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Expectations vs. Agreements

The Hotel Financial Coach ·19 November 2018
In life, few things make us less productive and more distant than other people's expectations of us. Expectations are everywhere, at work and at home. People detest others expectations.Uncommunicated expectations were not productive, especially when real work and strong relationships were required. Yet uncommunicated expectations were cast everywhere and they were weak.If I had a complaint in my world, it quickly became an expectation that someone else needed to fix. I tended to fixate over the injustice and in doing so I created my expectations. What I saw was that this was completely ineffective for getting things to change. Complaints were very easy to ignore and diminish; however, requests were not easy to ignore. Once we made a request we were 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 was having a very hard time getting other managers to prepare detailed monthly forecasts and get these to me by the 30th of the month. I sent a schedule and reminders. I spoke at the department head meetings about the deadline, but I still didn't get a high success rate on submissions. It was always a struggle to get others to do what I expected. Without the forecast, I was left with two very unattractive options: do it myself or go without it. Both options meant I was shortchanged because others were not living up to my expectations.Now, I had two alternatives: 1) Complain about it, which I had done for years without results, or 2) Make another request. This was the pivot point.If I was willing to admit that my current status was due to my expectations, and I could bring myself to ask the other party for agreement, the conversation might go something like this."Peter, will you help me? I want to include your numbers, not mine, as part of the detailed forecast. Will you complete your part and get it to me by noon on the 30th?"Now it might not be easy for Peter to say, "Sure, no problem."But now the exact expectation was known because it was what was asked for. Or the request might get reviewed in a different light like, "I could, but that means I'm going to have to rearrange my week because my assistant is on holiday and our second office computer is dead."This was what I wanted to hear. This was the foundation of an agreement as now both parties asked for something. It was no longer the case of my having a single expectation. Now there were multiple balls in the air; some were mine and some belonged to other people.Turn the unmet expectation into a request and the request into an agreement like this: "OK, so I will send the systems person to your office today to switch out the second computer, but I'm not sure what I can do to help you rearrange the rest of the week."To which Peter replied, "No worries, with the computer replaced I can manage. I will gladly get you my forecast by the 30th."Let's break it down and figure out what happened in this example:I changed my language from a tired, self-centered expectation into a request.Peter asked for my help with meeting his department's needs and then, in return, he will complete my request.I committed to help him with the computer issue.He, in turn, was positive and in agreement in his response to meet my request.This communication exchange was the foundation of an agreement. It passed the test of an agreement because it had four parts, two for me and two for Peter. The test was "give and get." In this example, Peter got his computer fixed and gave me the information on time. I gave the resources to fix the computer and I got the report on time.Before the request and the agreement, it was just me asking. I wasn't giving anything and what it boiled down to was I had an expectation of Peter, but no agreement. That was a weak negotiating position to accomplish any task.Now, some people are reading this and thinking, "I'm the boss and people need to do as I say" or "I don't have time to make agreements with everyone". These issues are partly true. But if expectations aren't getting met, there is nothing to lose in trying this technique.A commitment to drop expectations and start making agreements instead worked best. Yes, it took time to make agreements and find out how to help other people, but it was well worth the investment.

What's Missing with Labor Planning Tools?

The Hotel Financial Coach ·12 November 2018
I'm looking for an end to end solution to labor planning and I have yet to see one that brings it all home.Let me explain what I mean. In a hotel that budgets and forecasts labor hours, productivity, and business volumes and uses a labor planning tool to generate schedules, we need an end to end tool or set of tools that ties everything to do with labor together. Budgets, Forecasts, Schedules and Variance Analysis all need to be geared to the same measure.So now that you're confused, let me paint you a picture. For me to paint this for you it's imperative that you use productivity measurements in all your financial reporting - hours per room occupied and hours per customer served in F&B. If you don't use these in your budgets, forecasts and actual financial reporting - you should. If you don't, I'm sorry to say that the rest of this article will probably be of no use to you. If you use labor as a percentage of revenue or as a cost per room occupied that's OK, but not nearly as effective as hours per.Here is the scenario. You're in the last throes of budget 2019. You have all your numbers together and you are proud to say that the rooms and F&B labor productivity budgeted next year are better than the 2018 re-forecast. You made sure of it and your year-over-year statements prove it. Well done. You have taken the approach that you will run your hotel more efficiently next year than this year. After all that's what you get paid to do, right? Who would put forward a budget that says to the owners, "By the way my plan is to have the hotel operate less effectively next year wasting resources and consuming more costs." You're just not going to be the one who makes that kind of fatal move.Now let's imagine it's January and the budget is approved. You need to move into the new year with the business plan for 2019 in hand. With labor, you turn the ideas that are in your budget into reality with your Operation Managers. They need to put into action the ideas you conceived in the budget to achieve the increased efficiencies. This is where the rubber meets the road. You have a quick look at the month of January and you see the budgeted productivity for rooms is 1.255 hours per room occupied. Last January the productivity was 1.291. You have some work to do.Let's move from 10,000 feet down to the ground. In your hotel, you have a labor planning tool. Your departments use it to generate their schedules and they measure their schedule to the labor standards. Here is where it all falls apart. This is the missing piece and the missing link to your budget. The labor standards are essential to produce the schedules, but they must also produce an overall productivity by the same key areas we track on the financials. The labor planning tool must be programmed to spit out the scheduled productivity and analyze the actual vs. the scheduled and the budget/forecast. End to end we must always be using productivity. I have said this before and I'll say it again, "We need to be fascinated with productivity!" If we were making cars it would be hours per car; in the hotel business, we're focused on rooms, F&B, and non-operating department productivity.I am sure someone out there has put this all together in their financial modeling system and it also seamlessly feeds their labor planning tool. I would love to see your system in action. If you're not 100% sure about what I am referencing, that's OK. Call me and I can explain further.In my past life, I worked with a great financial modeling tool and a "so-so" labor planning tool. The stewards of the labor planning tool could not, or would not, see the value of having the productivity as another measure in their system. They were firmly stuck on the labor productivity standard, which ultimately meant nothing because the standard changed frequently. All that was missing was a simple additional measure which would have divided the hours worked by the anticipated and actual volume of business and voila, it would have been magic! What we ended up doing to work around this was to dump the data from the labor tool into Microsoft Excel, analyze it and see if the schedules were producing equal or better labor productivity by area, department, and division. We messed around a lot with this and very often the labor standards were producing less. This is ultimately where the labor tool sucked wind.Build productivity into each part of your reporting, planning and scheduling processes. Always be measuring productivity. Always challenge your department managers to find ways to improve productivity. Show them how the simple measurement works and have them find ways to make it better. The hotel business is a game of inches. Every day we sell hundreds of rooms and we service hundreds if not thousands of F&B customers. To do this we expend thousands of hours of labor. It all boils down to the volume of business and the hours worked and how can we get just a little better tomorrow.This article is dedicated to Dan Araujo, who analyzed all that data not so long ago. He was taken from us way to early!
Article by David Lund

Understanding Flow-Thru

The Hotel Financial Coach · 6 November 2018
A good analogy to grasp the concept of flow thru is to compare it to your paycheck. Imagining I give you a $1,000 a week raise, the question then is how much will end up as your pay vs. how much got eaten up by higher taxes and other deductions?The same goes for additional revenues in your business. If revenues are $50,000 higher this month than the same month last year, how much of the $50,000 will make it through to the profit line? How much will flow?"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 the key driver is the basis for understanding your hotel's 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 room 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 (food and beverage) 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 straightforward:Step one - Subtract the revenues from two different periods.Step two - Subtract the profit from the same two periods.Step three - Divide the difference in revenues by the difference in the profit.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 is more of an apples-to-apples comparison. When we compare flow thru to the budget we are comparing a real result to a projection.A word of caution, when comparing the flow from one period to another it is 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 citywide. 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 do not act, we run the risk of losing 100 percent or even more of the lost revenue in the form of decreased profits.Rooms FlowThe rooms department is the engine in 99 percent 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 is 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 chargeback. Other than these two cursory items no additional 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 percent of any additional revenue flow in rooms profit and 85 percent in GOP that result from the 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 six points in occupancy over the same month last year. This resulted in an additional 300 rooms sold and an additional $45,000 in room revenue. The question is how much should flow? With occupancy, it is 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 is an average of 10 more per day. I do not 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 third 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 percent of any additional room revenues from increased occupancy as increased rooms profit and 80 percent 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 from 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 increases 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 of our outlets vs. banquets. When we look at the average customer price for food we also need to understand the contribution margin. It is 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 is 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 the 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 flowSame 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, it is non-operating department flow. I cannot 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 are missing a powerful tool.Creating the flow thru measurements in your financials is relatively straightforward. 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.
Article by David Lund

Why OTA's are Uber Successful

The Hotel Financial Coach · 6 November 2018
Have you ever wondered why we all hear so much complaining and downright all-around annoyance being expressed from hotels about the on-line travel agents? You would naturally think that because there is so much protest being made that hotels would simply not use the service and opt for something else? Right? Well - not so fast as hotels are reportedly using OTA's more than ever.There are three key reasons why OTA's are so successful and, in turn, why hotels and customers all flock to use them.One. Hotels, brands and franchisers all benefit from using OTA's and they do so without making a single dollar of investment to create this ever-expanding marketplace that the world loves to use to book travel. The OTA's have created an incredibly powerful platform to feature hotels including photos, comments and descriptions. What other industry has such a parallel set of conditions? Imagine, if you will, for a moment that an industry popped up and aligned itself with the fashion world. This imaginary industry existed for one purpose only and that is to advertise and allow the clothing manufacturers, retailers and brands to list and advertise their products for free; the trade-off was each retailer had to pay a commission for sales through this medium. The only time the fashion world pays a commission is when there is a sale. The fashion world gets to decide what clothing products need additional exposure. I am willing to bet that the fashion world would jump at the opportunity given someone else is willing to pony up the development and ongoing operational cost.Two. Variety is the spice of life. Right? We all love choices and the OTA's have put this love of selection into the stratosphere. I just did a search for accommodations for an upcoming long weekend in Chicago and guess what? There were only 1108 options. How is this possible? Everyone hates the OTA's...I don't think so. With this kind of selection why would anyone what to shop anyplace else? Surely if you know your favorite hotel in the windy city and you're not looking for a deal then just pick up the phone and call and make your reservation. But for the rest of us, the one-and-done traveling public, we're interested in "getting a deal" and "finding the hot spot." The OTA's provide a great view to location, amenities and the sheer variety of selection that ensures a lineup of products to satisfy a longer line of travelers. I remember working in San Francisco almost 10 years ago and our reservations manager telling us at the department head meeting that Tom Hanks had just booked his room in our fancy hotel using Expedia! I guess even Tom appreciates a deal and I say, "Good for him." Third and perhaps the most compelling aspect of the OTA's popularity. People love getting a deal or the idea that they received a good deal especially after doing their homework. When was the last time you were at a party or social gathering and someone told you about the deal they got on a vacation, hotel or airline ticket? People are always bragging and why not, they did the work and found what they believe is a deal. I totally get this and, as someone who heads straight for the clearance rack at Barney's, I know all too well how much getting a deal means to me. In the travel world people are naturally suspicious of the big players and the very thought of paying the rack rate makes most customers run for their laptop and the next thing you know they are searching out their version of a bargain. Another powerful attribute the on-line travel agents bring the consumer is a wider choice - an ever-expanding set of possibilities. Using my recent search in Chicago in a very short moment or two of looking at hotels, I was fascinated to see the options from different downtown neighborhoods to the adjacent suburbs and many offered locations and amenities combined with favorable pricing that was very attractive.Without the OTA visit I would be left without an informative guide to help my search. We all love choices and when we are presented with options we were not previously aware of we often see the value proposition in a unique and powerful way - our way - because we discovered it. When was the last time someone just had to share their secret travel tip with you? Travel is one of those experiential things that humans love to talk about and when we find something we perceive as exceptional we love to share it.Hotels can, and many do, find a win/win with their OTA's. Here are some examples to think about:Hotels can get absolutely free advertising on the OTA's site. Add some great pictures and descriptions of your services and property and you have a wonderful marketing piece - free!They can take advantage of free revenue management tools that OTAs offer that help hotels drive more revenue, including recommendations for when they should price lower to take more business and price higher when they are able to.They can also work with market managers who are experts in the industry and trends for their specific local markets.In my opinion, hotels need to get onboard with their OTA partners in a more wholesome and collaborative way. The hotel's success is in many respects a product of a mix of business; treating the travel agents with anything other than the respect that a partner deserves is shortsighted.

