. I thought for a moment and then I turned my office chair around and stared at my waste paper container. I reached out and picked it up, it was half full of paper, a couple of coffee cups. I turned it upside down and dumped its contents onto the floor. I placed the cash, all of it, all 639 - $1000 bills in the bottom of the trash can. I then picked up the paper and cups and placed it back in its spot beside my side desk. Having changed into my riding clothes it's now time to go home. Forty blocks across town in the night air feels good. It's down, down down Nob Hill, across the tenderloin and the western addition and then up to Diviz and through NOPA and home. I sleep well. Up at 5:30 am, out the door on my bike at 7:30 and I'm back to work........ Just another normal day in the hotel business
Article by David Lund

Hospitality Financial Leadership - Creating Property Performance Commentaries

The Hotel Financial Coach - 30 May 2017
Creating a great commentary for your owners and corporate is a monthly mainstay in almost every hotel. It can also be a large dose of drudgery. This article is about how you can create an effective system in your hotel to generate a strong and meaningful commentary based on information from all areas of your business. Creating this kind of information system in your hotel is a powerful tool. This commentary power tool can help you drive superior financial results if you approach it with the right spirit and a system to follow.Who invented this commentary and why? The need for a commentary exists because of the principle of full disclosure. Full disclosure is a basic principle in the business and accounting world. What the principle says is that the readers of the financial statements need to know all relevant information that did or may impact their investment or stake in the business. Readers of only the financial statements cannot ascertain many important facts from looking at just the numbers. They need a "footnote" or special report to round out the financial results and to explain many of the reported results and future forecasts. If a possible future event is going to have an impact on the business it needs to be disclosed. Some examples would be: pending litigation, environmental issues, labor relations, governmental regulations, management changes, competitive changes, business trends, business on the books, etc., the list is long. The footnotes give the readers of the financials the information they need to ultimately make the most informed decision about their investment and its future. We translate the full disclosure principle in hospitality and voila we have our monthly property performance commentary, or executive commentary and sometimes it's called an owners commentary.Hotels are complex departmentalized beasts that are all connected and also very separated. What's happening in sales has zero to do with the kitchen but the chef and his or her food have everything to do with image and the sales and marketing efforts. Good commentaries in hotels tell the various stakeholders what's going on and what's planned for the coming month, quarter and year. Much of the revenues for a hotel are booked in the month for the month. On the flip side of this, it's the group base and its performance that drives the financial results. This coupled with catering pace needs to be closely monitored and explained carefully and consistently in the commentaries. The expenditures and labor costs can often have big impacts on the financial results and explaining the reasons why they perform the way they do is critical. Many times, the commentary is used to explain what happened. The forecast was for a certain level of income and profit and it did not materialize. Revenues were soft and costs need to be explained. That's where the drudgery comes from. We need to turn this around and realize a commentary is a tool. If we use the tool properly we can see what happened and take the appropriate actions so we don't make the same mistakes again.So how do we get every part of our business to tell their story each month in a way that provides meaningful information and proactive business thinking leading to constant improvement?The answer is a three-prong approach. The first part is every line needs an owner. My mother always said, "Many hands make light work." I translate that into our business and out comes a powerful concept. We literally take the P&L apart and we assign an owner to every single line of revenue, the cost of goods, payroll, and expense. The second part is we make agreements with every corresponding manager that they will Forecast, Track, Adjust, Review and Write monthly about their lines. A financial communication system for them to follow called F TAR W. This clarity is magic in your business when you combine this accountability with consistent training, executive support and the right business management encouragement. The third part is designing and communicating the monthly financial circle. The circle and key dates are on a monthly schedule that the whole hotel falls into. This keeps everyone on track.I have a separate blog on the detailed F TAR W process. If you missed it send me an email and I will see that you get a copy.When managers sit down and plan their numbers in the form of the monthly forecast we teach them to zero base the numbers. This gives them the clarity they need to see, to comprehend and execute their part of the business. Knowing exactly how much revenues are forecasted and what expenses are in my lines is mission critical. Without this zero-based detailed plan, they are lost. Having details on how many fixed and variable positions I have in my department provides me the structure I need to manage my labor. Expense forecasts need to be comprehensive with detailed lists of what is needed, with itemized lists and costs for each corresponding GL account. We don't just take a cost percentage or a cost per room occupied or cover and run with it. That does not work. We need details. With the details, we can see what our options are when we have a business situation that dictates that we need savings this month in order to help meet our profit targets. We couple this with a culture that makes the numbers as important as the guests and the colleagues. This means we discuss numbers daily at our communication meetings in all departments and this gives the leaders the focus and attention that's necessary to manage their numbers. We work with our managers to ensure that they take the time that is necessary to properly work the numbers. We create the culture around the business piece and the leaders now have a system to follow and they love it. We know the numbers are just another aspect of our business that requires our constant and continuous attention. Having a team of leaders who all manage their own piece is the key to success with your hotels' operational financial health.Good commentaries tell a story about what happened in our hotel and why. What did we learn from the results and how are we using this new-found information moving forward to obtain a better result? That's the muscle we exercise every month in our hotel. We're not going to simply regurgitate the numbers and explain ratio variances. This would add zero value. If food cost is up, we explain why? If protein costs are the culprit we tell our readers what we're going to do to remedy the situation. If the room rate performed better in our group segment, we explain what happened to make the forecast too low or the actual result better. What was our lesson and how will we take that knowledge forward in our hotel? If labor was over forecast, we explain what happened and how we are managing differently as a result. If expenses were off because our planning was flawed we tell it like it is and most importantly, always, what did we learn. This discovery process in our business is the key to improving results. Knowing that this process is the way forward in our business is good news. We also know that this job will never be done. There will always be new challenges to manage and yes, the same old problems come back every once and while. That's the hotel business!Commentaries flow from each part of our business as line owners follow their financial communication system. The last part of F TAR W is Write. Write about your lines. Don't let someone else tell your story. What did I forecast, what materialized, what changes did I make based on business levels and what did I learn? What happened and why and, most importantly, what are we doing about it moving forward. What management decisions and changes will be brought about because of the previous performance. Every month the window opens and closes in our business and each month we get a new opportunity to perform. The mistake most hotels make is that they leave the money tasks to a few executives. This is not effective because the action happens on the ground in every area of my business. I want to align my business practices around the individuals that make the schedules and order the supplies. This alignment gives me the ability to affect the result directly.An effective monthly commentary gives the stakeholders a clear picture of what happened in the business and why. It also tells the readers what we will "manage" differently based on the results we achieved. There needn't be any drudgery if you have a system to follow and you build a management team that produces. Ultimately, you're in control of the result and you can own this process by investing in financial leadership training and development with your leaders. This development will not happen by itself. It requires your attention, just like guest service and colleague engagement.Serve your leaders by creating financial leadership in your business and watch your profits soar. Serve your team and watch their engagement grow.Visit my website today for a copy of my guidebookThe Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotelwww.hotelfinancialcoach.com

Talk about agreements, not expectations

The Hotel Financial Coach - 29 May 2017
In our culture, it sadly does have that connotation, and what we need to realize is that expectations are weak, cowardly and completely ineffective when dealing with other people--especially when we want to get real work done and build strong relationships. Yet we cast these expectations everywhere and let others have these diseased spells over us and its largely because we don't know there is an alternative.If I have a complaint in my world, it quickly becomes an expectation that someone needs to fix, and I tend to obsess over the injustice, and in doing so, I create my expectations. What we need to see is that this is completely ineffective for getting things to change. Complaints are very easy to ignore and diminish; however, requests on the other hand, are not easy to ignore. Once we have made a request, we're heading in the right direction because on the other side of a request we now have the ability to make an agreement.Let's take a hotel example. Currently I am having a very hard time getting the other managers to prepare their monthly forecast in its detail and to get it to me by the 30th of the month. I typically send a schedule and reminders. I speak at the department head meeting about the deadline, but I still don't get a high success rate on their submissions.It's always a struggle to get other's to do what I "expect." Without the forecast, I'm left with two very unattractive options: do it myself, or go without it. Both options mean I am being shortchanged because you're not living up to my expectation and I have two alternatives. I can complain about it which, by the way, I have been doing for years without any results, or I can make a "request" of you. This is the pivot point. If I am willing to see that my current status is an expectation and it is weak, I can bring myself to ask you, to make a request of you. It might go something like this:"Peter, can you help me? I want to include your numbers, not mine, as part of the detailed forecast and I'm requesting that you complete your part and get it to me by noon on the 30th. Can you do that?"Now it's not easy for Peter to say, "Sure no problem." He now sees what you're asking for in a different light and he might say. "I could but that means I'm going to have to rearrange my week and my assistant is on holiday and our second office computer is dead."This is what you want to hear. This is the foundation of an agreement as you have now both asked for something. It's no longer the case of you having a single expectation, now we have multiple issues in the air, yours and his, and this is the way to go. Turn the complaint into a request, and turn the request into an agreement."OK, so I will send our systems person to your office today to switch out your second computer, and I'm not sure what I can do to help you rearrange your week," to which Peter replies, "No worries. With the computer replaced, I can manage and I will get you my forecast by the 30th."What just happened here? 1. I changed my language up front from a tired self-centered expectation into a request. 2. Peter asked for my help to complete and meet my request. 3. I committed to acting to help him with the computer. 4. He in turn was positive in his response to meet my request.The above exchange is the foundation of an agreement and upon examination, we can see it passes the test to be an agreement because it has four parts, two for me and two for Peter.The test is "get and give." If an agreement is really an agreement it must have these parts; a get and give for each of us. In this example, Peter gets his computer fixed and he gives me information on time. I give him the resources to fix his computer and I get his report on time. Before the request and the agreement, it was just me and my ask. I wasn't giving anything, and I had an expectation of Peter and no agreement. Now, I can be pretty sure some of you who are reading this are saying to yourself, "I'm the boss and people need to do as I say," "I don't have time to make agreements with everyone."Maybe that's partly true, but know this: Your people are quietly thumbing their nose at you and your expectations. What you need to do if you want commitment, is to drop your expectations and start making agreements. Take the time to make these agreements and find out what you can do to help the people you work with. This will change your world. It all starts with you and the ask; without it you will not have an agreement. Find out how you can help the people you work with and they will be more than happy to reciprocate. If it's all about you and what you want, then all I have to say to you is, "good luck."
Article by David Lund