Trading Places

The Hotel Financial Coach ·30 October 2018
Circa 2009. Late September. I'm the regional controller for five hotels. Sitting at my desk minding my own business, doing my own work when the phone rings.It's an old friend, one-time assistant, and now the regional controller based at a hotel in another city. He explained the desire to move back to where I was but was not having much luck finding a job. His homesick wife really wanted their children educated at home. We chatted for a few moments and caught up on different topics.Then he said, "Hey, David, how about we trade jobs?""Can we do that?" I asked.Then I thought, "Wow, it's 28 years after the high school summer I planned to spend in California and didn't get to go. Now I might get the chance.""Well, there's only one way to find out," he said.We both got to work to make the job trade possible. First, I got my work visa to go from Canada to the United States. The next positive step was his application for my job was approved. It now depended on me passing mustard with the owners of the hotel in the states.A date was set for me to attend and participate in the annual budget review meeting scheduled in early November. I was briefed on the hotel's operations and finances by my friend. As the deal hinged on making a good impression on the hotel's asset managers, it was prudent to discuss how these managers operated. A total of three asset managers were scheduled for the meeting. There were two companies that owned this hotel. Convincing one of the companies was an expected breeze. The second company had two ladies managing the asset. They had a reputation for being difficult to work with.Finally, the big day arrived. I flew to the U.S. and my friend picked me up at the airport. We enjoyed a nice dinner while discussing the two ladies and the possible objections, questions and overall hot buttons to avoid.The next morning after breakfast I headed back to the room before the meeting. In the elevator I pushed the button for my floor, but as the door began to close I saw someone entering the elevator foyer. Out of habit I selected and held the door open button.I casually asked the lady, "Going up?"She smiled and replied, "Yes, thank you. What a gentleman."What a great way to start my day. I asked her, "Where is home for you?""Los Angeles."As the doors opened at my floor I said, "Have a great day.""You too," I hear as the doors closed again.Thirty minutes later in the board room, with the Hotel's Executive Team, in walks the three asset managers. Introductions were made.Who do you think the lead asset manager was? She was the one with all the clout I found out later. Yes, it was the lady I held the elevator door for. A good decision perhaps.We reviewed the budget. The hotel was not doing well as a result of some issues from the last few years and the economy. The review was painful. We were getting cut to pieces, as was the budget. "Cut this . . . You didn't need that . . . Why so much expense here . . . This should be higher . . . That was too low."The last thing on the day's agenda was discussing my appointment as hotel controller. The three asset managers, hotel's executive team and I listened as the general manager went on about all the experience and expertise I possessed. He finished his pitch. There was silence for what seemed like an eternity.Then the lead asset manager said, "I can't believe you can't find a controller in this city! Why the heck do we have to move him from Canada? With this economy do you have any idea what you're doing with our money?"I couldn't breathe, like someone sucked all the oxygen out of the room.The general manager was a talented negotiator. To defuse the discomfort, he smiled and said, "It's been a long day for us all. I suggest my team leaves the four of us to finish this discussion."Fine!" she almost stomped her foot, somewhat perturbed.Then I spoke. I didn't plan this, it just came out, like opening a champagne bottle, pop: "Please allow me. If you bring in a local person without the brand experience, he or she will be at a great disadvantage compared to me. I see from our day together how I can save you 10 times what it will cost you to move me here. Knowing how to navigate inside this hotel brand is invaluable."With that, the general manager excused the team for a much-needed drink. The day culminated with a reception and dinner in the hotel's largest suite. It felt like a celebration after a boxing match where the opponents took time to kiss and make up. For the next 30 minutes the verdict hung in the balance. My friend was sure the deal was dead. So was I. But the tiniest bit of hope lingered. The hope wasn't based on anything tangible other than our need and want for this deal to happen.The general manager arrived at the reception with a somber look. I was sure I was heading home tomorrow empty handed. Instead I heard, "Welcome aboard, Mr. Lund."San Francisco, here we come!
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RevPAR And RevPAR Index Are Different And I'm Going To Explain Them Both In This Article

The Hotel Financial Coach ·16 October 2018
Let's start with RevPARIt is the cornerstone of the hotel world and rightfully so. It is the product of occupancy and rate smashed together. The acronym stands for "revenue per available room." In a simple example: If my hotel was 60 percent occupied last night and my average rate was $100, my RevPAR would be $60 (100 x .6). The other way to calculate this would be to take the total rooms in my hotel--in this example it is 500--and divide that by the total room revenue last night. At 60 percent that means I had 300 rooms occupied and I will multiply that by $100 to get my room revenue (300 x 100 = $30,000). To calculate the RevPAR, I divide the room revenue by the rooms available. ($30,000/500 = $60). I can calculate the RevPAR for any period--week, month or year--the same way.One last thing I will say about calculating RevPAR is that it is a relatively new thing. I do not want to draw too much attention to my age here but when I went to hotel school RevPAR was not on the menu. It was only occupancy and average room rate.RevPAR index is a concept that was developed about 30 years ago as best I can tell. I remember being introduced to it at a budget review meeting and I thought it was pretty cool. In those days we would do a call around to find out what the other hotels in our city were doing each month for occupancy and rate. I am pretty sure some of the hotels fabricated their results and I think a few others thought the same.Somewhere around the mid 1990s a company started a business based on capturing and sharing the occupancy, rate and RevPAR for hotels. They sold a subscription and the hotel shared their results every day on the previous day's occupancy and rate. The company now gathers this information for your hotel and your competitors and then they share the information, so you can see how well you are doing vs. your competitors.Let's now look at how we calculate RevPAR index. The reasons why we want to calculate the index are important to know.The first reason is this calculation will allow you to see how well you are executing your sales and revenue management strategies relative to your competition. Given the current product you have, how well are you selling the hotel?The second reason is the index shows you what your variance is relative to your competitors and what the gap is worth. Let's say your index is 15 percent below the set. This means that with a potential investment in your product y ou could close or beat that gap and that translates into potential dollars of profit to justify your investment.The third reason is to continually be aware of how your hotel is positioned relative to its competitors, so you can see if your rate and occupancy strategies are working. Maybe you want to lead on rate because you feel in the long run this is the best game plan for your asset, the index will tell you the answer.Choosing a competitive set of hotels can be difficult and it needs to make sense. If you are in a busy city setting, this can be easier because there is a large available selection of hotels to choose from. If you are in a resort setting, look at hotels that are similar in product and service to yours. Once you choose your set, you are not going to want to change it unless there are very good reasons to do so--perhaps a new hotel in your market place.Having a positive index, which is an index above 100 percent, is where you wan t to be. The bigger, the better.In many HMAs (hotel management agreements) having and maintaining a positive index is an important test. In some HMAs the manager is required to maintain a positive index, or they can lose the contract to manage the hotel. This can be a costly problem for the management company because losing the flag means you just lost all the fees from that hotel. You might even find yourself in a situation where you have to make up the lost profit and pay it to the owner.Above is the chart that lays out the RevPAR index calculation. Think about the index like a dessert that your mom made. She is placing that pie on the kitchen table and you want to make sure you get your fair share. The chart shows you what your slice is really worth.Looking across the top of the chart:* We start with each hotel's Room Base, the number of rooms in each hotel.* We then multiply the number of rooms by the days in the month to get Total Rooms Available.* Next, we enter the actual Rooms Occupied for the month, followed next by the percentage of occupancy for this month for each hotel.* Following those are the potential and actual share based on occupancy. This is the first point where we see the individual performance of the properties in relative terms on only occupancy to their competitors.* This produces the net capture index.* The next step is to add the monthly average rate which produces the property room revenue in the column on the far right.* Once we have the room revenue we can calculate the individual hotel RevPAR.* Once you have the RevPAR, divide it by the overall RevPAR of the sample set to produce the RevPAR index.That's a lot of math but it's really a simple set of calculations.When I was growing up it was very important to get my fair slice of the pie at mom's dinner table, how about you?

Your Department Managers Really Want to Do Their Monthly Financial Forecasts

The Hotel Financial Coach · 9 October 2018
One of the most powerful distinctions in the world is the difference between wanting to do something and knowing how to do something. There is a saying that goes like this: If you can find the 'want to', the 'how to' is everywhere. The meaning is twofold. One, it's almost always counterproductive to tell someone to do something. People hate to be told what to do. Think for moment. Ask yourself when was the last time someone told you what you needed to do and you really appreciated it. Two, as human beings we're typically very good at getting what we want. If we're clear about our desire and we're willing to commit to go after it, we usually get what we want. When we want something, our motivation is high. When we see that it's not difficult, our actions increase. When we are given support for our attempts, we're much more willing to try again. When we see that it's safe to try and we won't be criticized if we fail, we're willing to experiment. When we see the opportunity for greater prosperity, we tend to get excited. When we see the possibility of having a bigger impact in our world, we naturally want to move in that direction, if it's safe. Does any of this sound familiar? I mean, who would want to attempt something if getting it wrong or not quite right means personal judgement and embarrassment in front of one's peers? No one. And because we don't like feeling this way, we avoid the possibility all together.If you want to create the kind of environment that has your leaders and managers wanting to do their monthly financial forecasts, commentaries or budgets, then you need to work on the following:Stop using the financials as a tool to embarrass and ridicule your managers and leaders. If your practice is to call people out on their financial results at your department head meeting (or any other occasion) stop this bad habit. Your managers will never step up financially unless it's 100% safe to do so. You need to create the kind of environment where it's ok to fail. What's unacceptable in this environment is not trying. Failing to get your forecast right is a given. The only thing we know for sure about any financial projection, budget or forecast is that it's wrong, it's always wrong and it will never be right. What's unacceptable is not doing your forecast. This simple distinction is the starting point for your journey to turn things around with the financial leadership in your hotel. Don't think about sending your troops into battle without the necessary resources. We would not plan a mission without knowing what we need to make the mission a success. In any mission, we know we need supplies, training and planning. With your hotel financial planning you need to have a system that your leaders can follow and you need to train your managers on how to use that system. The great thing about hotels and the financials is that every month we get to start over again. Every month we get a chance to work the system, to practice, to improve and to get better. We can't expect to do this once or twice and get it "right," it's a continuous process. Just like service and colleague engagement, the job is never done. Your mission with the financials is a never-ending process that you get to restart each month. This is great news! Show your managers and leaders the engine room. An old boss of mine was a bit of a character. I remember once he told me to stay after our executive committee meeting for a conference call that he had scheduled with corporate. The call was the monthly succession planning call with the company president and all the VP's. In less than 30 minutes they talked about all the executive positions that were open in the company, who was ready to move into these positions and who wasn't. In mere seconds careers were made and lost. He or she is ready for a big move, not quite there yet, or they are forever a B player. I was flabbergasted. After the call he said, "You're in, you're out, on top one moment and gone the next, all because of what someone says about another." I was not surprised with what I learned from the call--this is how things were done. What I was blown away by was that he thought enough of me to share this with me. He could have given me a $20,000 raise and it would not have had anywhere near the same impact. Sharing the financials with your non-financial managers has the same impact. Especially when it's done in the right way. Your leaders want to be on the inside. Show them the engine room and watch them become engaged. Watch them want more.Preparing the forecast for a department in the hotel is not terribly difficult. Showing your leaders how the financials work and how to pull together the information you need to prepare a financial forecast is like teaching your leaders how to fish. The proverb saying applies here, "Give a person a fish and he is fed for the day, teach him how to fish and he is fed for a lifetime." Educate your managers and leaders on how the financials work. Once they see inside the P&L, explore how other departments work, and see how it all comes together, they will realize it's not so difficult. Expenses can easily be estimated using a zero base. Payroll forecasting is just an extension of preparing a schedule. Revenues are an estimate based on trends and indicators. The trick it to start. The next trick is to repeat. Your leaders will see it's not difficult. Each month equals practice. Each month it gets clearer. Each month we learn more about our business. It is the only way forward.Your leaders secretly want to be ok with their numbers. To do this they need a system, training, support, and the right environment. I ask leaders all the time, "Why didn't you do your forecast?" The reply I always get is "I really want to be comfortable with my numbers, I get the guest and colleague part, but to be a really effective leader I know that I need to get with my numbers?" Don't believe me, ask them yourself. Your leaders want to do this they just need the right environment. The only way this environment gets created is if you make it happen.My question for you is this, what's holding you back from creating this kind of environment in your hotel? You know it's what you want. You know it will make your hotel more profitable. You know your leaders will love you for giving them this financial gift. You know it will be a lot more fun. So, what's holding you back?Investing the time, energy, and resources in creating financial leadership in your hotel is not difficult to do. "How to" do it is not holding you back, "wanting to" do it is. You might want to ask yourself "Why?". When you think you have the answer put it down and just try. Make the act of doing the forecast the goal, not getting it right. Practice and make progress by getting a little better each month. Before you know it, you will have a team that swings a big bat.

Hospitality Financial Leadership: Understanding Liabilities

The Hotel Financial Coach · 2 October 2018
When I do financial leadership workshops with hotel teams we often talk about liabilities. I tell my audience that I know for a fact that each one of them have at least two liabilities. I get some puzzled and Kreskin-like looks from my audience as I tell them I can see two numbers floating magically above their heads. I tell them that I know for a fact that each student also knows the same figures, they are just not aware, yet!You see everyone knows how much vacation they have to take, and they also know how much money is owed to them in wages. They just don't see these two "things" as liabilities but they are excellent examples because they pass the three-part test that any and all liabilities must pass. More on the three parts in a moment.Liabilities are easily misunderstood if you are not thinking about them in the sense of a business. We all naturally think that my vacation pay is a good thing and it is to you. To your employers it is anything but good because they need to pay you when you are not there. It is definitely a liability to your employer.All liabilities must pass a three-part test. Once you see the three parts you are going to understand the liability mystery and the confusion will evaporate right before your very eyes.Liability Test - Part OneLiabilities need to have already occurred. That is right--they need to have already happened. Like the vacation pay we all have, it was earned yesterday, last week, last month and last year. Therefore, it already happened. Your employer has been keeping track of your earnings and at the same time they squirrel away a little extra expense for your upcoming holiday every pay period. This way they match the expense for your vacation when you earn it, not when you take it. This is a fine example of the matching principle, but more about that in another post. Each pay period you get your wages and somewhat secretly your finance department is adding a little to your holiday fund!Liability Test - Part TwoAll liabilities embody a duty or responsibility. Your wages owed to you are a great example of this part of the test. There is no question that your employer owes you wages you already earned. It is part of the social contract between you and your boss. They are on the hook to pay you.Liability Test - Part ThreeWith all liabilities there is no room for avoidance. If your boss tried to cheat you out of your vacation pay or wages earned, they would face the local labor board or some other government body that would make sure you get paid. This rarely happens but they know that their obligation to you is without question.So, to summarize: It's already happened, it's an obligation and there is no way to avoid it.Some other liabilities that you will find on any hotel balance sheetAccounts Payable - This is the outstanding list of vendors' invoices that need to be paid for goods and services the hotel has already received, expensed and the hotel must meet its obligations or else....Sales Tax Payable - This is the sales tax for rooms and food and beverage that the hotel has collected from prior sales. It is typically collected for one month then paid to the local or state/provincial government. The hotel has already collected the tax and it is obligated to remit the money. Failure to do so will land you in a pile of dung. Even being late a day can be extremely expensive. I know this from firsthand experience.Advance Deposits - This is a tricky one because we naturally think of a deposit as a good thing. Not so fast. Let's look at the three-part test. It already happened that the deposit was paid--in most cases if the client cancels in the appropriate amount of time we need to refund the deposit and have no room to avoid refunding it. Advance deposits have a special important characteristic in the sense that the deposit is a non-event for the profit and loss statement because we have not earned the income yet. We only get to book the revenue for the deposit when the guest actually comes and stays a night or has their event. Only then do we recognize the revenue.A final example is a general one. Whenever you see the word "accrued" in front of the title of a balance sheet account you can bet your paycheck that it is a liability. Accrued utilities, accrued vacations, accrued salaries, accrued bonus, accrued workers compensation. These are all liabilities because they clearly pass the three-way test.They already happened, there is a duty or responsibility and there is no wiggle room.

Hospitality Financial Leadership Unplugging the Brand and Cranking Up the OTA's - Hotel Overachiever

The Hotel Financial Coach ·25 September 2018
It's nothing new to hear about hotels or owners who have said "good bye" to brands and have gone on their own as an independent hotel. This is the story of one such hotel and a look at their results. I am also going to highlight the typical costs associated with being affiliated with a brand and what some say is the biggest reason to get out while you can.The whole idea was the new owners. They bought the hotel with the express purpose of taking down the flag and making the hotel an independent. The market was strong and the hotel with its brand was doing quite well - a positive revpar index with its historical comp set and a GOP to hold one's head relatively high. For the new owners this was not good enough and like most new owners they were interested in only two things: repositioning the hotel and flipping it for a big profit.Usually when a hotel owner repositions the hotel they do it through a PIP, a Profit Improvement Plan. Typically this involves a room renovation and a freshen up of the lobby and meeting space. One owner's representative referred to this process as "putting lipstick on the pig." It's an effective way to increase the revenues through higher occupancy and rates because your product is for a season or two the new kid on the block, well kind of. The increased occupancy and rate translate into more revenues and usually more profits. That translates directly into a higher sales price for the asset, most of the time.Here is a simple example of how a typical PIP works. A 500-room hotel gets a 20-million-dollar face lift including soft goods replacement (bedroom carpet, drapes, wall coverings, bed spread, lamp shades) and a select case goods replacement (hard furniture). In this case the low boy was introduced, the armoire was removed, new TV's and communications hub were added, new coffee makers, a new vanity for the bathroom, new sink fixtures and the removal of the tub/shower in favor of the now very common extra large shower. (Who a takes a bath in a hotel room?). A pretty basic job for the rooms but they look fresh and new and the sales folks love this because they can sell the dream again. In addition to the work in the rooms the hotel updated a few ADA issues: upgrades to the elevator cabs, replacement of furniture and carpet in the lobby, and the final touch of magic is new carpets and drapes in the 25,000 sq. feet of meeting space. Lipstick on the pig.So, we do the math and the owner has spent $40K per room to reinvigorate the hotel within its market and the following two years we see the occupancy go up 3 points to 78% and the rate goes up $20. With the refreshed banquet space, the hotel's group business and social catering also get a boost and the banquet revenues increase by $700K.Considering both scenarios, the hotel has increased its revenues by 5 million dollars and in this case 3.5 million flows to the "bottom line" to the owner's cash flow number - EBITDA. The hotel is now worth decidedly more. Using a cap rate of 6.5 the hotel can easily fetch an additional 50 million dollars in its selling price and the owners turn a nifty 30-million-dollar profit plus what they can pull out in operating profit. That's how it's done and if you catch the right wind and the market is strong you can really make those numbers sing much louder.That's how most owners reposition an asset. In this story they did the same renovation and on top of it they lowered the flag. Let's see what the results were on the profit picture.I am going to call this hotel The Overachiever! The flag means the hotel has brand equity. That equity means the banks and the lending institutions recognize a premium for the flag in two main ways. One, they see that the hotel can command a higher revpar because of the brand affiliation and number two, they give credence to the brand having more effective management abilities in a down market. Both give the owner a slight upper hand when negotiating a mortgage for the business. They can effectively leverage the hotel at a higher rate and end up with a lower mortgage rate. These are both very attractive options for the owner.My character now steps into this story. They see the Overachiever Hotel as a prime asset and one that can operate more profitably without a flag. Their sell their story along with their other like assets and track record to convince the bank to go along with the purchase price, the 20-million-dollar PIP a favorable debt load and an attractive interest rate.Here are the main highlights of the analysis and how the OTA's come into the picture. In a branded hotel you have five main costs that in the view of this owner bleed the operation. They want Hotel Overachiever performing without any of the following dragging her down.The biggest one is the straight up management fee which is usually 3% of total revenues. In this case the management fees are 3% of 35 million which is a cool $1,050,000. What does the hotel get for its million dollars? The brand name and that's it, absolutely nothing else, not even the sign on the roof or the actual flag. They have to pay for those; all they get is the name.The next big fee is the sales and marketing fee usually 1.5% of revenue and this goes to the brands corporate advertising and marketing engine that usually promotes the brand and not individual properties - an additional $550,000.The third big cost is for the reservations system and the delivery of individual reservations through the brand's call center or distribution center. Depending on the volume, it can easily be 20% of the reservations made and the typical cost is north of 10% of the average rate. In this case that equated to an additional $600,000.The forth component that the brand charges the owner is by far the murkiest. It's the chargeback for all the corporate programs. Everything under the sun from training programs to insurance to legal fees to service scores to employee newsletters, crisis hot lines, HR surveys, financial audits, third party processing fees, fam trips, web site fees, employee service gifts. Folks - I could fill the page with all the programs brands have that they, in many cases, "mandate" to owners. Other programs are optional, but many are not and when you add up all of these it's a big dinner check.The fifth component many brands charge is either an administration charge for certain centralized functions like IT or accounting oversight and it's usually .5% of revenue in this case an additional $180K .And depending on the deal there may also be licensing fees and incentive management fees.Let's look at the brand price tag in this case. In total the analysis showed Hotel Overachiever's fees total just north of 10% of revenues and for many hotels that's a light number. I have heard of fees being 13-15% all in.So back again to our main character. They bought the hotel and took down the flag, paid a relatively small penalty given the expiration of the management agreement was close. The big risk for the new owner in dropping the flag was the brand recognition and the reservation system. How did they overcome these challenges? In both cases they used their partnership with the OTA's to keep the hotel's name front and center with consumers and they used the OTA's distribution systems to drive the lost occupancy at very competitive rates with commissions that were not a great deal larger than they were paying the brand for their reservations.In year one the hotel drove over 50,000 reservations through the OTA's, nearly double the volume that previously went through the brand's reservation system. Oddly enough, the new OTA volume came very close to the combined volume of reservations previous through the OTA's plus the brands reservation system. The cost for all these OTA reservations was substantially higher than previously spent due entirely to the volume.Before the new ownership took over the old owners and managers had the strategy of:Build a base of group through the efforts of in-house group sellers coupled with leads from national sales offices.Use the company's website and reservation systems to capture transient demand.In the month for the month use the OTA's to drive occupancy at reduced room rates.The new owners with Hotel Overachiever took a different tactic:Build a base of group through the efforts of in-house group sellers coupled with three additional sales managers.Use the hotel company web site and in-house hotel web site to capture organic reservations with a focus on returning guests and database marketing.They also took a much longer view to using OTA's as well as ensuring all offerings were at parity with their own web site.Using demand parameters offering specials and value adds to both their OTA and organic customer base.The results after two years were impressive. GOP was up an additional 5 points. Rooms profit was down 2% largely due to the increased commissions for both group and transient even with the 20$ increase in rate and a 5% increase in occupancy. The real icing on the cake was EBITDA was up almost 10 points and over 4 million dollars more. This was due almost entirely to much lower fees and the removal of unnecessary brand costs that in this case didn't help make the hotel more profitable. The numbers become a little muddled when you combine the PIP with the flag coming down, but there is no skirting the dramatic increased profits from this strategy.Differentiation between generating revenue and making a profit was the driver for this analysis, the decision to buy, lowering the flag and my story. Hotel Overachiever.One last thing of note, the hotel's index suffered and dropped below 100%. Yet the profits went through the roof. I think far too many people look at index and increased revenues as the be all and end all. The moral of the story is there is more than one way to fill a hotel and the profit results can be very different once we have a full understanding of the "total costs" and we also examine the other sources of business. In this case the OTA's cost the owners zero dollars in investment, only operating costs.P.S. Back to what I promised in the opening paragraph, the biggest reason to get out while you can? I read a thought-provoking article a while back about hotel owners that have long term management contracts and they compared them to taxi drivers with million-dollar taxi licenses. A big time commitment to certain costs regardless of what happens to the customers' habits and choices. Scary stuff, perhaps, if you're that hotel owner tied to a brand and a long-term management agreement.How else can you play the hotel game?