Maximizing opportunity - Any Monkey Could

The Hotel Financial Coach - 28 May 2017
He would say this to our director of sales quite often, not only to ridicule their efforts but to remind them that the business is there it's really about maximizing the opportunity and knowing that this telephone ringing condition will not last, it never does. So, what are we doing, and what's the plan to siege the day?This is the tale of any and every hotel. "The rising tide lifts all the boats." This quote was made famous by JFK and it is said that he got it from the chamber of commerce in a small New England town, probably a resort town. The relationship from this idea to your financial leadership is one of opportunity. We all know that when we have a good month, season or year we know it's because the business was there. It all starts with that. Without the business being there and coming in like spades we are sunk. The reality in that statement is true but we also need to see that we can have a much bigger impact when we have a high tide.We seldom examine the excellent results for ways to improve. Why would we bother to do that? We just had a record year, double digit RevPAR increase and profits are off the charts. All indications point to the fact that we are doing an excellent job. But we also know deep in our sole that the volume hides a multitude of sins. The opportunity in all of this is to step back and look to see what these sins are and how we can correct them when business is good. We seldom or never do this exercise when it's actually the best time to do it. Imagine doing a staffing review in the middle of the best year we have ever had? That's right, doing the staffing review on a full tide will yield much more treasure. In addition to finding more opportunities you will see that finding the money to do this is much easier when times are good. Why wait for headwinds in your business and your pesky asset manager telling you its time? The same is also true for an expense review. Looking at your spending when you're spending the most will uncover the biggest opportunities. There is a reverse psychology that appears when you do things that all others miss. People are much more willing to adjust and change when times are good. Try and do this when your business is in the tank and you will meet resistance and bad moral. The same needs to be said for looking at ways to increase revenues, do this when business is strong and you will have more creativity and certainty. Being the leader that always looks for the opportunities to grow especially when all others look away is the greatest use of your talent.There is quote by Earl Nightingale, it goes like this, "enter a market and observe what everyone is doing and do the opposite" To sum this up, look at what everyone else is doing in business and especially when business is strong and find the opposite, do that, siege the opportunity. Creating the kind of culture inside your business and inside the hearts and minds of your team will have a spillover effect. Any monkey can follow the crowd, it's the clever chimp that knows there are more opportunities when the house is full.
Article by David Lund

Hospitality Financial Leadership - Share the Financials in Your Hotel or NOT

The Hotel Financial Coach - 23 May 2017
If you're in the camp that says we don't share, I ask you to think about what holds you back from sharing. Is there really a policy in your company that states the sharing of financial information is prohibited? I'm pretty sure those are few and far between. The way it usually goes down is something this. That's just what we do, we have always done it this way or the last guy or gal didn't either. I am willing to bet that most of your reading this could make the decision to share the financials with your department managers if you had a plan as to what would be accomplished if you did share. That's an exciting prospect. Changing the way, you manage and introducing a new process to generate a different result.The financial statements serve two purposes in your business. One, they are the vehicle we use to keep score. It's that simple, a way to keep score for the game we call the hotel business. How is your business prospering or not is revealed by the numbers in your statements? A quick look by someone who knows how to read the statement will reveal your truth. I know many hoteliers don't share because they are embarrassed by the lack of prosperity they are experiencing and the very thought of sharing this with their managers is too much to take. In our culture money has immense power. If we subscribe to this notion the power, we`re giving the money in our business is negative. It holds us down and keeps us from really wrapping our arms around our business and getting the results we know are possible. "But what will people think of me", "surely, they will think I'm incompetent", these are some of the fears we have. I often hear it's the owner that does not want the financials distributed. I also here its policy not to share and the reason is we want the managers and department leaders to look after the guests and their colleagues. No matter what the excuse or reason I always say the same thing in response to my inquiry about sharing the results. I say, "do you think you could achieve a better financial result if your leaders and managers knew what was happening financially?" Inevitably I get a deer in the headlights response of yes, but......The second purpose for the financial statements in your business is to help you to create plans and actions to improve the results moving forward. Really that's the BIGGEST and HIGHEST purpose of the financial statements for your business. Tell me how I'm doing, what's the score and drum roll here......It is What can I do to improve the results! Your financials point the way to possible improvements. If we don't know what's wrong with our patient, then prescribing a cure is beyond anyone's ability. A close review of your financial statements will reveal exactly what is wrong with your business. When we look at ways to improve our business we naturally want the maximum buy-in from our managers and leaders to help pull it off. Well, let's think for a moment and ask yourself how could I get my managers to really own the action going forward. How can I get the team as engaged as possible financially? The biggest part of the answer is to share the financial results with your leaders and involve them in the formulation of the profit improvement plans. This really is not a new thought or a leading edge new age strategy. This idea to get your managers to buy into the ideas for improvement by involving them in creating the ideas by sharing the financials is as old as the hills. Here is the kicker. If you won't share or believe you can't share the financials the buy-in and accountability you desire will NEVER HAPPEN. That's right, no matter what else you do if the managers and leaders of your hotel don't have financial statement information they will not step up. Why may you be asking is this the case? It's simple, you cannot expect someone to create a result that is better than the current result if he or she don't know what that result is or what the new one should look like. They are in the dark without any way of navigating and they have no destination to navigate too.Your leaders want to make a difference in what they do in the lives, at work, and at home. All of us have a basic human need to make a difference. Your managers what to have a greater impact on your business results. They also what to know the score, the scoop. They want their seat at the captain's table. They want to be on the inside track. They also want you to treat them like adults. For you to share the financial results and ask for their participation is an incredibly powerful gesture. It also needs to be presented properly with just the right amount of humility and vulnerability. Yes, vulnerability. When you share your results your opening up a part of you that they know is sensitive and personal. Money in our society has such incredible power and by showing your financial results you create equity with your leaders. Manage this process carefully and you can turn your financial world around. Educate your leaders on the financials. Show them how it works and what it all means and watch them get excited. Financial leadership skills are incredibly valuable assets for your managers to create. With these skills, they are highly marketable in our industry. These skills cannot be picked up at school, or from a textbook. The only place you can learn how to manage the P&L and your department is on the job. The only person in your business that has the capacity and capability to create these financial leadership skills with your managers is you. Do you remember what it was like when you were younger and someone took you under his or her wing, guided and mentored you? This is the same opportunity you have to create that priceless relationship with them. Do this for your leaders and they will move mountains for you and your business. And don't worry about your managers taking these new skills and running to the competition. By the very fact that you have served them and created greater prosperity for your managers means their commitment to you is at its highest level.Serve your leaders by sharing the financials. Serve your manager by training them on how the financials work. Serve your team by asking them to participate financially and ultimately to create their own forecasts and budgets. Serve by creating financial leadership in your business and watch your profits soar. Serve your team and watch their engagement grow.Visit my website today for a copy of my guidebookThe Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotelwww.hotelfinancialcoach.com
Article by David Lund

Hospitality Financial Leadership - Welcoming Imperfection

The Hotel Financial Coach - 16 May 2017
To maximize your effectiveness with your leadership team around the money you would be well advised to accept the fact that it's an endless exercise. We must see that the idea of mastering the numbers is elusive. This imperfect reality is comforting and seeing the challenge we have as just another endless mountain to climb is very healthy.It's critical to always remember when we do a budget or forecast for our hotel or our department that the only thing we know for certain is it's wrong. Yes, wrong, it will never be right. Why then do we go through such an exercise if we know it's wrong? The answer is obvious; we want a system that produces information about where our business is going so we can manage accordingly. We confuse this with the misguided idea that my numbers need to be right.The fact that we will never master the numbers in our business is oddly enough in great company. Introducing the money's two sisters; we have guest service and colleague engagement. These three pillars operate in the same fashion. We confuse money and its absolute qualities with the real task at hand, creating a business plan in which we can communicate and achieve a superior financial result. Having and executing the business plan in all departments is the key. Knowing that the various parts of the plan have been created by the leaders inside each department means we know the resources we have to execute our mission relative to our projected sales. With the plan in hand, they can take their shot. That's exactly what we want them to do. Know the target, take the shot. Hit or miss, just take the shot.Guest service is a constant, never ending battle in our hotels. We accept the fact that it will never be mastered. There will always be challenges; training, standards, new colleagues, technology glitches, communication issues, guest expectations, business volumes, staffing challenges, value for money. I could fill the page with the endless demands that are part of creating and delivering guest service. The important aspect of these confronting circumstances is that we accept this reality. Knowing the job will never be mastered keeps us in the hunt, on our game. Hospitality and service are not an absolute, it's not a science. There is an endless list of ingredients and conditions that produce a different result every time. That's our business and we accept the challenge and meet it head on and perform. Knowing there will be new challenges tomorrow keeps us excited to see what shows up. It's comparable to playing a team sport where we get a chance to win every day. Even if we win our performance is full of areas we could have executed better. Somehow, we come back the next day and play again knowing were going to face yet another set of challenging circumstances with service. This captures the very essence of our business and it helps explain the addiction we all have to the hotel business and service.Colleague engagement is the never-ending practice of building a team to take on the challenges of our business. Creating and maintaining an engaged team in your hotel is the building block that allows the service the highest probability of being consistently delivered. We know that the creation and maintenance of engagement will never be complete. We will be forever charged with the task of creating and maintain engagement with our colleagues and leaders. The important thing to always remember and accept is the job will never be done. There will always be; turnover, lack of turnover, staffing level challenges, business volumes, resource issues, communication issues, last minute changes. I could once again fill this page and so could you with all the engagement challenges we have. What's most important is we accept the fact that the engagement job is never done. We don't give up and we fight every day to improve the landscape and win. That's a tough pill to swallow especially if you still have some rose color in your glasses. Knowing what our business is all about is knowing the game will never be mastered. For some of our leaders, this is the obstacle that stops their career. Who would want to work in an environment that resembles ground hog day? The same old served up day after day, the same challenges. Moving the needle in the right direction is the reward, building the team and their engagement is the reward.So how do these two sisters relate to the money, how do they correspond to the financial leadership inside your hotel?The money is "exactly" the same. The money piece will never be mastered in your hotel. As I stated earlier, the only thing we know about our forecasts and budgets is the fact that they're wrong from the getgo. Somehow, we have it all wrong in our thinking around the numbers. We naively believe we are entitled to get it right. Like it's grade 10 math with an absolute answer for each problem. With grade 10 math it's either right or wrong, we get a check mark or an x. That is where we confuse math with business planning. This confusion stops many of you in your tracks when it comes to playing; the money, the monthly forecast and annual budget game in your hotel. The whole idea behind creating financial leadership in your hotel is not to get the answer right. It's to produce; more operational questions, better financial communication with you leaders, higher engagement with their numbers and ultimately a strategy to more effectively manage your business. Like service and engagement, we are going to drop the ball from time to time. When we do we need to realize it's part of the deal and it's an opportunity to learn what went wrong. The error leads to a better result next time. If we can see this, we now have the numbers working for us. They now give us clues about our business we could not see before. That's the real purpose for the numbers, they point us in a direction. If we don't write a plan and then execute we have no comparative. Without the comparison, we are lost. "Without a map, any road will take you where you want to go". Far too often we use the result in our business to make someone wrong. Rather, we should be looking at the financial communication system and strengthening it."I've missed more than 9000 shots in my career. I've lost almost 300 games. 26 times, I've been trusted to take the game-winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed. Talent wins games, but teamwork and intelligence win championships. I can accept failure, everyone fails at something. But I can't accept not trying." - Michael JordanThis quote by basketball's greatest player ever sums it up quite well. In your hotel, you have a chance to take a shot with every leader every month. Buy "not trying" in your hotel means you have no monthly departmental business plans. Each department is on the sidelines and they are not taking a shot, their shot. They are not taking a shot at getting better. They are missing their opportunity to fail and learn. Get them to complete their forecast, track their results, adjust their spending, review their monthly financial results, write their commentary. F TAR W. Practice and learn, that's what you do and above all else, you create an environment where it's safe for your leaders to take their shot and ultimately miss it. And then you encourage them to take another shot, learn and know that failing is the way to win. The financial game in your hotel will never, ever, ever, ever.......repeat "ever"300 times, be done, won or mastered. Accepting this reality with the financials and working with all departmental leaders to create teamwork and intelligence with the numbers is the ultimate way to succeed. You have the ability to create a financially engaged leadership team in your hotel. Just get everyone on the court and take a shot. Learn and take another shot. Just don't stop.I am going to wrap this one up with a great quote from Henry Ford. "Whether you think you can, or you think you can't--you're right."Financial leadership in your hotel is something that you can create and it's also true that it won't happen if you don't think you can. The right mindset is a powerful thing.Visit my website today for a copy of my guidebook: The Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotel
Article by David Lund