Hospitality Financial Leadership: Using Expense Checkbooks

The Hotel Financial Coach ·18 September 2018
I can vividly remember, as a young lad, my dad sitting at the kitchen table paying the monthly bills by check and then updating his checkbook. I remember asking him why he entered the details on the page at the back of the checkbook. He said very clearly, "So we don't spend more than we have and in the bank. If I don't keep track, we will run out of money and I'll end up bouncing a check!"In hospitality, we are all much better off when we use the checkbook system to manage our expenses so we don't run out, and so we don't overspend. The only difference between my dad and your department's expenses is you do not really run out of money like he could, you just go over your budget or forecast. This usually results in some frustration, perhaps even a nasty email or two. The great thing about this situation is it easily can be rectified with a little work on your part. Having and using a checkbook is a great way to get and stay on top of your departmental expenses. Do this and your star is shining.Contrary to common belief a useful and accurate checkbook does not require a computer system and, in many cases, it is much easier to use one without all the hoopla that an online environment creates. All you need is a piece of paper, or better still your trusty Excel sheet.The basic idea about a checkbook is to tell the user what the final position is with your line-by-line expenses and exactly where you are on that path. Specifically, what have you ordered (approved and ordered purchases orders), what has been received (what goods that were received that have invoices or packing slips that were signed and sent to accounts payable), and, finally, what was received that did not have an invoice or packing slip (items that need to be accrued at month end, items that need to be added to the expenses).That's it--a short list--it should look like this:The checkbook must be organized so you have a different list (page) for each general ledger account you are responsible for, e.g., guest supplies, cleaning supplies, paper goods, etc.The first thing to do is make a separate page for each account and put a title on it. Next, populate each sheet with the items you will need to order. Here is where most people tune out, but not you. If you are not sure what to write for the items you need to order then do the following: Write down the items you think you need and as the month starts and you order additional items, write those down on the correct page. If you do this, your list by account will come together very quickly. When you make an order, be sure to write the dollar amount in the "ordered" column. Tip: Add the quantity to the items column with the description. This will be a great help next month.Once the order has been placed, the next step is to simply wait for the items to arrive. When they do you enter the dollar amount in the "arrived" column. Normally, items arrive with an invoice or packing slip. Make sure you see this and sign it, and I also recommend you make a photocopy for your records. The signed slip will either go to the receiving department or it will be your job to get it to the accounts payable person. When this happens you write the amount of the goods received into the "invoice signed" column. If you do this for all the items you order and do the same for any services you order, you have a full checkbook of the items ordered, received and approved for payment.The last step is to accrue any items received that did not have an invoice or a packing slip. All you are doing with the accrual is telling the accounting department that these goods or services were received in the current month and no invoice was received. Using this information, the accounting department will bring these expenses into the current accounting period.Now that you have one month under your belt you are away to the races. You now have a base for all your expense lines. You now know where things go--into which account--and how much you spent. From this point forward, each month you add to your knowledge and accuracy. Do not worry about missing items especially in the beginning, just start and pull your list together.This is the hardest part--the beginning. Remember the golden rule about budgeting and forecasting: The only thing we know for sure is the number we come up with is wrong. That is right. Your forecast will never be perfect. It is always going to be a work in progress but knowing what you ordered, what has come in and what you have signed off on is career gold. You will very quickly organize your departmental expenses and make a name for yourself with the people who can tell the world in your hotel that you have your "$%#@" together.This is what you want, not the chaos that comes from not knowing what is in your expenses. Do not be the one who misses this opportunity to shine.

Hospitality Financial Leadership - The Morning Meeting

The Hotel Financial Coach ·11 September 2018
The morning meeting is a mainstay in almost every hotel. All the key department managers and leaders gather, usually in the front office or sometimes an in-house meeting room, to devour the day's business at hand. It is a great way to distribute last minute information and highlight important changes to groups and business volumes.However, most morning meetings miss the most important pieces of information. The most valuable nuggets are stepped over and not seen or exposed for what they are.A rundown of the following is a typical morning meeting:1. Previous day's occupancy, rate, and RevPAR.2. Anticipated occupancy, rate, and RevPAR for tonight.3. VIP arrivals and departures.4. Previous day's security and safety report.5. Restaurant summary: yesterday and today, covers, issues.6. Housekeeping sick calls for today, rooms out of order.7. Banquet activity yesterday and today, special needs.8. Maintenance report, noting special activity, getting rooms back.9. Guest complaints and compliments received, follow up.10. Rooms pickup report for the previous day.11. Labor summary with variances to plan.12. Human resources update with a highlight on training.All of this is usually good pertinent information, vital facts that department heads need to get on with their day. So what's missing?What's missing is a review of the business strategy and how the execution of that strategy is unfolding. Here is the dynamite, no...Wait for it.... What's missi ng is what each department head needs to do today, tomorrow and next week so we can right the ship. Each manager in that room holds their piece of the business and they need to know whether the vessel is on track to make its forecast revenues or not and, most importantly, what they need to do so their part of the enterprise flows.A 1.2.3 strategy for managing the finances needs to be clearly understood and acted upon by each member of the team who manages a work schedule or orders their department's supplies.First. What exactly are the monthly forecast business volumes, rooms revenue, food and beverage revenue, other revenues? What is my department payroll productivity target for the month? What are the detailed zero-based expenses for my department? It's not too much to expect that each one of your key managers knows these facts because this information is just as important as guest service execution and colleague engagement. Expectation is the wrong word, they have all agreed to know and manage these business facts. The key part of the execution of the leaders knowing their numbers: They put the numbers together for their area. Developing a management team that knows the business strategy and plays the "business of hotels" daily is Step 1.Second. Everyone must know the latest score. Where exactly are we with our business volumes? It's like the last month of the baseball season, Folks. Is my team going to make it? That's the level of focus. This is tricky and it requires insight, experience, and a steady hand. In many hotels, pick up in the month-for-month is substantial. Depending on the month, the market and the weather, along with 100 other factors, determine the end result. Every day your leadership needs to get the latest pickup on rooms, conference services, outlets and other sales. Where are we--what is the prediction for the month-end result? Waiting for the 15th of the month to take our pulse and see how things look on the revenue front is a dangerous practice. You need to be on top of the revenue picture from day one and every day after that. Nothing is more important to your business success than having your managers understand than, the latest projected revenues by department for the entire month at hand. Are we going to make it?Third. What to do when the ship needs to turn. This is where 90 percent of hotels are completely lost. If occupancy is soft and my room revenue is going to be short compared to my budget, what moves do my teammates make to manage the flow thru? If my rate is down to forecast, what expenses can be managed so I can affect the costs this month positively. If my banquet or restaurant volumes are not going to come together as planned, I need my managers to do their part. This is where we go back to steps 1 and 2. If I have trained my managers well and we have done a good job with our "distant early warning" system to help the m understand the revenue picture, then I have a chance. If my managers know their staffing guidelines and follow them to the letter--daily--they will still have a good shot at making the productivity target for their individual area. If I have a team of leaders who all know what is in their expense lines--in detail--then they will know what to put the breaks on and how to turn the ship.It is not rocket science, it is just attention to the details and making sure all my sailors do their part. As the GM or the Director of Finance, I cannot turn the ship with some late calls for man overboard. My crew needs to know their part of the ship inside out and they need to know how the wind is blowing. If a storm is coming, they need to do their part. If the seas are calm and it is smooth sailing, they need not trim the sails.Your morning meeting is your daily view into the latest forecast for the month and it is also the critical point where your managers need to know the play they can run to win the game. Throwing your hands up in the air and believing there is "really" nothing we can do, it is too late, is just poor management.Execute the 1.2.3 strategy in your hotel and watch the collective abilities of your management team grow.If you would like a copy of any of the following send me an email at david@hotelfinancialcoach.com* Incentive Plan Template* EFTE and Productivity Exercise* Hotel Financial Policy Manual - Inventory of "Sections"* Hotel Financial Coach "Services Sheet"* A White Paper - Creating a Hotel Policy Manual* F&B Productivity Spreadsheet* Rooms Productivity Spreadsheet* Financial Leadership Recipe F TAR W* A White Paper - A Six Month Workshop and Coaching Assignment* Hotel Financial Coach - "Speaking Sheet"* Flow Thru Cheat Sheet - Enhanced
Article by David Lund

Hospitality Financial Leadership - Igniting Your Financials by Putting Hours of Work in Your P&L

The Hotel Financial Coach · 4 September 2018
In hospitality, we all know that payroll is by far the largest expense and therefore it has the biggest negative impact on profitability. Turn this around and know that finding ways to be more efficient with payroll can have a big impact on labor costs and a positive impact on your hotel's bottom line.In hospitality, we all know that payroll is by far the largest expense and therefore it has the biggest negative impact on profitability. Turn this around and know that finding ways to be more efficient with payroll can have a big impact on labor costs and a positive impact on your hotel's bottom line. If you don't have hours of work in your monthly P&L, you are missing a massive opportunity to better understand payroll and productivity leading to ways to manage your business better. You know what they say, you can't manage what you can't measure. Putting hours of labor into your financial statements is just good housekeeping. It is the start of getting your focus on what you can control, which is the number of hours of worked or, more simply stated, the schedule. There is only one number that will always increase in your hotel, and it is not the RevPAR or the average room rate. It is the average rate of pay. You have little control over the rate of pay. On the flip side, you have 100 percent control over the schedule. This is where you need to focus your efforts and putting the hours of work statistics into your monthly P&L is not difficult. Once it is done you will have a baseline for your productivity. A place to start, knowing that improving the productivity will lead to higher profits. In almost every operation the hours of work are already tracked and totaled on a per pay period basis. This is how your employees get paid. Hours of work are entered into the payroll system and they are multiplied by the wage for each position. Same goes for any salaried positions. So, the total hours of work are already at your fingertips. If you pay your staff every week or every two weeks, there is one small stumbling block you need to overcome. You will need to do a monthly accrual for both the dollars of payroll and the hours and in turn, reverse the previous month's accrual. You may already be doing this. If you pay monthly or semi-monthly, there is no need for an accrual. Payroll breakdown In your current financial statement, you will want to review and make sure the payroll is organized so a breakdown is possible. If you have a rooms and F&B operation, you will want to have five different buckets for payroll. If you have a larger operation you will want to consider the complete layout that is covered in the 11th edition for the uniformed system of accounts for hotels. For this article, I'm sticking with five as this will work for any operation, especially a smaller one. The five buckets are housekeeping, front office, F&B service, kitchens and all other. We also want to be able to subtotal: (Housekeeping + Front Office = Rooms total) and (F&B Service + Kitchens = F&B total) By grouping the payroll hours and dollars into the five buckets we can begin to see our operation in a different light. Matching the payroll dollars with the hours in these areas produces the total and average hourly costs in these areas. Matching the room revenues with the rooms payroll and the expenses produces a rooms profit. Do the same with the F&B dollars and hours and we now have an F&B profit. Use the third payroll group to create the separation for all other payroll. I have numbered the buckets one through five on the statement to show you the setup. In addition, also separate the cash wages from the auxiliary pay and benefits. This gives you the ability to see the average wage costs as well as the other payroll costs. I'm not sure what you think but this layout gives me a ton more information about my operation. This is information you already have--it is just presented differently. A little playing around under the hood of your business and you can produce the same quality information that is going to help you make better decisions about your hotel. Your new statements now look something like this:***** Insert photo 2 hereInformation is king. Now the fun starts. How can we inspire and innovate with our team to find ways to improve our productivity? In hotel and food service business there are a 1000 ways to be more efficient and the opposite is also true. Now you have a tool that let's you measure your results, and with your leadership, this moves to focus and improvement. Collect, measure, report, innovate, repeat.If you would like a copy of any of the following send me an email at david@hotelfinancialcoach.comIncentive Plan TemplateEFTE and Productivity ExerciseHotel Financial Policy Manual - Inventory of "Sections"Hotel Financial Coach "Services Sheet"A White Paper - Creating a Hotel Policy ManualF&B Productivity SpreadsheetRooms Productivity SpreadsheetFinancial Leadership Recipe F TAR WA White Paper - A Six Month Workshop and Coaching AssignmentHotel Financial Coach - "Speaking Sheet"Flow Thru Cheat Sheet - EnhancedVisit my website today for a copy of my FREE guidebookThe Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotel www.hotelfinancialcoach.com Call or write today and arrange for a complimentary discussion on howyou can create more profits in your hotel.Do you need a dynamic speaker with a unique and creative financial message for your next hospitality event?Are you thinking about your management team and what to engage them with this year? Consider a full or half day hospitality financial leadership workshop.Give the coach a call and let's get going!Contact David at (415) 696-9593.Email: david@hotelfinancialcoach.com www.hotelfinancialcoach.com

Hospitality Financial Leadership - Who Inspired You?