The Paper Can't Talk

The Hotel Financial Coach - 1 May 2017
In the hotel business, we have three equal pillars. The guest, the colleague and the money. We need to realize that the 3rd pillar, the money, the owner, the P&L, the paperwork, whatever you want to call it, it needs a proper voice. The right voice, a voice that speaks to the leadership and the highest purpose that a corner stone of our business warrants. Far too often the voice of the money is scary stingy or down right mean. If the paper is going to have a voice we want to ensure it's the proper one. The voice that will get and give equity with all of our constituents.You're probably thinking that the director of finance sure makes enough noise about the numbers and schedules for month end and the variances to forecast. He or she is very vocal at the department head meetings, always telling us what's wrong, what's late, what didn't work. You're also thinking that the owner's presence with their asset manager is obvious. They are always getting the hotel to cut back, we make seemingly endless changes to standards and payroll all to drive the bottom line. The financial voice in the hotel is loud and it's almost always negative, never enough always wanting more, an endless need to be fed. This is what happens to the voice for the money if we don't address the way in which we craft, package and deliver the money message.What if the voice of the money had the same respect and understanding that the voice of the guest has? Or the voice of the colleague. It's possible to create the kind of environment where this is the case and it's built on understanding. Before I go there and tell you what that looks like it's important to understand why the money needs a special voice and why it easily gets a bad rap if we don't take care to give it the proper voice. Money, the P&L, the owner usually gets a bad reputation because of three reasons. One, money is a powerful part of our societies fabric, if you don't have money or you think you need more it is a powerful negative force. Not enough money and the next step is surely death, and so on. I think we all get the picture. Two, money is usually used to shame people, not enough and surely there is something you're missing, not doing and certainly you're not keeping up. Third, as part of our culture the very subject and open discussion about money is still largely taboo. So, the net sum of all of this is; if we want to have a positive relationship with the money in our hotel we need to get the money out of the dark closet and get it front and center. We need to give the money a fair, friendly and equitable voice. After all money is just a way to measure and exchange value in our world.To give the money that kind of a voice requires a strategy and practices we need to adopt. The strategies foundation is open access to financial information. Budgets, forecasts and actual results are all shared in your hotel. Manages and leaders at all levels are part of the creation of the budget, forecast and they share these updates regularly with their departments and colleagues. Success are celebrated and rewards for financial gains are shared. The sharing part is critical, whatever that means in your business is uniquely yours. It could be profit sharing, bonuses, celebrations, it really does not matter as long as your sharing the prosperity. In times of constraint when revenues decline we now have a leg to stand on with our teams. Expenses and staffing need to be adjusted and no one likes to do this but an engaged team that knows what the score is will be much more willing to do their part id they know what's going on financially and if they feel like they are part of the team. This is the only way to break out of the cycle that would otherwise have the money being the instrument that victimizes the workforce when we need them on board more than ever. We can't have our cake and eat it too. If we try too, our colleague and leaders will see through our double standard.In writing this article, it occurs to me that this is the very core of our being in hospitality. We're here to help people and we often associate that with helping the guests. The same is equally if not more important when it comes to the colleagues. If we truly desire a team that actively looks after our guests then the formula is surely one that has the executive, the leadership, the owner, the money looking after the colleagues. A large part of that looking after can be built on the money culture, making its voice one of caring and fairness. All we need to believe is that looking after our colleagues and sharing resources results in one thing, colleagues that look after their guests and this in-turn keeps them raving about your business and coming back. It's like perpetual motion.Giving the money a voice in your hotel enables you the embodiment of values that no other pillar can. It creates an incredibly engaged team in your business, a team that respects you because of your openness. This team lifts your business up with many hands. The voice of the money can be kind and just, it need not be feared and kept in the dark for only a few. Either way its voice will be heard, it's up to you to decide what it will say.Visit my website today for a copy of my guidebookThe Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotel www.hotelfinancialcoach.com

Flow Through - Understanding How it Works and How to Include Flow Thru in Your Financial Statements

The Hotel Financial Coach - 25 April 2017
"it's great that you increased the rate and overall revenues in my hotel, but what I really want to know is how much you will keep and give me in profits" - anonymous hotel ownerManaging flow thru in your hotel is a key attribute to understanding the profit model for your hotel. The reason it is so important to understand is the different characteristics that emerge when revenues go up or down in different departments. Measuring flow thru by department and by key driver is the basis for understanding your hotels real financial results and most importantly its financial potential.Here are some motherhood questions to get your flow thru imagination going.The overall revenues year to date are up by 1.3 million dollars how much should flow in GOP?Occupancy is up over last year by 5% - and the rate is up $15 as a result room revenues are up $720,000 - how much should flow in rooms profit and GOP?Restaurant average check is up by $2 and as a result food revenues are up $10,000 - how much should flow in F&B profit and GOP?Liquor revenues are up over last year in my lounge by $7,000 - how much should flow in F&B profit and GOP?Banquet food sales are $50,000 higher this month than the same month last year driven by higher volume and average check - how much should flow to the F&B profit and GOP?The way we calculate flow thru is straight forward. The first step is you subtract the revenues from two different periods and step two is to subtract the profit from the same two periods and the thirds step is to divide the difference in revenues by the difference in the profit. See the sample charts below.All the revenue streams in your hotel have two attributes, pricing and volume. Understanding the difference and measuring the impact is the key to understanding and measuring departmental flow thru.Measuring flow thru to the prior period is normally a stronger comparison than measuring flow thru to budget or forecast. The reason being when we compare the flow thru from one real period to another real period it's more of an apples to apples comparison. When we compare flow thru to budget were comparing a real result to a projection. A word of caution, when comparing the flow from one period to another it's important to include any events that may have had an impact on the results. This is where a good memory and a great monthly property commentary come into play. Let's say that last year in the month of May we had a great group month, off the charts because of a city wide. That fact will skew the flow thru to this month. Being able to articulate the impact of past and current events is very important.Negative flow is also an important concept and calculation to master. When revenues decrease, we want to be able to mitigate the impact to the profit lines. We want to be able to retain the profit loss. If we don't act we run the risk of losing 100% or even more of the lost revenue in the form of decreased profits.Rooms FlowThe rooms department is the engine in 99% of the hotels in the world. The greatest contributor to performance is rate and then occupancy. If my rate goes up $10 over the same month last year and I sell 18,500 rooms this month, the same amount as last year, my room revenue just went up by $185,000. The question is how much should I be able to keep as profit. What we need to examine is what else would need to increase to compensate for the additional room revenue? This is the magic in the hotel business as very little needs to go up when my rate grows. Whether it's a transient increase or group the impact is largely the same, i.e. Very Good! Depending on my segmentation I may need to spend some of this increased revenue on third party commissions. I also may need to spend more on my reservation expense from my brand, depending on the mechanics of the charge back. Other than these two cursory items no addition expense or payroll in the rooms department need be spent. Other costs that will be impacted by the increased revenues are credit card commissions, centralized fees and management fees. A good rule of thumb is I should see 90% of any additional revenues flow in rooms profit and 85% in GOP, that result from increased room rate. Your hotel manager may take it upon himself/herself to spend a little more this month to catch up on some cleaning or other expense but it is not directly related to the increase in rate. On the other side of the equation is occupancy. Let's say my hotel this month saw an increase of 6 points in occupancy over the same month last year. This resulted in and an additional 300 rooms sold and an additional $45,000 in room revenue. The question is how much should flow? With occupancy, it's a bit more complicated. Every time I sell a room I have both fixed and variable expenses associated with the sale. Taking the 300 extra rooms, that's an average of 10 more per day. I don't need huge amounts of additional resources at the front desk, in reservations or in guest services. I will however need additional room attendants and housekeeping labor. I will consume more amenities, guest supplies and probably should pay higher commissions to 3rd parties and more in reservation expenses to my brand. I will also pay higher credit card commissions, centralized fees and management fees. So, as a rule of thumb I should see 85% of any additional room revenues from increased occupancy as increased rooms profit and 80% in increased GOP.F&B FlowWhat is the increase or decrease in F&B revenue and where did it come from? In the food and beverage department we need to have a much bigger calculator to see what happened and what the results should be. We want to be able to measure the increase or decrease in all the dimensions that drive our business. Profitability characteristics are very different between food sales and beverage sales. Within food sales the profitability of all the different meal periods as well as distinguishing the relationship between outlet sales and banquets is key. What would you rather have, dinner revenue increase or the same revenue increases from coffee breaks? Would you like to see sales increase in your outlets or in banquets, what would have a bigger impact on profit.? With beverage sales, the profit margins for liquor, beer and wine need to be understood as well as the portion from our outlets vs banquets. When we look at the average cover prices in food we also need to understand the contribution margin. It's nice to see the average cover increase but what profit do I make from the different type of sales inside my F&B operation? All of this looks complicated on the surface but it really is not. With a little analysis and some patience, we can build a model that will help us see the optimal picture for profitability in our F&B operation. With this picture, we can strive to create the optimal recipe for our food and beverage success. That's the key, understanding what the optimal mix is and getting our sales and conference services people selling that. Getting our outlet managers and servers to understand what items have the biggest contribution to profit and have them sell accordingly. If we were selling cars, we would know model that generates the biggest margin, and the accessories that drive profits. Our business is no different. Flow thru and its impact is at the heart of understanding this profit model.Minor operating department flow. Same principles as above, what is the difference in the top line and how much did we make in additional profits. This is valuable information for spa, golf and retail operations.The last part is sometimes the most important, in this case its non-operating department flow. I can't tell you how many statements I see where there is a nice hit on the top line revenues only to have most of the potential profits chewed up in non-operating departmental creep. Administration costs, sales and marketing and maintenance flow needs to be measured, and managed. If you cannot readily see this you're missing a powerful tool.Creating the flow thru measurements in your financials is relatively straight forward. Pulling out the numbers you want to see like the change in revenue and the change in profit from the two different periods and dividing the two is it. Display these on your financials and you will have a whole new understanding of your business and be much more effective in your ability to hold others to managing their departmental flow thru.Mastering flow thru is the key to the hotel profit maximization. Understanding where we win and pointing the team, the sellers, the operators in that direction. Creating alignment around the business model.For a complimentary copy of my excel sheet "flow thru cheat sheet" send me an email requesting a copy todavid@hotelfinancialcoach.com or visit my website and download my free guidebook, "the seven secrets to create a financially engaged leadership team in your hotel". www.hotelfinancialcoach.comCall or write today for a valuable consultation on how you can create more financial leadership in your hotel.

Do Your Hotel Financial Statements Pass The Test? Part 2

The Hotel Financial Coach - 19 April 2017
Do your hotel financial statements give you the information you need to effectively manage your hotel? Are you able to see if your profits are where they should be in an enhanced top line statement? Do your statements measure flow thru? Do you record your rooms business by proper segments and track the rooms occupied, rate and revenue in each segment? Do you record customers served in F&B and do you separate meal periods? Do you record liquor, beer, wine and mineral sales on your financials separately? Do you measure labor productivity in your financials? Do you record hours of work in your financials? Do you have payroll segmented by management and hourly classifications? Do you have a separate supplemental payroll and benefits statement? Do you track arrivals and departures? Most statements I see do not have most of these critical elements included. They're lacking these incredibly effective items that can easily be added. Most people use the standard format as outlined in the 11th addition of the uniformed system of accounts for the lodging industry. This is great however you can produce an enhanced statement with just a little more detail added that will greatly assist you in effectively managing your hotel.How would these elements add insight and value to your business? Let's explore this.In part one we covered the Top Line Statement format, Flow Thru, Rooms Segmentation, F&B Customers and Average Checks by Meal Period. If you missed part one check out my website and blog post from February 27th, 2017, to get the article.Measuring Productivity on Your Financial Statements.The only truly effective way to measure labor productivity in the hotel business is by expressing the productivity in hours per room occupied in the rooms division, hours per cover served in the F&B division and EFTE's per 100 rooms available in the non-operating departments. In this article, we will concentrate on Rooms and F&B productivity. The reason why hours per is the best way to measure productivity is we divide actual hours worked by the actual volume of business, units sold. Others may say that measuring labor percentage, or dollars of labor per unit sold are effective but the fact is our managers and leaders have no control over wage rates, but they do have control over hours worked, the schedule, and this is what we want them to focus on. Being able to see the hours worked and the number of rooms or covers served in our financial statements means we need to record and book these statistics monthly in a statistical journal entry. We accomplish this by adding a "stats" department to our chart of accounts and the statistical entry and department net to a big fat zero each month.The beauty of knowing the hours per room occupied is powerful stuff. If we were making cars we would want to know how many hours of work it takes to make a car. We would then want to innovate and find ways to reduce this. In the hotel, it's the same. We split off the rooms and F&B because they are very different. In the hotel business, we want to know how many hours it takes to service one room or one cover. We then want to innovate to see if our malmanagement practices are actually producing better or worse results and adjust accordingly. The only way to do this is with hours per calculations.In rooms, we want to be able to see the hours it takes to service one room. We want to be able to break that down between the front office, guest services, housekeeping, room attendants, and reservations. We also want to be able to distinguish the hourly and management hours worked. Once we have the hours recorded by area in hourly and management we divide the hours worked by the rooms occupied. So, for example, YTD the front office hourly total is 10,434 hours worked and management is 4,976 hours worked. The rooms occupied are 41,975. To figure out the productivity I divide the hours worked by the rooms occupied. My productivity is .249 for hourly and .119 for management. I do this with each classification of payroll monthly and YTD, for all three financial categories; actual, budget and last year. Below is a chart the shows the complete rooms division picture. Quickly we can see if we have better or worse productivity compared to budget and last year. An increase in our productivity will mean my numbers go down. Why would I hire you to run myhousekeeping department if you're going to be less productive than the last manager? I want you to continually strive to improve productivity and the only way I can measure this is by hours worked divided by rooms occupied. We want to include all rooms occupied and all hours worked. Over time hours count as one hour. We do not include hours for holiday pay or vacations, these are nonproductive hours.In this example were looking at an average hotel and it's the May results and YTD May. The left side is the summary of hours worked and on the right side, it's those hours divided by the rooms occupied which are at the very bottom of the chart on the right side.From this simple analysis, we can clearly see where we're improving and where we are falling in the rooms division for the month and YTD relative to budget and last year with labor. We can see this by area and by hourly and management position. In this example, management in the front office, housekeeping, and reservations have had positive productivity changes. With the hourly, we see improvements in the front office, room attendants, reservations, and bell desk. Overall the YTD productivity is 1.755 hours per room occupied compared to the budget of 1.831 and last year of 1.806. Let's now look at the impact this has on the hotel. Comparing the YTD productivity to last year we see that it has improved from 1.806 hours per room occupied to 1.755 hours YTD this year. To measure the impact, we just need to subtract the two and multiply by the YTD rooms occupied. In this hotel, the wage rates with benefits are $30. (1.806-1.755 = .051) x 41975 rooms occupied = 2140 less hours worked x $30 = $64,221 in labor savings YTD after May. If the trend continues we will save over 150k by year end.The chart and the analysis are great tools but the most useful piece of this is understanding what changes were made that created the enhanced productivity. From there we want to see how these ideas can be extrapolated to our other hotels. One of the chief by-products of this type of analysis is benchmarking all the operations in our portfolio so we can see what hotel is best and in turn discovertheir practices and apply them wherever possible and practical to our other hotels. Brands sell expertise to owners and without productivity measurements in the financials, brands and hotels don't know if they are improving or not. A percentage will not tell you as it's a percentage of something else, usually revenue and this can be very misleading.The food and beverage department productivity analysis is the same but uses F&B hours by area and covers. In F&B we need to organize things a little differently due to the various outlets and kitchens. We want to record direct service for each outlet using hourly and management as well as allocated hours for management, kitchen and stewarding.Separate Schedules for Supplemental Payroll and Payroll BenefitsHaving these two additional costs separated and summarized on a separate schedule is both very handy and useful. These costs are usually allocated to each department using hours worked or some other allocation basis. To be able to see them in total is critical. Without the totals, we don't know the overall picture relative to budget and last year. This schedule can be created quite easily and it's important that we distinguish between supplemental payroll which is defined by costs that are directly related to the payroll. Examples are vacations, statutory holidays, sick pay, bonus, severance. On the benefit side, we want to include items like state and federal programs, health care, cafeteria costs, worker's compensation, and pensions. Both of these categories are big dollars to a hotel and their characteristics are different so having separate reporting that summarizes them is very important.Tracking Arrivals and Departures and Average Guests Per StayI once had a hotel in my region that had an average length of stay of 13 days. Needless to say, this hotel was unique. On the other side of that, I also know an airport hotel that has an average stay of less than 1 day. This statistic allows us to measure the amount of activity for the bell desk and front desk as well as the demand on the room attendants as stay overs are easier to clean than departures. Stay overs mean no additional work for the front desk, door or bell desk. The average length of stay also can point to early or delayed capital needs for everything from the room renovation to the carpets and other operating equipment. A general rule of thumb in rooms is, the higher the average length of stay the better the labor productivity should be. This statistic is calculated by dividing the number of rooms occupied by the arrivals. Finally, were wanting to measure and see the average number of guests per stay. We can achieve this by recording the number of guests in the room and dividing the aggregate of these by the total number of rooms sold. This is particularly useful for measuring F&B capture and it also points to linen and amenity consumption. Typically, the lower the number of guests the lower the laundry and amenity costs per room occupied.Visit my website today for a copy of my guidebook, The Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotel. www.hotelfinancialcoach.com

The Luggage: Humility in the Hospitality Industry

The Hotel Financial Coach - 10 April 2017
"Servants don't know a good master till they have served a worse." -- Aesop, Aesop's FablesThe Empress Hotel in Victoria, British Columbia, saw massive renovation in 1988. The renovation was so big the hotel was closed for 6 months. One man died in the construction falling down the garbage chute and it is said that the hotel rose 6 inches taller as so much weight was taken out of her. The Indian gum wood piles expanded giving the old girl a lift. I have said many times, you have not really worked in the hotel business until you have worked in a hotel that's closed. We take for granted the little things like the cafeteria, the laundry, the washroom! At one point, we had to walk up six flights of stairs to get to our office and six back down to go to the loo.Eventually, the hotel emerged from its renovation and physical transformation and the results were amazing. The renovation costs more than doubled the budget. Once you start peeling back the walls what you find is usually not what you bargained for. None the less, the job was done and the old lady had a new dress and shoes. So, it's the summer of 1989 and the hotel is back online and we were hosting our first big conference: The Canadian Pacific Presidents Conference. Back in the late 1980s, Canadian Pacific was a huge conglomerate of companies sewn together. Coal, gas, paper products, food, hotels, ships, trucking, credit cards, lumber, chemicals, railway, airline, power, telecommunications, consulting, securities, and real estate were all part of the conglomerate at one point or another."I don't think we are too diversified. We would be if we didn't have a plan. You look closely and everything fits. You know, we didn't try to diversify just to look good." Ian Sinclair, President and Chairman of the Board, CP Limited, 1966.While the conference dates had arrived and it goes without saying that we were pulling out all the resources we had to give these folks a great time. Each division of the company would send its president and executive team along with their spouses. These folks came from all over the world and they were captains of industry. As a management team, we were assigned extra duties to help with the conference, especially with the arrival process. I remember having sketchy photocopied black and white pictures from past annual reports to use as clues to who these people were and our job was to find them upon arrival. Each of us was assigned key individuals to meet and greet, escort them to their room, make sure they were welcomed and happy with their suites. Normal stuff.Our hotel company President was one of the first to arrive and his wife arrived a bit later on a separate flight, only to have the airline misplace her luggage. The hotel company President was back and forth between his hospitality suite and the front door, welcoming his fellow company Presidents and having a few cocktails. The biggest arrival by far was the current Chairman and President, William Stinson. He had grown up inside of Canadian Pacific since the mid-1950s and he had quite the reputation. His nickname was 'Old Ironsides'. When he arrived, the hotels' General Manager (GM) took him directly to his office as Stinson had business to attend to which meant he needed a phone to use. In 1989, we had cell phones but not many business executives were using them. The landline was still king.So now it's getting a little later in the afternoon and most of the company brass was in house. I was at the front door and our hotel company President came back to the lobby and asked me how things were going. I said: "We have three more to arrive and I am told they are all on schedule." A bit of b-- but he was happy to hear this. Funny thing was he had a "lime vesicle" sticking on his upper lip and the fragrance of gin was ripe. None the less, he was in a good mood and as we chatted our hotel GM came to the front door as well. The words that came out of their mouths next were incredible.Hotel President to our GM: "Where is my wife's f-- luggage?"GM: "Mr. Stinson is using the phone in my office."Hotel President: "Haven't you got another f-- phone in this hotel!"So, all of this unfolds two feet away from me. I see our GM, who is a powerful man in our eyes, melt. He was speechless. Having been called to the ground in front of me by the President. I felt so embarrassed for him as he retreated to the other end of the lobby to get someone to call about the President's wife's luggage.This story reminds me of a saying often repeated by an old GM I used to work with: "We're all busboys, get over it." And that is so true. No matter how important you think you are there is always someone seemingly more important. So, the grand lesson in all of this is; treat people the way you want to be treated because that's the right thing to do and don't treat others the way the treat you. Don't go there. Rise above. Be the leaders that stands above.
Article by David Lund