The Hotel Financial Coach ·20 August 2018
Who inspired you - Who was the one person in your career you would have done anything for? Be you for a moment and re-live the experience you had when your career really took off. That place in your past that had you really growing and learning your craft at a rapid rate. You had someone in your world that was an inspiration, a bright light to follow. Some would call this person a mentor or a guide or adviser or a guru. This person took it upon themselves to help you find your way. And how exactly did they do this, what was their method or system to help you? "Show me a successful individual and I'll show you someone who had real positive influences in his or her life. I don't care what you do for a living--if you do it well I'm sure there was someone cheering you on or showing the way. A mentor." -- Denzel Washington In the financial leader's world this mentorship is a big deal and it is also a great way to learn how to delegate. When I was in learning and growing mode I had several mentors. Basically they were those ahead of me who would show me how to do something that I did not know how to do. I recall one summer when my boss told me he was taking a month off and going on a big trip and while he was gone I was in charge--it was budget season! I would be responsible for the office, all the staff and their work, as well as my work. On top of all of that I needed to prepare next year's budget for a 500-room hotel! Was he insane? How could he take a month off and dump all this on me? That was my original reaction. I thought, There is no way I can do all of this and prepare the budget as well. I had never prepared a budget before. This was a big problem. Or so I thought. "I don't have a problem with delegation. I love to delegate. I am either lazy enough, or busy enough, or trusting enough, or congenial enough, that the notion leaving tasks in someone else's lap doesn't just sound wise to me, it sounds attractive. John OrtbergWhat was I to do to make this work?Well, this is what happened. I had a good friend who was the executive chef in the same hotel. He was English and he had a wicked sense of humor. We would often meet at the end of the work day in his office for a cold beer. That's right he had a fridge in his office and enough suppliers dropping by a gift now and then so he always had beer. On that day when I learned my boss was leaving on his big trip and leaving me all the work including the budget, I told my friend over a beer that I was pretty sure I was being dumped on and taken advantage of. He laughed and said, "I guess you're really screwed now!" We laughed. He then said something I will never forget, "Michael and Ian are not stupid. They would not leave this with you if you were not ready." I thought about what he said and it occurred to me that this was a BIG opportunity. Learning how to pull all the information together for the budget and presenting and editing every piece with our General Manager was an amazing experience. I learned so much. The way he thought about each area and how far he could stretch that manager's numbers. How he put all the pieces together, with my help to create a story that made so much sense, chapter by chapter. If I was not left with the mess, I never would have learned what he taught me. Well, the month went by and when my boss returned the budget was done. Now it was time to present it to the corporate folks. I assumed that meant he would be on a plane in a couple of weeks to present the budget himself. Well, to my complete surprise, about a week after his return he came to me with an amazing offer. He asked, "How would you like to go to Vancouver and present the budget?" WOW, that was not even on my radar. So, off we went--the General Manager and me--to present the budget to the corporate team, including the president of the company and several other very senior executives. What an opportunity for me to shine. I bought a new suit and, boy, I was excited. The people I met in that board room on that day opened many doors for me and my career all because my boss delegated and believed in me. Who are you believing in and who are you helping? Delegation for your nation. It's the answer.If you would like a copy of any of the following send me an email at david@hotelfinancialcoach.comIncentive Plan TemplateEFTE and Productivity ExerciseHotel Financial Policy Manual - Inventory of "Sections"Hotel Financial Coach "Services Sheet"A White Paper - Creating a Hotel Policy ManualF&B Productivity SpreadsheetRooms Productivity SpreadsheetFinancial Leadership Recipe F TAR WA White Paper - A Six Month Workshop and Coaching AssignmentHotel Financial Coach - "Speaking Sheet"Flow Thru Cheat Sheet - EnhancedVisit my website today for a copy of my FREE guidebookThe Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotel www.hotelfinancialcoach.com Call or write today and arrange for a complimentary discussion on how you can create more profits in your hotel.Do you need a dynamic speaker with a unique and creative financial message for your next hospitality event?Are you thinking about your management team and what to engage them with this year? Consider a full or half day hospitality financial leadership workshop.Give the coach a call and let's get going!Contact David at (415) 696-9593.Email: david@hotelfinancialcoach.com www.hotelfinancialcoach.com

Hospitality Financial leadership - Why Your average Joe Should never Use an OTA - and... Why He Will Never Stop Using Them!

The Hotel Financial Coach ·15 August 2018
With two large shortcomings, I can't see why the average person who has a basic understanding of how the travel world works would ever use an online travel agency. In making this statement it occurs to me that--obviously--most people don't know the basics. If they did know the two things I'm going to talk about here, the OTA world would be dead on its feet. The real question is why hoteliers do not get together and create a presence in the online world and inform people so many more customers can make a favorable decision. Then hotels, in turn, could increase their own traffic and reduce commission costs. This is the $64,000 question for all times in our industry: How can hotels and airlines get consumers to book their needs on their site and not on an OTA? The number one thing the Average Joe needs to know about booking a flight, airline ticket, car or anything else at an online travel agency is the fact that they are not customers of the hotel or airline. They are customers of the OTA. As such, any problems the customer might encounter with that flight or hotel room stay are not met or dealt with in the same manner as a client who books through the hotel or airline's booking system.Here are stark realities of this factAs a customer of the OTA when there are problems with flights being overbooked you can bet your grandmother's knitting needles that you are going to be on the short list of people to get the kind of trip adjustment we are all too familiar with these days. As we all also know, hotels need to overbook to end up full. Who do we bump in the middle of the night when our math did not work? Not the loyal customer, that is for sure. We pick the reservations with the lowest potential negative impact profile and many times that means an OTA reservation. I think we get the picture here. I am not saying the OTAs do not care when there is a "problem." I am saying they do not have the same ability to remedy the problem as the hotel or airline does. The second thing every Joe needs to know, at least the North American Average Joe, is the price is the same at BLANK hotel or BLANK airline as it is on the OTA because of a little-known agreement called "rate parity." Little known outside our industry, rate parity simply put means the final pricing has to be the same on originating businesses' booking platforms as it is on the literally thousands of OTAs. Do not believe me, just do a search across multiple OTAs for a specific flight or hotel room on a specific date and see. I always tell people: Use the OTA to do the research, routes, flight times, pricing, hotels in the location you are looking for--then book it on the brand, hotel or airline platform. You will get the same price and, in many cases, get a little extra something, especially if you are a member of that brand or airline's loyalty program. With these two ugly facts and a public relations campaign, the hotel and airline industry could turn the OTA world on its head, quite literally. So why, I ask, don't they do it? You cannot go anywhere in the hotel news world and not hear about the supposed war on the OTAs. Hotels and brand owners are all crying foul. If it is a war the hotels are waging against the OTAs, then they are not sending many soldiers or missiles and certainly no warships. The reason why the war is not really a fight is that hotels are chicken. They are afraid to be singled out and dropped by the OTAs. They are also worried about competition regulations and any whispers of price fixing. I think the big hotel brands must be careful with how they try to tackle the OTAs. They don't want to be seen as trying to interfere with the competition. I also think they are hiding out behind the lodging association that they largely fund, which some say has had success limiting home sharing services. You can't fight when you are running away. Hotels are not aligned in any large enough or meaningful way even with massive consolidation to fight the OTAs. But, if they were, and, if they really went at it, they could. OTAs take advantage of the fact that the hotel world is unorganized and incapable of a unified position. The old practice of playing hotels against the other as rates drop is still the nightmare that keeps revenue managers, directors of sales, GMs and owners up at night. OTAs drive more business to hotels than any other channel and hotels know this as well about that business: it's free. Yes, there are commissions, but no one complains when the business saves the day or the month's financial results. So why then do we hear so much negative press regarding the OTAs? I say it is largely a negative campaign, not unlike election ads. Negative advertorial. Back to the other part of this piece and the reason why Joe will not and never should stop using his OTAs. One simple fact. Joe can find all his options in one convenient place. He can literally find all the obvious options for his travel needs in one search that not only yields what he is looking for but also several options and features he may not have considered.Here is an example of an OTA positiveI just did a search on Expedia for a three-night stay in the City by the Bay in late September. My simple search reveals a whopping 510 accommodation options. It is all there: The Ritz and Westin at $1,299 and $1,454 a night all the way down to the I won't mention the name hotel in the mission for $103. My search also turns up some interesting options I had not considered. First, it shows me I can enjoy San Francisco and stay at the airport or further down the peninsula for a 75 percent reduction in room pricing. I even see home sharing and vacation rental options. They have it all: good inventory, great pictures and descriptions of rooms, the hotel and their services. Some OTAs even have a rewards program that is actually worthwhile! With an OTA I can also book my air travel and ground transportation all in one place, with as many as 35 currencies and languages and seemingly more trustworthy reviews. This is an incredibly powerful tool. For Joe, he is more than willing to trade this convenience for the largely useless customer loyalty program and a little parity. I say OTAs provide an incredibly valuable service for the Average Joe.For a complimentary copy of my guidebook on creating a finically engaged team in your hotel head over to my website, www.hotelfinancialcoach.com and don't forget to email me david@hotelfinancialcoach.com for some of my free spreadsheets.

Hospitality Financial Leadership - Light Bulb Moments

The Hotel Financial Coach · 7 August 2018
The ones that stand out the most for me are the ones that I experienced from my father. Growing up I was not what you would call a high achiever. My grades in school were not great by any measure. I had friends and my social network was solid. I had a girlfriend in junior high school and that was probably what saved me from being somewhat of a delinquent. I was always curious about the things you were not supposed to do.I always thought my dad was somehow disappointed in me and my behavior and choices. Two light bulbs I experienced through my dad. The first one came when I graduated from high school. It was early June and I think it was the very day I graduated. My parents came to the school for the ceremony and the proverbial pictures. It was a happy time and I was finally free from this thing called school where it was fun to play but the learning I had little interest in. That afternoon at home we had a BBQ, nothing special, just some hamburgers, and my father told me what he had done. Re-wind the clock three years and I didn't pass grade 9 and was held back a year. At the time, it was a big embarrassment for me. All my friends went on to grade 10--high school--which was in the same building just up one floor. My girlfriend and I were now in the same grade and there were not many of us, maybe 22, in grade 9. Well, being held back worked a little and my grades the following year were a fair bit better.The following year I was in high school and, lo and behold, two of my counterparts had failed to get the minimum of three credits and they were where I was in grade 10. In the high school I attended you needed 15 credits to graduate from grade 12. Six classes per year and you needed to pass an average of five to make it. After two years in high school I had 12 credits and in the final year I took only five classes and dropped one in the final semester and graduated with 16 credits alongside my cohort buddies.What my dad told me that afternoon was shocking to say the least. He could never have told me and I would not have known what he did. But, when he told me, I was not at all sure how to react. His good friend and fellow member of the Lions Club was the principle of our school. My dad asked his friend to hold me back in grade 9. His friend did exactly what my dad asked. So how does an 18-year-old kid react to the fact that his father took a year out of his life? My thoughts at the time were that I did not care, I was done and that was four years ago. I honestly did not mind and in the back of my mind I had a light bulb turn on: My dad cared enough about me to orchestrate this and that meant he loved me.The second light bulb happened a little earlier in grade 11. I was working at the drug store after school and on Saturdays and the job was great. Stocking the shelves, running the till and a bit of housekeeping. It was Saturday afternoon and the phone rang and it was my mother. She never called. She said, "Your father has had an accident and I need you to drive me to St. John."My mother didn't get her driving license until she was 63. I left work and went home. We drove to St. John which was 60 miles away and I learned that my dad had had a heart attack in the woods about 20 miles from home. He was hunting deer with a friend and he had spent a couple of hours on the ground partially conscious before his friend got some other men to carry my dad out of the woods. They then took him to a nearby hospital which could not deal with his case. They then transported him from St. John to the regional hospital and the cardiac care unit. I got to see my dad that night and he was in critical condition. He was in the hospital for the next four weeks recovering. At home, my two older brothers were both away studying and my sister, who is 12 years younger than me, was at home. My dad did not go back to work for six months. His recovery was slow and overnight I became the man of the house. My mother relied on me for day-to-day things that dad would have done. This new role gave me a purpose and responsibility that I unconsciously gravitated toward. Let's just say it helped make a man out of me.The next light bulb I cannot remember when it happened but it was sometime in my late teens and again it was at the hand of my father. I do not remember the circumstance but I do remember the message. He said to me, "Son, as your father I must tell you that I do not know anyone in this world that will help you be successful in life. No one I know will give you a job, I don't know people like that. If you're going to make it in this world you're going to have to do it on your own."This was a major light bulb and I appreciated it even in the moment. I appreciated it because at that point in my life I was more than a little confused about how one gets ahead and is successful in life. All around me it seemed that my friends were getting ahead because their parents had connections or their family had influence. That was kind of the way it was in my hometown, or at least that is the way it seemed at the time.I look back on that moment and have done so many times since, and his words have given me the strength to go after things in life that have brought me so much: A career, love and a family. With my three daughters who are all in their twenties now, all finished university and on their own, I translated what my dad told me into my message to them. I have repeated this a few times. I say, "There isn't anything you can't accomplish in this life if you willing to work for it."I love the fact that my dad had the courage to tell me what he told me. I did not look at it like he was copping out on me, and I easily could have. I took it to mean that he thought I could make it on my own.We always have a choice in life to believe the story. Good or bad--we make up the story.Also, delivering my first workshop was a light bulb but it was more along the lines of "How can I bring this new-found process and educational element into my company and my world?"The next big light bulb was when my last boss dissed my idea of wanting to take the workshop I was teaching outside of our region."Why would you want to do that?" he asked. I knew in that moment it was all about him--not about me or my idea. I knew in that moment that I needed to move on. I had outgrown my role, and the company, or at least his view of it, no longer supported my vision of what could be, of what was possible with this financial leadership training. I was also confused in that moment. Was I being selfish about what I wanted vs. his version?Six short months later I left my day job and the security of 30-plus years of working for the same hotel company. On my own to explore the world of being an entrepreneur and creating a business.Like my dad said, "Son, if you are going to make anything of yourself, you are going to need to do it on your own."What was your light bulb?For a complimentary copy of my guidebook on creating a finically engaged team in your hotel head over to my website, www.hotelfinancialcoach.com and don't forget to email me david@hotelfinancialcoach.com for some of my free spreadsheets.