Creating Financial Leadership in Your Hotel

The Hotel Financial Coach - 6 April 2017
Creating financial leadership in your hotel has the same fundamental realtionshift at its roots. The traditional relationship in the hotel with reports and deadlines to submit; forecasts, budgets and commentaries is to have the financial leader tell the non-financial department managers when reports, forecast, budgets and commentaries are due and to send out schedules and hound everyone every month several times about the pending deadlines. This system does not work. I know because that was my system for nearly 20 years and all it ever consistently produced was my frustration and a lack of usable content.My frustration came from not being respected enough by the non-financial leaders or so I thought. The other leaders rarely provided their departmental numbers and reports to me on time, correct and of good quality. So, my assumption was they didn't respect me, they didn't respect my position and I was sick of it. It really was the worst part of my job. Especially when their lack of attention to their responsibilities got me in hot water. I can't sit in my office and dream up what is going to happen next month, next quarter, next year in the other department of the hotel. It does not work that way and without their financial contribution I'm playing Russian roulette. Sooner or later I am going to get it terribly wrong and the department managers will inevitably lead me to produce projections and actual results that are wrong. Even in a small hotel the business needs to be managed departmentally with budgets and forecast that leaders can follow and adjust as business levels change.So where is the shift? The shift for me came from the act of serving. The schedules and reminders and memos' and follow ups that I was doing were not serving anyone but maybe me, selfishly. When I created, and delivered my first financial leadership workshop I had a profound and life changing experience. At the end of that day I had a lineup of leaders waiting to thank me and to share their experience with me. "no one ever explained the P&L to me before", "I had no idea what you did with my numbers", "everyone should have this training before they start" these comments and many more took me completely by surprise and I knew right away that I was onto something, something profound was going on.At the time, I thought it was novel, however I didn't really understand the implications of what I had started. In a short period of time, less than 6 months later I did the same workshop in the same hotel again and I got the same result. Leaders wanting to thank me and share their experience with me. Fantastic, nice feeling but something else was going on. These same leaders were now regular getting their forecast, accruals, budgets and commentaries to me on time and with so much more accuracy and clarity. Leaders were now seeking me out to discuss their ideas on how to save money and generate more revenues. I had created a financially engaged leadership team by teaching them the business of hotels and treating them like adults. Investing my time and effort into their prosperity.All of this happened because of the shift that the workshop created. It shifted me from the dreary and negative task of pestering the other leaders to give me what I needed. It shifted me to a place where I was serving them first. Now that I have served they are more than willing to reciprocate. Why didn't I think of this before? Ego is the reason I didn't think to do this workshop and education idea before. Ego is what holds us all back from really leading by serving. I'm the director of finance and they should get me their numbers because I need them and that's my job. I laugh now when I think about it because it only took 20 years to figure it out and it was someone else's idea to begin with. Oh well, now that I know the secret I'm telling others and writing this article to boot.The realtionshift in my hotel and the realtionshift I help my clients create in their hotels is anchored by four distinct elements.The non-financial leaders now see the impact that they have. Impact and making a difference are basic human needs. Maslow's hierarchy of needs identifies that people want to know they make a difference in life and with their work. This is a powerful principle to shine a light on. When you mix this with the other principles it results in a much greater desire to do this financial work. People see they make a difference and that this work will make a difference in their lives and create more, larger and desirable results. It will literally create and lead these managers to greater prosperity in their lives. Financial leadership skills are very valuable to have and once people get them it's like riding a bicycle, we don't ever forget.They also quickly see that it's not so hard. Financial leadership and knowing your numbers is not hard. It's especially refreshing when you get a group of leaders together and expose the truth about what happens in your department with payroll or expense and then the same thing happens in the sales department and maintenance. Suddenly, the charade cannot survive any longer and leaders see it's the same thing in another department as mine. What is all the fuss about let's get on with it and do this! Before financial leadership training non-financial leaders spend an inordinate amount of time making excuses and basically hiding out. With this training, it's no longer possible to hide out.Return on investment. What would it be like to have your hotel full of leaders that knew their numbers, and managed accordingly. Do we think it might lead to higher profits? The answer is a resounding yes! We all know there are a million ways to save money in our business and we all know the opposite is true, there are a million ways to waste it. All it comes down to what kind of a team do you want to create? A team that is financially engaged or one that is not. It's really that simple. What you tend to grows. Creating a financially engaged leadership team is essentially no different than creating a great guest service culture or a team with high colleague engagement. When we focus our time and resources on financial leadership we get results. We go from having few leaders that know their numbers to having lots of leaders that know their numbers.Leadership is the fourth element. This part took me the longest to see and it has had the most profound impact. Creating a financially engaged team means your committed to the non-financial leader's success. You will be there when they have challenges and you will support them, and you will also be there when there is success. The commitment you have to help them grow is the most powerful element. Remember what it was like when someone took you under their wing and helped you. This is what's possible with financial leadership. I teach my clients to make agreements on how they will support each other on the creating and ongoing maintenance of the numbers. Leaders will literally love you for helping them with this and it's not long before they get it and your world of frustration is all but gone.To wrap up the RelationShift its important to put things in clear perspective. The hotel business is about people, guests, colleagues and leaders. We're not perfect, any of us and we never ever will be. So just like service deficiencies were going to drop the ball with the numbers. Just like colleague engagement we can operate at a high level but were not machines and we will make mistakes. However, it is entirely possible to manage the numbers with great skill and it is possible to create a financially engaged leadership team in your hotel. No superstars, no exceptions, no excuses, no victims. Just team work, support and commitment to constant improvement. We approach guest service and colleague engagement this way, no one gets to ride the train with a free pass, were all in this together. Make financial leadership the same. RelationShift.Reprinted from the Hotel Business Review with permission from www.HotelExecutive.com.
Article by David Lund

Flying-by-The-Seat-of-Your-Pants - AKA No Hospitality Financial Leadership

The Hotel Financial Coach - 5 April 2017
We seemingly have no way of knowing what's really going to happen financially in our business. We roll the dice every month. When we are in a fly-by-the-seat-of-your-pants hotel and we have a good month, things are great, but we really don't know why. For example, why were expenses so low this month? Or, perhaps payroll seems too good to be true. When we have a bad month, the sins are obvious: missed invoices from prior periods; over forecast in payroll and revenues below forecast. Didn't anyone see this coming? Well, actually, no. No one saw this coming because we don't have a financial communication process to ensure we are on top of the business.When we are in a fly-by-the-seat-of-your-pants hotel and we have a bad result the GM points fingers at the controller. The controller blames the department heads who didn't submit their forecast on time. The department heads blame the controller because he/she created the forecast anyway! You see, it just goes around and around. No accountability, no ownership, lousy results and no financial leadership!This is a dangerous and irresponsible practice that almost always leads to financial failure at some point. It is common practice in our industry and one that has led to many financial meltdowns. For some, the argument would be that the finance department is responsible of managing the numbers. That might sound like the right idea to the lay man but in practice it is short sighted. It rarely works because the finance department has no real way of knowing what is going on in the various and numerous departments within the hotel. The fact is the accounting departments' job is to record what happened, capture the data in the month for the month, report on the results and ensure the assets and liabilities are properly recorded and safeguarded. It is not to know what each area in the hotel will do next month, next quarter, next year. If we want that kind of forward looking intelligence in our hotel we need to create a system to generate it. What can we do to create this system?If we want to have a system in our hotel that allows us to manage the financial picture properly we need to give our managers and leaders the responsibility for their results which means they need to create their budgets and forecasts. They need to know what is in the middle of their statements. Budgets and forecasts must be zero based and each area leader needs to own them. There is no other way to create this. If we try and manufacture numbers and give them to our leaders to deliver on, we are going to fail. Your department leaders and managers want to be fully and completely responsible for their departments' finances. And what they need to accomplish this, is training, support and your guiding hand.So, there you have it. Stop flying-by-the-seat-of-your-pants and get your financial leadership on!Call or write today and arrange for a complimentary discussion on how you can create a financially engaged leadership team in your hotel.
Article by David Lund

Hospitality Financial Leadership - How can we create it every day in our hotel?

The Hotel Financial Coach - 28 March 2017
I think leadership is about two things that are continuously and endlessly evolving: communication and the development of people including you.Financial leadership is also about the same two processes.If you're the leader of a nation, an army or a company, you need people to understand you and you need to understand them. Your constituents must be able to hear your message clearly and your message needs to resonate with them to allow them to follow you and do great things. Being compassionate, listening to the needs of others and making challenging decisions that move people and situations forward, allows people to really become who they need and want to be. This is where the communication transcends the art of effective speaking and listening into thoughts and actions that move people forward, including you, in the development of your mission, culture and company."True leadership lies in guiding others to success in ensuring that everyone is performing at their best, doing the work they are pledged to do and doing it well." --Bill OwensFinancial leadership means you're able to clearly articulate the goals and means to achieve these in your company. And, you have an effective means to gather and process the needs of others thereby allowing them to contribute their best performance. Their contribution is a direct reflection of your commitment to developing them. The way you do this is by creating an environment that has their success and development come first. The support you give allows them to develop. You cannot expect the development to happen first and your support follow. People need you to light the way."But all I really want to know.... I want you to show me the way" - Peter FramptonLogically that makes sense. People need us to show them the way. If we don't, they go their own way. We need to see this and get in front of it. However, all too often we get lost in the busyness of what we do and who we need to be as that leader. We follow a downward trajectory as a result of our lack of a work system. The key is to be more than we do. 'Being' means creating a consciousness that can see the path and guide the 'doing' down the needed path. Stepping back every day to ensure the work is done and the ship is still heading in the desired direction, the being. That's the key: have the disciplines in place to get the work done and have time to guide the journey. Continuous communication with your stakeholders allows them to develop and this happens because you create the environment.
Article by David Lund

CSMD - Conference Services Managers' Disease and Its Devastating Effects on Your Hotel's Bottom Line

The Hotel Financial Coach - 21 March 2017
The symptoms of CSMD are quite easy to spot once you know what to look for. People who have CSMD are always too busy. Too busy to attend important meetings. Too busy to make administrative deadlines. The telltale sign is, it is always their clients that need them and this important "fact" precludes them from keeping their commitments and obligations. Too busy to get their colleague reviews done. Too busy to make the payroll cut off. Too busy to attend the department head meeting. Too busy to get their departmental revenue forecast done. Too busy to do their day by day budget. Too busy to write their monthly commentary. You know the drill.Managers inflicted with CSMD have a distorted belief about the client's needs coming first, which we all know in hospitality that this is the golden rule. Behind the golden rule lies the reality. The reality is that our guest's needs come first, however, we need to organize ourselves, our team and our world so the guest's needs get looked after and we canconsistently deliver on our agreements and perform to a high standard in all our work areas. People with severe CSMD believe the very fact that they interact with the clients in real time excuses them from their other leadership responsibilities. This condition gets acerbated by their leader who allows and even encourage this excused standard. They can "get away with this" because their leader wants as little as possible to deal with those pesky guests. Normally CSMD starts when this individual is a banquet manager or captain or a similar guest facing position. CSMD is caused by a legitimate event taking place in your hotel that requires the personal attention of your CSM or like position and then this euphoria transmutes itself into everyday hotel life. CSMD is not something that happens overnight it is a progressive disease that takes hold after long periods of being busy.Behind CSMD is a mindset disorder that has been learned and in fact, it's just a habit. The habit is formed in the victim part of the brain. It starts out very innocently, usually taking root when the CSM or like position is directly servicing clients on the banquet and event floor. The junior CSM is a full-on position that services guests. Now the Conference Services Manager finds him/herself as the Conference Services Director. Why? He or she is the best at handling the grueling hours, customers and all the internal goings on that it takes to pull off a successful group in your hotel. This skill is an incredibly valuable one and it's critical for any hotel group/catering operation to have.Why is CSMD so devastating to your bottom line? The Conference Services Director in your hotel manages the second largest revenuestream in your hotel and the engine of profitability in your food and beverage department. They need to manage all the functions of the department and quite often what's missing is the business acumen. They are now not just directing the movements of groups and the utilization of the space they are also the needle point of your F&B success. Knowing what will transpire with groups means a day by day forecast, by meal period, and by group. Without this kind of detailed focus the entire banquet, food preparation and stewarding departments are just floating around and they are lost. The number of hotels that operate today without this level of information is a lot more than you can imagine. I estimate that more than 2/3 hotels do not have this day by day revenue forecast as a monthly practice. The reason for this is CSMD. Your conference services director must be capable and able to master the numbers as well as the service. Generating this meaningful forecast not only provides valuable top line information but more importantly it allows for planning and efficient use of the resources in the kitchens and the banqueting departments. The amount of resources it takes to staff and supply these areas is huge, arguably the largest portion in some hotels and without a detailed forecast that the other leaders can rely on to do their planning, you're not going to be efficient and you will not be as productive as you could be. A telltale sign of deep rooted CSMD is the number of days out your Conference Services Department gets their banquet event orders (BEO's) out. The shorter the BEO lead time window, the greater the chaos. The greater chaos brings lower labor productivity and higher cost of sales.CSMD can be treated and even cured. Your CSM must step back and look at their role and realize they can manage the numbers. They move in this direction by slowing down and taking the first step which is to prepare a day by day, group by group, meal period by meal period forecast. Try to pull it all together for next week. Then, try two weeks and then 1 month. Once you have a month down, do 12. This is the only way to master the groups that have booked, the tentative and the prospects.Without a solid daily group conference services and catering forecast, the entire operation is lost. If you run a hotel without this valuable tool there is a cure. Get your CSM some help. They really do want the chaos to end and it's only a habit. Your bottom line will thank you.Call or write today to book your complimentary discussion on how you can create a financially engaged leadership team in your hotel.
Article by David Lund

F TAR W: The secret recipe for creating financial leadership in your hotel

The Hotel Financial Coach - 14 March 2017
To get your non-financial managers to play ball with their numbers in your hotel you need a system that they can follow, a sort of road map they can use to stay on track every month. Teach them this and you will have an engaged team that buys into playing their financial part.F TAR W is a step by step process you can teach your leaders to follow. I have clients who use a white board or a scoring sheet and they display the monthly results. How? They list the leaders who have P&L responsibility down the left-hand side of the sheet and across the top they have 5 columns; Forecast, Track, Adjust, Review and Write. One client even calls it the wall of fame. They populate the sheet with X's where the corresponding leaders have completed their part of the recipe for financial leadership this month. What they find is leaders want to have a full set of check marks. Competition is healthy and so is accountability in a fun and inclusive setting."F" stands for Forecast. Did you complete and submit your forecast this month? Was the forecast used? In other words, was it in line with the business volumes relative to the budget? Did the corresponding leader complete the zero-based expenses forecast for their area of responsibility? Zero based is a list of items and amounts to spend for these items that corresponds to each general ledger account they own. The expense forecasting is a mental hurdle that is only overcome by doing the work. The first time is always the hardest. After that it gets much, much easier. Start with the latest value you have for each account, maybe it's the budget, maybe its last month's total, or the same month last year. Grab the GL details for the same account and see what you spent. Knowing your department, what will you need to spend next month? What projects or changes in business standards will drive your activities next month? Make your grocery shopping list for each GL expense account you own. Summarize these account totals and compare that to the total expense values in the budget. Is the forecasted amount reasonable given the forecasted business volumes? If the occupancy is budgeted at 75% and the latest forecast says 77% your expenses should be in line. If the latest forecast is down to say 65%, your expenses need to be reduced. What items from your grocery list can you reduce, postpone or eliminate? And remember the golden rule when it comes to budgets and forecasts, the only thing we know for sure is the number we have is wrong. You will never get it 100% right, ever. So, give it up and put down what you think you will spend relative to your budget and business volumes. Make your list. Forecasting payroll in your department depends on a fixed vs. variable formula. If you're a non-operating department the best way to forecast payroll is have a monthly schedule with rates of pay multiplied by the wage rates for each position. Consider holidays and vacation days by person/position and you have the forecasted payroll expense. Compare this to the budget and the business volumes forecasted and if your payroll is too high, who can you send on vacation? Whose hours need to be reduced? What can you do to manage the outcome? And remember you're the manager of the department and that is part of the deal. For variable payroll, you need to have a simple formula that drives the monthly schedule. Let's say you're forecasting the front desk. Both daytime shifts have 1 person as fixed and you know for every 75 arrivals and departures you need an additional 8 hours. Set up your monthly schedule with the daily occupancy, arrivals and departures for the rooms forecast and you now have the variable hours. Forecasting revenues: If your department generates revenue, then you need to forecast it day by day. I'll use the spa as an example. To forecast my revenues, I need to set up a 31-day spreadsheet and down the left I list all my services in one column, prices in the next column and each day I indicate how many of my services are purchased. Across the top I have occupancy by transient and group. I also include other information that is pertinent to my business-like members, social events, weddings, whatever drives my spa. Very quickly I can see the daily sales and the monthly total. Does it make sense based on the business volumes for the hotel? Is there a good chance I can make it? And don't forget the golden rule. You will never be right. If you run a F&B outlet you will need the same basic set up but more along the lines of meal periods, covers, average cover and rooms capture. If your forecasting banquets its day by day - group by group. What do the contracts say? How about the latest intelligence from the conference services people and the catering managers? The information you need for all your forecasting is easily within your grasp. What you need to do is own it and if pieces are missing you need to pull them together. You need to own it. That's the only way it's done. No one will do this for you."T" stands for Track. Tracking the results every day in my hotel is paramount to my departments success. Tracking the revenues every day and month to date along with tracking my spent is the way you do it. Are we on track to make our revenues? Back to the spa example from above, I need to track my treatments relative to my day by day estimates. How am I doing? This tracking is how my forecasting gets better and better. Are my expenses that I forecasted tracked, do I know how much I have spent? Do I know how much of my forecasted payroll is scheduled? Tracking back to my monthly expense list and payroll plan is the only way to know what the score is. A cautionary note here: Don't rely on accounting or some system to tell you. You need to know what you have to use and how much you have used relative to the revenues."A" stands for Adjust. The reason we zero base our expenses and payroll is we want to be able to adjust our spent as business volumes change. It's called managing. Managing what my department consumes relative to the business volumes and revenues. This is where the magic happens with our formula. If I don't keep a close eye on revenues, and don't know how much I can spend on each item and how many hours of payroll I can use, then I'm lost. I want to be able to manage my costs relative to revenues. If business levels are on target, then I know I can spend what I planned. If business levels are below forecast I know I need to do my part and spend less. From my detailed lists of payroll and expenses what do I need to adjust? Make these adjustments. No one will do this for me. I own it and I own the result for my department."R" stands for Review. I have put a reasonable amount of effort into creating the forecast for my area and I have tracked my expenses and my payroll hours. Now it's show time. All this activity will be reported in the financials. The profit and loss statement and the general ledger listing hold the results. I want to closely review these instruments to make sure that what gets reported is what happened. Knowing what I bought and how much should be reflected in the account details. I want to make sure the activity in the account and the value in the P&L mirror my information. This step can be frustrating and your partner on the financial side must be willing to take responsibility for any mispositions, old items, corporate charges etc. With this partnership, these surprises will diminish. Without your vigilant review your other work is meaningless. You own it. You want to see the results of your efforts pointing to numbers that you made happen. Work with the accounting team to ensure they get it right. Repeat this every month and you will get your accounts clean."W" stands for Write. Every hotel has some form of monthly commentary to the owners, brand or management team. Its contents disclose what happened. It tells the story the financials cannot tell by themselves. You write your part of the story. What happened in your department with your accounts? What assumptions were right and which ones were wrong and why. What was over and what was under and why. You don't regurgitate numbers you tell your story, whatever that is. Our business is not a science and you will never get it 100%, ever. So, stop craving perfection and start wrapping your arms around your piece of the pie. Then get ready, it's time to start over again.
Article by David Lund