Hospitality Financial - Flower Power

The Hotel Financial Coach ·31 July 2018
Here's one of my favorite episodes as Regional Operations AnalystDuring one of our early discussions my new boss told me that he would use me to solve problems. I thought that was an interesting way of looking at what I did. I was pretty sure I would be comparing lots of ratios and statistics. He had a different idea and he was the boss so we played the game his way. He mentioned that regular visits to the hotels to review their performance and look for opportunities to improve profitability would be part of my responsibilities. Travel has always been interesting to me so I liked the sound of that. Most of the GMs in the region were bigger than life. At least that is what they thought. I do not mean that in a mean way, it was just that these executives had a lot of power and hundreds of people working for them. They managed buildings full of bars, restaurants and beautifully decorated rooms and suites. This usually meant there were lots of opportunities for trouble. They were kings of their castles. They all had the run of their houses unless the big dog was around. The big dog was my boss and he knew a thing or two about what really went on in his hotels. One of the first things we did was a tour of the region. We visited each hotel and spent a good half day going through their P&Ls line by line. My boss was a master at asking just the right questions about their numbers, variances, increases--things that just did not add up. During one such review he stumbled onto something he thought was completely unbelievable. The hotel was doing well financially, but seasonality in the hotel business is always a challenge and something jumped out at him. We were reviewing the maintenance section and one number really got his attention. It was the "grounds and landscaping" line. It was a big number and we were only looking at the February statement. He asked, "What are we spending so much money on, what exactly is in this line item of expense?" The GM and property controller were dancing on this one. You can always tell when you have a live one because the tone of the discussion changes from an informed answer to a "well - um" response. I think the YTD February expense was $15k on budget of $8k and last year actuals of $10k. So, it stood out. My boss asked what was in the expense this year that was so much more than last year. Silence. The GM then asked the controller to go get the general ledger. Now, I know what you're thinking, a GM asking for a copy of the GL? My boss said it could not be that complicated. With that we had a short break, then the report was produced. Most GMs would not know how to read a GL let alone ask for one. In short order, we saw that the expense was predominantly made up of payroll entries. "Why is payroll in an expense line?" he asked. The response, "Well (hesitation, stumble, fumble - then it came), we're growing our own flowers and that's the payroll to run the greenhouse and the staff are the summer gardeners that we like to keep year-round so we grow our own flowers." You could have heard a pin drop. Then my boss started to laugh. Then he said, "In 30 years I have never heard of a hotel that grows its own flowers." The GM responded that it was indeed unique and he also asserted that it was an efficient operation, and keeping the staff year-round with work to do was an added bonus. My boss chuckled a bit more and we moved on. That night at dinner my boss had more than one good joke about the flowers. Back at home base the next week I sent my boss the notes from our review. He phoned me and asked me to come to his office. He thanked me for the report asked, "Are you ready for your first assignment?" "Sure, what do you have in mind?" I answered. He smiled like he was ready to share a juicy secret. "I want you to go back to that hotel and take a magnifying glass to that greenhouse and flower boy's operation. There is no way on God's green earth that growing your own flowers in an 80-year-old greenhouse in the Rockies in the dead of winter makes any financial sense. With that he told me to plan my visit for the following week and to think about what I would look at in my review. He also told me that he would take care of letting the GM know I was coming and that he was to allow me complete and "unfettered access" to anything I needed to see. Wow, this was going to be fun. By the way, I do not know the first thing about running a greenhouse or growing flowers. I was excited and a little apprehensive. I knew I was walking into a powder keg that was ready to blow up in my face. The following week I made my way to the hotel and started my visit with a trip to the accounting office to see my colleague the controller. He was a good friend and he informed me that the GM was just a little upset and concerned about my visit. It was not long before the GM was in the doorway of the controller's office. He shut the door and took a seat. Then he explained the importance of the greenhouse staff and operation. He asked what I would be looking at. I told him that I was not entirely sure because I had never reviewed a greenhouse operation before. I told him I thought I would start with interviewing the staff and, by the way, who do they report to? With this the GM blew a gasket. In next few minutes I got to experience why this guy had the nickname that he did. He went up and down both sides of me and the boss too. I kept my cool and assured him I was there to help and not to create any problems. You know the saying: We are here from corporate and we want to help. With the pleasantries out of the way, I went to work. I met the staff and was given a compete tour of the facilities including the apartments on the second floor of the end building attached to the greenhouse. The building was quite large and the thing that was most interesting was the lack of flowers. I expected to see flowers everywhere but not so. It was too early to plant the flowers that would eventually make their way into the ground in late spring. Interesting, I thought, no flowers but we were spending money. Most of the expenses made sense and I also understood the strategy with keeping the staff occupied in the winter to ensure they were there the following summer. I reviewed the previous 14 months of general ledger data and organized the payroll costs and raw expenses. In addition, I reviewed the energy costs which is another story because they made their own steam onsite for the entire property. I do not have the exact cost anymore, but the total amount to run the greenhouse and grow the flowers for the property was just north of $50K net. The analysis showed the payroll and direct expenses in total - less what it would cost to buy all the flowers in the spring (like every other hotel does). Suffice it to say my boss was pleased with my little study and with this in hand he personally saw to it that the flower boy's days of growing his own were done. The flip side of this was the real kicker. It seems the GM and my boss agreed to use the greenhouse for something else. Go figure. I think it was the GM's idea all along. It's funny how things work out sometimes. The following year the hotel submitted a capital request to renovate the greenhouse. The request was approved and a year later the greenhouse welcomed its first paying overnight guests. The hotel now had four new luxury cabins, aptly called The Greenhouse.So, what was a "dud" turns out to be a "star." Go figure. Life in the hotel business

Hospitality Financial Leadership - Educating Our Leaders is the Highest Form of Service

The Hotel Financial Coach ·25 July 2018
By creating my hospitality financial leadership workshops, I learned 3 very valuable lessons. The third lesson was by far the most powerful and transformative for me and my way of seeing the role I was playing as a financial leader.The first lesson I learned from creating and delivering financial leadership training was the students really liked the learning, the subject matter and the material. They all responded very positively to the workshops and the subject matter. From this revelation I realized that the students could now see that this "financial piece" that every touts as the hard and confusing part of hospitality, was indeed not so difficult. Its very accessible and with the proper instruction, tools and some attention the hospitality financial piece can be taught to anyone and once a leader sees the opportunity to learn and advance their personal prosperity they are literally all over it. They realize that the financial piece is the missing link in their careers and without these skills they will not make the cut. This in and of itself is powerful, but there is more.The second valuable lesson is the immediate and measurable return on investment we all saw with financial leadership training. As a financial professional, in my career when I was presented with purchase orders and requests for funding for leadership training in my hotels I would always ask, "When am I getting my money back?". I would always receive the same deer in the headlights look and the typical answer, "well you know its good and the leaders will all benefit". I know training is almost always good and worthwhile, but you should be able to put your finger on some results, to justify the cost. That's just common sense but inevitably that never happened. With financial leadership training you can ask your managers to tell you what they are doing differently, what new ideas have they brought to their department. What savings have they uncovered. They will tell you, because this is different training. I know of hotels that ask each leader each month to tell them where they found in savings to the previous forecast. When people have the tools and the understanding they are more than happy to show you what they have accomplished. I have a separate blog on how to turn $250 into a million in asset value. Check it out for the ROI details. http://hotelfinancialcoach.com/1million/The third and by far the most impactful lesson for me in all this hospitality financial leadership work is the realization that education is the highest form of service. Allow me to explain.Before I embarked on this path of creating and delivering workshops to teach our leaders about the financial business of hotels I was just another controller trying to get a clean month end, a good forecast and a monthly commentary that made some sense. Getting the other non-financial leaders to participate in these endeavors was like pulling teeth. I was diligent in sending out the monthly schedule, the reminders, the update at the weekly department head meeting, a sermon or two at the executive committee meeting and countless 1-1 chats with other managers. But alas none of this worked. What changed the game completely was the workshop. By educating and helping the other leaders understand the financial piece they were more than willing to reciprocate and do their part. Not only did the quality and quality of their work go way up, their attitudes and willingness to get involved went sky high. So, what happened? What changed in the hearts and minds of the leaders in my hotel?Service is what changed. Prior to the workshop era I was just another mouth piece. Another wining voice that wanted something. That's a relatively easy thing for most people to ignore even if I'm the controller. They all know they don't report to me. There was little in the way of retribution for missing my deadlines. You know the drill. Another way to look at what was happening with what I wanted was I had an expectation. People don't respond well to your expectations. Think about it, when was the last time someone expected something from you and you got all warm and excited with that prospect. Never, it's always the direct opposite. All my schedules, wining, sermons and reminders boiled down to one thing, I had an expectation. Dead on arrival. It never worked.The workshop changed all of that for me and my non-performing non-financial leaders. In the world of the mind there is a fundamental law. The law of reciprocation or as some call it the law of reciprocity."Social psychologists call it The Law of Reciprocity - and it basically says that when someone does something nice for you, you will have a deep-rooted psychological urge to do something nice in return. As a matter of fact, you may even reciprocate with a gesture far more generous than their original good deed." - GoogleBy taking the time and effort to put together the workshop my non-financial managers were on mass more than happy to reciprocate. Its just what human beings love to do. What this meant is their contribution to my forecasts, month end and commentaries went way up. As a direct result of me educating them. But don't let the workshop or the education piece fool you like it did in the beginning for me. What was really going on here is I was serving them and due to the law, they were more than willing to return the love.Think back in your career and remember the people who helped you. The manager that took you under her or his wing and helped you. You would do just about anything for them. There's the law again. If serving is beneath you then leadership is beyond you. Its that simple. Help people first and they are going to respond. Especially when you help them with something and seemingly large and scary as hotel finance. They see what your trying to do. They see you helping them with lifelong skills that make a huge difference to their individual personal prosperity.Service equals an opportunity to provide your leadership with what they are longing for. Provide your managers with the gift of a no strings attached education on the business of hotels and I guarantee you they will love you for it and respond.Let's face it. Who else is going to do it?