Creating Hospitality Financial Leadership - A RelationShift

The Hotel Financial Coach - 7 March 2017
That's right, your eyes and my fingers have not failed, I wrote the word on purpose "relationshift" and I got this word from my coach, Steve Chandler. He wrote a book with Michael Bassoff called relationshift and its about fundraising and fundamentally changing the relationship between fundraisers and donners. To sum it up in one sentence, the book is about fundraisers outgiving the donners and showing the donner that they make a difference, both the donner makes a difference and their money made a difference too.Creating financial leadership in your hotel has the same fundamental relation shift at its roots. The traditional relationship in the hotel with reports and deadlines to submit forecasts, budgets and commentaries is to have the financial leader tell the non-financial department managers when reports, forecast, budgets and commentaries are due and to send out schedules and hound everyone every month several times about the pending deadlines. This system does not work. I know because that was my system for nearly 20 years and all it ever consistently produced was my frustration and a lack of usable content. My frustration came from not being respected enough by the non-financial leaders or so I thought. The other leaders rarely provided their departmental numbers and reports to me on time, correct and of good quality. So, my assumption was they didn't respect me, they didn't respect my position and I was sick of it. It really was the worst part of my job. Especially when their lack of attention to their responsibilities got me in hot water. I can't sit in my office and dream up what is going to happen next month, next quarter, next year in the other department of the hotel. It does not work that way and without their financial contribution I'm playing Russian roulette. Sooner or later I am going to get it terribly wrong and the department managers will inevitably lead me to produce projections and actual results that are wrong. Even in a small hotel the business needs to be managed departmentally with budgets and forecast that leaders can follow and adjust as business levels change.So where is the shift? The shift for me came from the act of serving. The schedules and reminders and memos' and follow ups that I was doing were not serving anyone but maybe me, selfishly. When I created, and delivered my first financial leadership workshop I had a profound and life changing experience. At the end of the day I had a lineup of leaders waiting to thank me and to share their experience with me. "no one ever explained the P&L to me before", "I had no idea what you did with my numbers", "everyone should have this training before they start" these comments and many more took me completely by surprise and I knew right away that I was onto something, something profound was going on. At the time, I thought it was novel, however I didn't really understand the implications of what I had started. In a short period of time, less than 6 months later I did the same workshop in the same hotel again and I got the same result. Leaders wanting to thank me and share their experience with me. Fantastic, nice feeling but something else was going on. These same leaders were now regular getting their forecast, accruals, budgets and commentaries to me on time and with so much more accuracy and clarity. Leaders were now seeking me out to discuss their ideas on how to save money and generate more revenues. I had created a financially engaged leadership team by teaching them the business of hotels and treating them like adults. Investing my time and effort into their prosperity.All of this happened because of the shift that the workshop created. It shifted me from the dreary and negative task of pestering the other leaders to give me what I needed. It shifted me to a place where I was serving them first. Now that I have served they are more than willing to reciprocate. Why didn't I think of this before? Ego is the reason I didn't think to do this workshop, education idea before. Ego iswhat holds us all back from really leading by serving. I'm the director of finance and they should get me their numbers because I need them and that's my job. I laugh now when I think about it because it only took 20 years to figure it out and it was someone else's idea to begin with. Oh well, now that I know the secret I'm telling others and writing this article to boot.The relationshift in my hotel and the relationshift I help my clients create in their hotels is anchored by four distinct elements.1. The non-financial leaders now see the impact that they have. Impact and making a difference are basic human needs. Maslow's hierarchy of needs identifies that people want to know they make a difference in life and with their work. This is a powerful principle to shine a light on. When you mix this with the other principles it results in a much greater desire to do this financial work. People see they make a difference and that this work will make a difference in their lives and create more, larger and desirable results. It will literally create and lead these managers to greater prosperity in their lives. Financial leadership skills are very valuable to have and once people get them it's like riding a bicycle, we don't ever forget.2. They also quickly see that it's not so hard. Financial leadership and knowing your numbers is not hard. It's especially refreshing when you get a group of leaders together and expose the truth about what happens in your department with payroll or expense and then the same thing happens in the sales department and maintenance. Suddenly, the charade cannot survive any longer and leaders see it's the same thing in another department as mine. What is all the fuss about let's get on with it and do this! Before financial leadership training non-financial leaders spend an inordinate amount of time making excuses and basically hiding out. With this training, it's no longer possible to hide out.3. Return on investment. What would it be like to have your hotel full of leaders that knew their numbers, and managed accordingly. Do we think it might lead to higher profits? The answer is a resounding yes! We all know there are a million ways to save money in our business and we all know the opposite is true, there are a million ways to waste it. All it comes down to what kind of a team do you want to create? A team that is financially engaged or one that is not. It's really that simple. What you tend to grows. Creating a financially engaged leadership team is essentially no different than creating a great guest service culture or a team with high colleague engagement. When we focus our time and resources on financial leadership we get results. We go from having few leaders that know their numbers to having lots of leaders that know their numbers.4. Leadership is the fourth element. This part took me the longest to see and it has had the most profound impact. Creating a financially engaged team means your committed to the non-financial leader's success. You will be there when they have challenges and you will support them, and you will also be there when there is success. The commitment you have to help them grow is the most powerful element. Remember what it was like when someone took you under their wing and helped you. This is what's possible with financial leadership. I teach my clients to make agreements on how they will support each other on the creating and ongoing maintenance of the numbers. Leaders will latterly love you for helping them with this and it's not long before they get it and your world of frustration is all but gone.To wrap up the RelationShift its important to put things in clear perspective. The hotel business is about people, guests, colleagues and leaders. We're not perfect any of us and we never ever will be. So justlike service deficiencies were going to drop the ball with the numbers. Just like colleague engagement we can operate at a high level but were not machines and we will make mistakes. However, it is entirely possible to manage the numbers with great skill and it is possible to create a financially engaged leadership team in your hotel. No superstars, no exceptions, no excuses, no victims. Just team work, support and commitment to constant improvement. We approach guest service and colleague engagement this way, no one gets to ride the train with a free pass, were all in this together. Relationshift.
Article by David Lund

The How To vs. The Want To - Creating Financial Leadership In Your Hotel

The Hotel Financial Coach - 2 March 2017
The business of managing the hotel finances is not terribly technical or complicated. What makes it challenging is that it's usually a very large job involving many people. In a 500-room hotel, you can easily have 20+ forecast contributors. The communication system in the hotel is the key to both smooth management and predictive financial results. This is the how to.If hotel finances are not a complicated matter, then why is it such a challenge in so many hotels? The answer lies in finding the want to.Most leaders in the hotel don't naturally want to be managing numbers. They typically didn't get into the hotel business with the idea that they would be business people with forecasts and budgets to run. They're "people people"; artists and creators. We all know the stories of how so many of us found our way to hospitality and fell in love. Most of your non-financial leaders landed in hospitality for a short stay and decided to move in. Now a few years later they find themselves in roles with responsibilities to get the numbers done and they don't like it.They don't like it for a few reasons:1) They are often responsible for numbers that are created by someone else; someone who expects that leader to own the numbers. This rarely happens. If you're cooking up the numbers in your hotel and giving them to your department managers, then stop! This is a complete waste of time as they will not take any ownership with these targets, they're yours, not theirs. Know that the other leaders are quietly thumbing their finger at you when you do this. You're placing a huge expectation on them and they don't like it one little bit.2) They don't have a good financial communication system to use when dealing with the numbers. Non-financial leaders need a strong schedule and constant communication around the numbers. It's not enough to publish daily reports and expect that the managers will read and use them. You need to have the numbers be an integral part of the daily communication system in the hotel. Not just arrivals and departures, vip's, outlet hours and groups in house at your daily meetings. You need to shine a light on yesterday's revenues, month to date revenues and the variance to forecast. Every day your leaders should know if we're on track to make our top line and divisional revenues. If not, then how will they be able to react and adjust labor and spending to compensate and effect the flow?3) They don't take the time necessary to properly manage the numbers. Your leaders will always treat the numbers as second unless you show them that the numbers are just as important as the guests and their colleagues. How do you do that? Simple - make the numbers real and treat the leaders as adults who have financial power. Invite them into the captain's lounge and show them the respect you have for their role. Be there and be supportive and helpful when things are not going well and be there to celebrate and encourage when times are good. We all know our business has ups and downs, its cyclical in nature so be the kind of leader who walks the talk and knows it's not always easy for your leaders and you have respect for their challenges.How can we create the want to?The want to do this in all of these areas is low. Let's be realistic for a moment and ask ourselves: "If they really wanted to manage their expenses and know how much they spent" they could figure it out. So how do we increase the want to? We do this by showing our leaders what is possible with good financial communication by investing in financial leadership in our hotel. Leaders realize very quickly that it's not so complicated, and mastering the numbers is 100% possible. Your leaders really want to be responsible for their numbers. I am going to tell you why they want to master their numbers, but first, a little story to reinforce the how to vs. want to distinction.A couple of years ago, our daughter moved in with Johanne and I while we were living in San Francisco. She had finished university and had come to start her career and was staying with us until she got on her feet. One thing developed that we were not anticipating. She was a messy housekeeper and her room was a disaster. I asked her several times to clean it up and somehow this just wasn't working. So in this situation, it would never dawn on me to send her on a course to learn how to clean her room or by her the latest book on how to clean your room! She knows how to clean her room! So, what's missing? Answer - she doesn't want to clean her room. Period full stop. Doesn't want to. If I am going to have any impact on this situation I need to operate in the realm of increasing the want to. Once someone, anyone has an increase of "the want to, the how to is everywhere".Increasing the want to is always the answer we want to be looking for. What's in it for them? What will be better in their lives that will make them motivated to do the task at hand? With financial leadership in your hotel, there are lots of areas you can cultivate in the want to.Financial leadership skills are extremely valuable tools for your non-financial leaders to have. In today's competitive world it's not enough just to be great with the guests and colleagues, leaders need these financial skills to advance. All your leaders want to move ahead, they all want to be executives and lead. When you present these as opportunities, your leaders will happily step up. We also must remember that the only place your leaders can get these skills is from you. They need you to create this environment, the environment that nurtures these skills. Your leaders see more dollars in their pockets and rightly so, with these skills they are much more valuable.Your leaders all want to have more impact. Once you show your team what happens with their number and how they directly affect the business and that all stakeholders are directly impacted by their efforts they are going to naturally want to get on board. Maslow's hierarchy of needs shines a light on people wanting respect for their work and to have a meaningful purpose. When framed properly this is incredibly powerful. Self-esteem and self-actualization are direct by-products of having financial leadership skills and responsibilities. This comes with a warning label. Make the responsibilities a positive attribute and not one that is negative. Management by embarrassment will backfire big time, every time. The financial leadership in your hotel needs to be always be packaged with love and never fear. If we put fear and money in the same boat, we are literally sunk.When you train and invest in financial leadership you slow things down with the financial piece and the byproduct of this is that your managers will see it's not complicated. Getting your leaders in the same room to study the P&L and how things come together financially in all the different department is magic. The curtain falls and your team will stop believing it's a difficult subject because they all see this together. When a chef explains his labor and sales managers talk about their expenses the whole room now has a new window into the story and the mystery evaporates before their eyes. How many of you have regular or even irregular classes on learning and understanding the financials? By teaching our leaders we show them the real story around the numbers and this cannot be accomplished without slowing down and taking the time to learn. Just like service training or engagement. We need to invest in what we want to grow. Regular ongoing creative training around the finances drives the want to.The last part of the want to is my favorite. Why would I want to have a financially engaged team in my hotel? Don't forget to check in on your want to as well as your leaders. I want to have a financially engaged team because I'm committed to having my team be as successful as possible. I am personally committed to my leader's growth and their individual prosperity. Wikipedia, "Prosperity is the state of flourishing, thriving, good fortune or successful social status. Prosperity often encompasses wealth but also includes other factors which can be independent of wealth to varying degrees, such as happiness and health." When I have this kind of commitment to my team I am making a real difference in their lives and this is priceless. BTW - they will love you for being the one that leads the way. The one that gave them the biggest gift, the learning.
Article by David Lund