Hospitality Financial Leadership - Credits to Cost of Sales in Food & Beverage

The Hotel Financial Coach ·17 July 2018
The first question to answer is why we need to credit the F&B operation for its goods used in other parts of our business. Someone once asked me why we don't credit maintenance for their costs when used in other departments. Or better still, why don't we credit rooms when staff members stay over because of bad weather or business volumes? Why is F&B so special? I have heard this one a hundred times.The reason F&B is special is because it has cost of goods sold accounts. Cost of food and cost of beverage. The rooms department has no such cost of goods account because they are not producing anything they do like F&B. In F&B we buy products--food and beverage--and we manufacture goods and sell them for a higher price. In rooms we don't do anything like this (sorry, rooms folks). In the case of maintenance, that is a non-operating department (no revenues) so it gets no such credit. We do appreciate all their hard work, but we do not give them any credit on our books. Sorry.We want to give F&B credits for their goods used in other departments, so we can keep a close eye on the cost of goods sold percentage--food cost percentage and beverage cost percentage. Credits come in two forms: credits for goods at cost and credit for goods at retail. These transactions are handled separately but their values effect the same accounts on the statements.Let's do credits for goods at cost first. As a young lad one of my first jobs in hospitality was a food and beverage storeman. My job was to fill all the requisitions for the kitchens and the bars. Many carts full of food from the freezer, fridge and dry goods room every day were delivered to the kitchen. Boxes and boxes of wine, beer and spirits for the bars to pick-up. But then, every once in a while, I would get requisitions from other places: general manager's house, executive offices, staff cafeteria, and the chef also would order booze for the kitchen and the bars ordered food like limes, lemons and juices. I thought at the time this was interesting, but I had no idea that it all meant something. Every one of these "other orders" caught the attention of the cost controller each month as he requested I keep a separate and complete copy of each "other" requisition.Odd, I thought, as the main requisitions piled high in the corner of the office, never to see the light of day again. Each one of the other items was costed and recorded as a credit to either the food or the beverage cost depending on what family the products requested belonged to. The cost controller totaled these requisitions each month and sent the summary up to accounting.Food to the GM's house was a credit to food cost and a debit to GM's expense. Same for the booze and oddly enough it was a big number, then a credit to the beverage cost. Same with the cafeteria food as it became a debit to employee benefits.The booze to the kitchen, which I am pretty sure didn't all make it to the soup (Cheffie), was a credit to the beverage cost and a debit to the food cost. Lemons and limes to the bars were a reverse to the booze for the kitchen. Finally, I was able to see the work I was doing was not going unnoticed. These items were closely watched, and I even had a visit one day from the Director of Finance and some strange people from the corporate office. They were interested in looking at all the requisitions for the GM's house. I still wonder why. [?] Credits for goods produced were not handled by me in the store room. They were done by the number crunchers in the accounting office. When a hotel uses food or beverage to entertain or promote the hotel, the cost of sales is credited to the food and beverage departments' accounts and a corresponding debit is charged to the department that benefits from all this entertaining--usually the sales department. What happens each day in a hotel when there is an event which is a "hotel event" the banquet event order states which "house account" to charge the function to. That night the auditors reverse the revenues, credit food cost, credit beverage, reverse the sales tax (depends on your local rules) and debit the sales entertainment account at cost. The same thing happens when one of the managers uses a restaurant or bar for entertaining. Reverse the sales, taxes, covers, reduce the value of the sale to cost, credit F&B costs and debit the department that consumed it.At this first job I was often asked to consider giving credits for things other than the cost of sales. I would hear:Why we don't credit the labor the same way, especially for big events?Why don't I get a credit for all those 50 percent off accounts?Why don't I get a credit for all those package discounts?Why don't I get a credit for the "poor service" write-off account?I could fill this article with the requests I have heard, some of them seemingly legitimate and others not so much. All I can say to that one is "Read the book, The Uniformed System of Accounts for Hotels. It tells what to do and not do when it comes to all things financial.For consistency, your hotel must establish the rules for their credit to the cost of sales. Some things to consider:What percentage to use as a credit to the cost of sales? Last year's cost percentages, budgeted costs, year to date cost, last month's cost. All of these are good selections, just make sure once you choose your method, you stick with it (consistency principle).Do you take the credits each day with your income audit or do you do it monthly with the closing of the house accounts?Who can authorize the use of the promotion and entertainment accounts? I have seen some questionable events, outings and requisitions in my day. You want to make sure the proper approvals are in place for both types of credits.If you would like a copy of any of the following send me an email at david@hotelfinancialcoach.comIncentive Plan TemplateEFTE and Productivity ExerciseHotel Financial Policy Manual - Inventory of "Sections"Hotel Financial Coach "Services Sheet"A White Paper - Creating a Hotel Policy ManualF&B Productivity SpreadsheetRooms Productivity SpreadsheetFinancial Leadership Recipe F TAR WA White Paper - A Six Month Workshop and Coaching AssignmentHotel Financial Coach - "Speaking Sheet"Flow Thru Cheat Sheet - EnhancedVisit my website today for a copy of my FREE guidebookThe Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotelwww.hotelfinancialcoach.comCall or write today and arrange for a complimentary discussion on how you can create more profits in your hotel.Do you need a dynamic speaker with a unique and creative financial message for your next hospitality event?Are you thinking about your management team and what to engage them with this year? Consider a full or half day hospitality financial leadership workshop.Give the coach a call and let's get going!Contact David at (415) 696-9593.Email: david@hotelfinancialcoach.comwww.hotelfinancialcoach.comFacebookTwitterGoogle+LinkedInPinterestEmailShare

Hospitality Financial Leadership - Why Hotel Brands and Franchisers Secretly Love the OTAs

The Hotel Financial Coach ·10 July 2018
I know we all hear the battle cries every day in our industry, but what's really going on with hotel brands, franchisers, the online travel agents and their war over commissions and fees? In this piece, I am going to expose an angle that I think needs some light. It gets back to a fundamental understanding of how our industry functions based on its evolved structure, with brands and owners. I also believe this is a good lesson in hotel business strategy, to understand what underpins the relationship between the warring parties and what drives the business model with hotel franchisers and brands.The first thing to know about hotel management companies and franchises is they make the lion's share of their revenues and resulting profits based on the hotels in their portfolios generating revenue. Fees based on revenues are what drive the hotel brand's business model. They also make money on reservation systems and other services, but normally these are on a cost recovery basis. The brands tell their hotels that the services they provide are on a cost-return basis and largely they are. Very little profit is generated by the brands from their other services. On the flip side--when you look at the way the fees are calculated--is a simple total revenue or total room revenue times "x" to produce the fee.What really matters most to the brands is getting their hotels to produce more revenue. The more revenue the better. Not profit, revenue.The second thing to know is that management companies and franchises make little or no money on the profits their hotel owners make. Unless the agreement with the hotel has profit sharing or an incentive fee component built in, the hotel owner does not share any profits with their brand.The third thing to know is fees paid to the brands by the owners are in no way linked to the hotel's profitability. Whether or not the hotel is profitable has zero impact on the calculation of the fees or the requirement to pay these fees every month.I don't know about you, but I see a problem here. The problem I see is the brands make hay on the backs of their hotels whether the sun is shining or not. Not unlike a stockbroker who makes fees on your entire portfolio regardless of their performance with your investments. Some might think this is OK and the way it should be, but I see it as offside.Let's look at the impact the online travel agents have had a big hand in. For almost the past 20 years the OTAs have been turning the hotel and travel world on its head. They have built systems that allow any hotel to sign up almost universally without any upfront fees and instantly market their hotel around the world to the ever-growing planet of the traveling public. This, in my opinion, is the single biggest positive development in our industry ever. Hotels always have used travel agents and what has happened in 20 years is more and more business has moved online--where today the individual hotel consumers' world is virtually all online.Shopping for a hotel room online? In general, we can thank the OTAs for this phenomenon, they created it. How does all of this online activity benefit the hotel brands with little skin in the game?Here are some revenue factsAccording to a Cushman and Wakefield report, room revenue in America has grown from $70 billion in 1998 to a whopping $150 billion in 2017. That's more than a 100 percent increase in 20 years. Here are the numbers that make this up: supply in 1998, 3.9 million rooms; 2017, 5 million rooms; RevPAR in 1998, $50 and in 2017 it was $81.Now let's look at feesThe typical hotel management fee of 3 percent of total revenue and a franchise fee of 5 percent of room revenue will be used in this exercise. I know these are estimates but bear with me. We'll be blending the two together and using a conservative 4 percent of total revenue as a gauge.The total fees charged to owners in the past 20 years has more than doubled as well. No surprise, revenue doubles and so do the fees. Fees in 1998 at $70 billion equal $2.8 billion. Same 4 percent of revenue in 2017 equals $6 billion.The first real question and my point is this: How much of the increase in room revenue in the past 20 years has been because of the platforms and systems built by the OTAs? The simple answer is lots of it.The second question: How much investment was incurred by the hotel companies to get consumers to use the OTAs and ultimately spend more and thereby generating more fees for them? The answer is quite simply - A Big Fat Zero. Someone else built the OTA monsters and the brands are the number one recipient of the benefit with no investment.Would hotel companies minus the OTAs have invested the cash necessary and revolutionized the travel industry? I think not. They are management companies and they are capital light. That's their strategy. Put their name on the hotel, and let the owner invest and drive the guest experience, brand promise and fees.I'm not saying OTAs do not have some faults and some hotels may rely on them too much, but the fact is they have had a big hand in revolutionizing the travel world and that is very good for brands and owners.No wonder hotel management companies and franchisers secretly love the OTAs. Anything that drives revenues their way is what works.When something or someone else does this for them, it's golden.

Hospitality Financial Leadership - The Greatest Illusion - Ever

The Hotel Financial Coach ·25 June 2018
What are you believing and why? Do you believe the numbers are the hard part of hospitality? Do you believe you were in the wrong line at birth and just did not get the right tools? Well, I invite you to open your mind and think again about what you believe. If you do, you can open a brand-new door that will pay off in spades.This is an article about how people see things, how they think. Because we're human we have the highest power in the universe and that's an imagination. Because we have an imagination we "feel" our thinking. In hospitality, there is a lot of misuse of our imagination and I will examine how this negatively affects financial leadership.The problem with feeling our thinking and having an imagination is four-fold:Often, we use our imagination the wrong way, we use it to scare ourselves.Often, we believe what we think is real, what we imagine is real, right?Often, we get hung up on these scary imaginations and they preclude us from being productive.We think the world is happening outside of us when it's all an inside job, it's our imagination."Imagination is everything. It is the preview of life's coming attractions." -- Albert EinsteinImagination is our greatest gift as human beings. We are the only creatures that have one. Your dog is not sitting at home planning his retirement. The dog, like all other creatures, operates on fight or flight and some instincts. Same goes for all other creatures in our world. They all have an operating system that does not include an imagination.At the very foundation of our beings is the 1,2,3 concept of mind, then thought and finally our consciousness. Another way to express this 1,2,3 is our brains, our thinking and our outlook on life.Let's first look at the brain--our mindIt operates the body and it is the most sophisticated thing on earth. We do not need to tell it how to process our oxygen, manage our waste or to remember to grow our hair. It operates our body without our thinking or intervention. We can think about holding our breath or needing to pee or getting a haircut, but the brain and our minds just go about managing things for us. This is a wonderful thing.The second part is thought--our thinkingWe have thousands and thousands of thoughts every day and most of these we are not even aware of. As much as 95 percent of our thinking goes on without us even being aware of what those thoughts are. This is described as habitual thinking and quite often a large percent of this thinking is negative.Much of this thinking comes from our upbringing, our past. This is nothing to get worried about because there is nothing we can do about it. So, no solution, therefore, there is no problem.The third part is consciousness--our active thinkingPut another way, it is our outlook on life. This is where things get put together. This is where we get fooled. This is where we see how our world and the people, places and things seemingly affect us. We believe that this is our reality. My life and the people in it, the conditions I live with, the job I have, my relationships, my prosperity, my image of myself, my happiness. This is where we take all the stuff that is happening to us and we make up our story. We see the world as outside in and the truth is it is the opposite. Our reality is made up of our imagination combined with the thoughts we have. This all happens inside our consciousness not outside. This is "the great illusion".Now stick with me here because this is where we will expose the illusion for what it really is.As human beings we are well advised to realize--we do not need to believe--what we think. We are much better off if we do not believe what we think, especially the negative thoughts. We have thousands of thoughts a day. Most we do not even realize. The ones that we do realize we believe or better still we "believe them" because we "feel" the thinking. We have a negative thought about our finances and we feel bad. We have a negative thought about a relationship and we feel bad. Before you know it we are feeling really bad. But it is all an illusion and it comes from inside our consciousness where thought and imagination get mixed together.What we need to do is not believe it. Do not believe any of it.Thoughts are like a perpetual fountain of crap that spews into our consciousness. It never stops spewing. Our job is to look the other way until a good thought happens along and then we play with that one. The same way we pick the things we like in other parts of our lives. We have the choice to pick the things we think about, believe and like. Thoughts both bad and good will pass, like a cloudy day. However, the thoughts we hold onto are going to shape our consciousness. Hold onto bad thoughts and see where that gets you. Play with and nurture positive thoughts and life looks much better. Things will naturally move in a good direction.Now back to financial leadershipIt is simple. What are you believing and how is it making you feel and what direction are you heading in?Do you believe that you were born without the numbers gene? Do you imagine how embarrassed you will be at the department head meeting when you cannot explain why your payroll is more than the forecast? Do you panic when you look at the statement and none of it makes any sense? Do you feel a sense of dread about the numbers?Or:Do you believe that the numbers are just another part of the business and that with a little practice you can learn how to manage? Do you imagine that soon you will be able to do your forecast, track your revenues, adjust your monthly expenses and payroll based on the volume of business, review your month end P&L and GL for accuracy and finally write your departmental business commentary? Do you imagine that others have crossed the same bridge of knowledge and ability successfully and you can too? Can you imagine how good it will be to manage your department's finances?Financial leadership is about your imagination and believing you can build your muscles and the desire to feel good about your abilities and yourself.For a complimentary copy of my guidebook on creating a finically engaged team in your hotel head over to my website, www.hotelfinancialcoach.com and don't forget to email me david@hotelfinancialcoach.com for some of my free spreadsheets.
Article by David Lund