The Old 80/20 Rule - OTA's - And How a Corporate Sales Manager Can Save Your Hotel 100K

The Hotel Financial Coach - 20 February 2017
I had a wonderful discussion with a hotel sales manager last week about a new hotel reservation platform that does not include any stops at an on-line travel agent, OTA. The sales manager explained to me that her mid-sized hotel did a couple of million dollars in corporate IT sales and that represented just over 12,000 room nights. She went on to explain that the room nights were generated by close to 100 corporate contracted companies. These companies ranged in volume from a dozen room nights per year to the top of the list where a handful of companies were in the 1000 room nights per year category.The 80/20 rule is also known as the Pareto principle. Pareto wrote a paper in university in the late 1800's Switzerland. In his paper, he stated that for many events and happenings that 80% of the effects came from 20% of the causes. He had studies the ownership of land in Italy and found that 20% of the people owned 80% of the property. He also studied the peapods in his garden and determined that 80% of his peas came from 20% of the pods. So, what does this have to do with OTA's and hotels you might ask?On further reflection in the hotel where she worked 80% of the 2 million dollars in sales actually, comes from 9 companies. The other 90 companies combine to produce less than 500k in sales almost exactly 20%. When we look closer at these 9 companies we can see the revenue they produce is somewhere just north of 1.5 million dollars and almost 10,000 room nights. The other aspect that we can readily see is the cost of obtaining this business, what we would traditionally call the distribution cost or better still on-line travel agency commissions. In the corporate IT world, the individual travelers typically book their accommodations and better still its usually the corporate executives staff that book the room. They book it through some form of an OTA and the loaded commission costs are in the 20% range. Using the 1.5million in the top 9 accounts this translates into 300k in commissions that the hotel is paying to get this business.Her idea was to approach each top corporate customer, all 9 of them, and offer a better deal on their room price in exchange for using a new reservation platform that connects the hotel and the corporate travel planner directly. No middle man and no commissions. This allows the hotel to offer the customer a special rate that's not published and not under the rate parity agreement that applies to hotels and OTA's. The customer saves on every single room they purchase and the hotel saves commission on every single room night. Win Win. Both the hotel and the corporate clients have just increased their profitability.Back to the 80/20 scenario. In order to save the 100k the hotel only needs to talk to 9 clients. The clients, in turn, need to re-educate their travelers and typically this is very easy to do as they are used to following the corporate travel manager's directives. Using the basic commission of $30 per reservation her plan is to pass along $10 per room to the hotel and in turn, the hotel's profitability increased by $20 and this means the goal is to pass 5000 corporate room nights through the peer to peer app.This translates directly to improve the hotel's profit by 100k. Translate that into owner asset value and were talking about more than a million dollars. That's how a corporate sales manager could save your hotel a cool 100k this year! www.rfpmaker.com
Article by David Lund

Hospitality Financial Leadership Recipe - Owners, Not Victims Please

The Hotel Financial Coach - 15 February 2017
Being a financial leader means you own the result. There is no room for being a victim or victim thinking when it comes to leading the financial piece. The challenges demand the type of ownership that takes each situation and finds the opportunity in it."A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty." Winston ChurchillWinning at the hospitality financial leadership game is something that requires the correct perspective. To desire perfection in this realm is not wise. To look for and nurture constant improvement and individual effort is the telltale sign of progress. We need to ensure we have a constituent in every area of our business that takes it upon themselves to own the result. They take it upon themselves to own the result because that's the culture. In a business that relies on multiple levels of communication to produce information that is used to build the entire budget and forecast product. It's like simultaneously writing a song using a team of players strewn all over the enterprise. What happens over here changes the way things sound over there and this collaboration only works when the team is patient, attune and fully participating. It's quite easy to play the victim and not have the timing and missing the opportunity to take the shot. The team effort requires dedication and a committed conductor to keep watch and ensure each person in the ensemble is playing their part.You will hear the victim's language loud and clear. The victim will tell you they are too busy, they didn't get the time, they are short staffed, they got slammed, they're swamped, they are underwater, it's insane, there is too much going on! No matter how they characterize it, they make it sound like some biblical force that has a mission to hold them out of action, to render them helpless. Victim thinking has them stuck believing the power lies outside of them to take or make the action necessary to get the result. An apparent self-imposed need to get it right stops the victim and precludes them from playing.You can't say it any better than David Earle has it, "A victim evokes sympathy, right? Victims are not responsible, right? Victims have the moral high ground... someone else is causing the misery, right? Victims can easily justify why they are right. Victims allow themselves to be stuck in the status quo and they excel at seeing the faults in others, ignoring their own responsibility. They love to take others' inventory of faults and are excellent at blaming. Victims become hypersensitive to real and perceived injustice, where any slight becomes a reason to reject. Victimization is the toxic wind blowing through enterprises, fanning the fires of dysfunction."The numbers have a special victim code. The persons who possess the special number victim code have signed onto the club that reduces their members power by showing them that the real power in their ecosystem belongs to someone else. The person who holds the special number code has treated the victims like always and short changed them. Therefore, its ok for the victim to miss their turn and not take their own shot. Someone must step in and take their shot for them and then you hear the victim recite something like this, "see what I mean, they just keep shortchanging me and giving me unrealistic targets and numbers that don't make any sense, see I told you it always works this way, tie one hand behind my back and they still expect me to do it". The victim abdicates their position by missing the opportunity because the whole system is rigged to make them fail. What the victim won't see is the opportunity they have to take a shot, miss and shoot again. Missing your shot is OK, not taking the shot is the problem. We all miss shots. "I've missed more than 9000 shots in my career. I've lost almost 300 games. 26 times, I've been trusted to take the game winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed." -- Michael JordanBeing a financial leadership owner invokes a commitment to the organization and the process. It's says I'll be around and playing even if I miss the game winning shot. I'll find a way to always show up and play full out and I know that means sometimes that I'm going to miss my numbers and screw it up. But I know the team has my back because that's the code I read. It's a choice based on how I think and how I see my world. The ownership code says I can do this and I'm stepping up and showing up as me, of free will to claim my spot. I own my spot and the ongoing cost to keep my space is my commitment to play full out. When others miss their shot, I'll make mine and it will help carry the day. When I miss my shot, the team has my back and we all help each other by staying in the game together. By staying in the game I know I'm owning my result, no one is going to take or make my shot.

A Light in the Tunnel - In the On-Line Travel Agency Hold

The Hotel Financial Coach - 17 January 2017
More Creative Disruption?The On-Line Travel agents, The Expedia's of the world started it all for the hotel business and served as disruption model for many other ideas and innovations. Has the time come for their disruption? Like a restaurant that pops up next to a hotel, the OTA's have been sucking the life blood from hotels bottom lines. It was and is due to the lack of a meaningful platform or a response that created the need in the first place. Brands and hotels were asleep to technology and they welcomed the on-line phenomena until it became omni present and greedy. It's been 20 years since Expedia launched its first on-line travel site, completely revolutionizing the travel industry. But many would argue it's time to disrupt their game.You don't have to go far to find a disgruntled hotel manager or owner when it comes to the ever-rising costs of the OTA's. It's an all-out war to remove this cancer from the landscape. But how? To-date there has been no platform that has any real potential to impact the strangle hold that the OTA's have on the hotels. Brands and OTA's have messed around with rate parity and this has just frustrated everyone even more. Brands try to leverage loyalty and offer value adds that the OTA can't but that has had little impact on the soaring OTA usage and costs. So, what can a hotel do to reduce these OTA costs and not lose share?Well, a small light in the tunnel has appeared. A Danish company has developed a peer to peer cloud-based application that allows hotels to have travel agents and corporate travel managers book their rooms without any fees. Both the hotel and the agents purchase a modest subscription and that's it, no percentage of spend. In a typical hotel picture, a 12k US spend in the traditional OTA arena would produce enough commissions to pay the annual subscription fee and the meter stops there. Every reservation and all spend from that point on is free of commission or any other fees. The hotel only needs one subscription for all traffic regardless of segmentation or the orientation of the business. On the travel agent and corporate travel managers side, they currently use the OTA's to book rooms for their clients and one study suggests an average reservation equals 38 different websites are used to research and ultimately book what's needed for their clients. Most of the visits are needed to compare rates, policies, amenities, and services. With the "Request for Proposal" RFP platform all the travel planners and agents need to do is drop a pin on the area they are looking to find accommodations in, put in a few modifiers and the hotels respond with pricing that is not commissionable and this pricing is not in the public domain and not subject to rate parity. The RFP system has over 350,000 hotels in its database for travel planners and agents to choose from.The system grew out of an apartment exchange site that had some popularity, it was called Shevana. The original idea was to make the travel planner's life easier. There really is not a convenient, modern and cost effective platform for their use. Not until now.The technology is a breakthrough for hotels and travel planners. It's a breakthrough because the current requirements to book this type of accommodation must pass through a beleaguered landscape of outdated and expensive technology. This new platform resets the game so to speak and now the customer and the hotel can communicate seamlessly with one another. Like in the old days when the travel agent or the travel planners would call the hotel reservations department directly and get a greatrate and service for their clients. Well the old way is back with a new set of tools and maybe it's time has come. Necessity really is the mother of invention. http://www.rfpmaker.com/

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