Hospitality Financial Leadership - The Busy Hotel Executive

The Hotel Financial Coach ·19 June 2018
Many people are fond of saying the numbers are the hard part of hospitality. That's not true. What is true is we do not exercise these muscles. We do not even know we have a financial muscle in many cases. This story is about one of those people and how I was able to help her. Names and places are changed to keep anonymity.Tina emailed me with a somewhat cryptic and erratic message that almost had me delete the email without even responding. A message about needing help with budgeting and I could tell immediately that this person was racing against time. You know the kind of note that someone writes when they are doing three other things at the same time. That's what my instinct told me. It also told me to slow down and see if this was someone who needed my help.I replied to Tina's note and suggested a call to discuss her needs. She immediately replied yes, and I followed up with two open times in the following week. She replied, and we had a time for our call booked--now she just needed to confirm a phone number for me to call. No response to this question. I sent a note early on the morning of our scheduled call that I still needed a phone number. No reply. Ten minutes past the time of our call and my phone rang. I did not recognize the caller, so I let it go to voicemail. It was Tina. I picked up the phone.That was a long paragraph to tell you this lady was a busy hotel executive. She was just appointed as the director of operations in a 600-room hotel in Chicago. She immediately impressed upon me just how busy she was with meetings, long hours, vacant leadership positions, a 90 percent occupancy week, owner's meetings, a GM that had expectations. All of this in less than 60 seconds. After I had an opening in the barrage I asked her how I could help. She told me she had more than 15 years of experience, but numbers were not her strong suit. Lots of operational experience in both rooms and F&B, but not comfortable with numbers.We talked, and I asked her why she didn't have a comfort level with numbers and she said it was just one of those things that never naturally came her way. No direct experience and spending most of her career in positions where the numbers were not part of her responsibility. A familiar story and a hallmark of hospitality. Look after the guests and the colleagues; someone else will look after the numbers. I did not believe her for a minute. But it was way too early in our relationship to tell her the truth. If she stuck around long enough it would be revealed, but not now.I listened to a few more war stories and then I asked her if she would like to have another call where I would coach her. My gift to her. She said she would like that. We coordinated a time, I got her number and that was that.Over the next three weeks, she canceled and changed the appointment four times. This is a busy person. No, not busy, just not committed to herself. I see this quite often. When we finally did get on the phone I asked her about her commitment to herself and specifically how committed she was to change the relationship she had with her numbers. She seemed kind of puzzled by my question."I want to get a better understanding of the numbers," she said."Why have you rescheduled our call so many times?" I asked.She went on again about how busy she was, and I listened for a moment and then asked, "Over the last two weeks since we spoke, did you have dinner every day?""Yes," she said."Did you manage to get to sleep every night?""Yes," she said with a little laugh."What about coming to work, did you manage to get to work each day you were required to be there?""Yes, what's this all about?" she asked.I replied, "Your problem with numbers isn't because you lack the ability, you are just not committed to it. And unless you are willing to make it a priority and lock in the time, it is not going to happen."There was a moment of silence and I was not willing to fill the void. I waited for what seemed like a long time until she spoke."I know," she said, "I do this a lot with things that I think are difficult.""How you do this thing is how you do everything in your life," I said."If you're willing to recognize that and if you are willing to really commit to this, then I can help you," I continued, "If you're not, then do us both a favor and let's both move on.""No, no," she said, "I want this more than anything right now and I'm willing to commit.""That means a weekly call with me that does not get canceled or postponed, ever. Making yourself and-- in this case--your development as important, or more important, than the one thousand other things you need to deal with each week. Make your learning and personal development the priority and schedule your world accordingly."This is what's missing. If you think the numbers in hospitality are the hard part, then you are just not committed enough to change that. Up your commitment and the numbers will start to come together for you. It is no different than anything else in life.The very notion that somehow you were in the wrong checkout line when they handed out the numbers gene is not true. It is just a popular excuse.What you focus on in your life gets results, it is that simple.If you would like a copy of any of the following send me an email at david@hotelfinancialcoach.comIncentive Plan TemplateEFTE and Productivity ExerciseHotel Financial Policy Manual - Inventory of "Sections"Hotel Financial Coach "Services Sheet"A White Paper - Creating a Hotel Policy ManualF&B Productivity SpreadsheetRooms Productivity SpreadsheetFinancial Leadership Recipe F TAR WA White Paper - A Six Month Workshop and Coaching AssignmentHotel Financial Coach - "Speaking Sheet"Flow Thru Cheat Sheet - EnhancedVisit my website today for a copy of my FREE guidebookThe Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotel www.hotelfinancialcoach.com

Hospitality Financial Leadership Business Acumen and Women

The Hotel Financial Coach ·12 June 2018
I may have caught your attention with this potentially explosive title, so I hope you will read this and either help change this inside your hospitality business or personally get your hospitality business acumen on, whether you're a woman or not. In my experience in the last 35+ years I know three things are true about women and business acumen. By the way, I think the word "acumen" is the wrong word simply because it has the word men in it. To my way of thinking it is a non-starter right out of the gate because it sounds sexist. To me the words to describe any manager who has their stick together with the numbers side of our business should be Hospitality Financial Leadership Skills. We need the word Leadership in our description. Leadership is about communication and development. Perhaps we could swap out Financial and replace it with Business. Hospitality Business Leadership Skills. I just wrote these four words together for the first time. I am going to try them out and if you have an opinion on the little debate I just started about words and which ones are best, I would love to hear from you. The first thing I know about women in the hotel business is there are not enough in senior leadership positions. Specifically, General Managers. I do not have any hard data to cite here but there are lots of articles that have been published that exalt the unbalanced results. Just google, "Women in senior hospitality management rolls," and you will find lots of links to articles and papers on this subject. Why are the numbers so one-sided toward men?Three main reasonsOne, we do not train our managers on finances. We do not have systems inside our hotel companies to train women or men on Hospitality Business Leadership Skills. We still cling to a system of mentoring, (there goes the men word again). We cling to a somewhat sick right of passage to get the numbers down. Two, men are--more often than women--risk takers. This propels them through the "figure it out as you go" system faster and more often than women. Three, men have always accounted for more senior leadership rolls and they favor more men. Long hours, children, family life and sacrifice all favor a man's world. This is simply my opinion and I want this to change. There is no argument to the imbalance and it has improved but we still have a long, long way to go. The second thing I know is, in my experience, often when we give our female managers training and support around the numbers and they accept the challenge, they are equal to and often better than men at delivering financial results. When I consider what is required to create the kind of engagement with the numbers inside the hotel, I am focusing on managers consistently and accurately preparing their departmental payroll and expense Forecasts. Tracking business volumes, Adjusting their spending to maximize flow thru. Reviewing the month end results for accuracy. Writing their commentaries. F TAR W. Read the article on how to create financial leadership using my system. http://hotelfinancialcoach.com/f-tar-w-the-secret-recipe-for-creating-financial-leadership-in-your-hotel/ Women are better at consistently and accurately delivering these results. I believe this is the reason why: Women pay more attention to the details, they are more organized, and men are more interested in the lime light. I know you are probably thinking that is a BIG statement to make. I make it based on my experience. With the proper training and resources, I would pick my line-up with more women than men when it comes to delivering on financial preparedness. The third thing I know is women have a predisposed belief that they were short changed with the numbers or numbers just are not a woman's thing. It is some cocktail of left and right brain misalignment. All of this is complete BS. There is not one shred of evidence that I have ever come across that supports this.Three important factors are missingOne, women, like men, need to know that in order to get ahead in the hotel business they need to know their numbers. It is not nearly enough to be good with the guests and the colleagues. Being a leader that knows their numbers and can actively participate in the financial and business strategy side is a must for advancement to senior rolls. Without this you are just another face in a long line. This is equally applied to men and women. But more frequently, women are not given this advice and they are not "groomed" as often. There is a great Ted Talk on this subject. Check it out here.Two, both men and women can easily learn the numbers and all it takes is effort, commitment and practice. To learn the numbers--like anything in life-- it takes effort, time and practice. Far too often the numbers are the very last thing aspiring managers focus on. They all use the same excuses:We are so busy.My finance person is impossible to deal with.They just change my stuff anyway.The numbers are just for the senior team.I was told to look after the guests and the money looks after itself.You get the picture. Lots of excuses and victim thinking. If you are going to ramp up your financial skills it takes work. No fairy dust here, just apply yourself. If this is not something that is readily available at work, then seek it out. Find a mentor, a night class in accounting, volunteer for projects that have a numbers side (they all do), ask for cross training. Read a book. Read my past 50 blogs on financial leadership. Oh, last but certainly not least, get a coach. And know this: It will come and when it does you will look back and laugh. You will laugh at all the fuss you made in your own mind before you crossed the financial skills bridge. Three, we confuse things and roles. Accounting underpins the language of business. To have Hospitality Business Leadership Skills you do not need to be an accountant or know accounting. Some very basic concepts, yes, but people think that accounting knowledge is what is missing. Wrong. You do not need to know squat about accounting to do your departmental expense budget and staffing guide, track productivity, adjust spending in the month-for-month based on business volumes, write your monthly commentary, read a P&L or review your general ledger listing at month end, just to name a few. People hide out with a misguided version of what they are missing and in the process of being misinformed they get scared and back away. If you are going to understand and improve your numbers, you must be open-minded and curious about how you can apply your skills and efforts to work those numbers. This is the pivot point because the work to accomplish is NOT accounting. I wrote a previous blog on this very subject with a story of a leader who did exactly this with her numbers. http://hotelfinancialcoach.com/hospitality-financial-leadership-financial-statement-analysis-and-your-hotel-career/ To wrap things up I want to tell you that I have a dream. My dream is the numbers are just as well managed in our business as the guests and the colleague engagement. What that really means is I dream that all our leaders are just as comfortable with their numbers as they are with creating great guest service and superior colleague engagement. I know that it is possible for my dream to come true. Like Walt Disney said, "If you can dream it, you can do it." I also know it is true because I have seen it happen many, many times and, Women, you do not need to take a back seat to anyone. Getting your financial game on is completely within your reach and abilities. Just jump in with both feet and apply yourself and do not take no or later for an answer. If someone or something is in your way, then move around the obstacle or even over or under. Just do not stop and look the other way. The last part of my dream is that our industry understands the numbers for what they are, and we ditch some of our stereotypes at the same time. The numbers are just another part of our business, just like guests and colleagues. Like guests and colleagues, the numbers are not going away. Here is the shift in all of this. We somehow think that the numbers are like grade 10 math, if you pass it you will never have to take math again. Well, the numbers are never going to be perfect and they are never going away. The only thing we know for sure about the budget or the forecast is it is wrong. We need to bring the same lightness to working with our numbers. Remove the seriousness and just get on with the task. We come to work every day to face the imperfect guest service delivery and the colleague engagement mess knowing it is never going to be perfect. Same goes with the numbers. Just take your shot!If you would like a copy of any of the following send me an email at david@hotelfinancialcoach.comIncentive Plan TemplateEFTE and Productivity ExerciseHotel Financial Policy Manual - Inventory of "Sections"Hotel Financial Coach "Services Sheet"A White Paper - Creating a Hotel Policy ManualF&B Productivity SpreadsheetRooms Productivity SpreadsheetFinancial Leadership Recipe F TAR WA White Paper - A Six Month Workshop and Coaching AssignmentHotel Financial Coach - "Speaking Sheet"Flow Thru Cheat Sheet - EnhancedVisit my website today for a copy of my FREE guidebookThe Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotel www.hotelfinancialcoach.com
Article by David Lund

Hospitality Financial Leadership - How the Coach Helped Me

The Hotel Financial Coach · 7 June 2018
Coaching people around the financials in hotels is what I do. I accomplish this by one-on-one coaching usually on the phone, through Skype, or in workshops where as a group we explore and debunk the mystery around the numbers. Many people are fond of saying the numbers are the hard part of hospitality. That is not true. What is true is we do not exercise these muscles. We do not even know we have a financial muscle in many cases. This story is about one of those people and how I was able to help them. Names and places are changed to keep anonymity. Chris sent me an email requesting some of my free documents that I offer on my weekly blog posts. I think he had read the article, "Financial Statements and Your Hotel Career. " His note was uplifting and he thanked me for writing the blog. Short and sweet. I replied and thanked him for his kind words and attached his free stuff to my email. About a month later he wrote to me again and asked if I could help him understand the rooms productivity measurements. I replied and sent him the link to the blog that explains how they are used. "Read this and if you want more help let's have a call," I wrote, "It will be a gift from me to you." He replied thank you and we scheduled a call the following week. During the call, he explained to me that he was the rooms division manager of a 350-room hotel in San Francisco, Calif. They had a labor planning tool and daily labor reports but no real productivity measurements to work with and no labor statistics in the property financial statements. What they were using was "the standard" that the labor planning tool generated based on job tasks that each department manager created for each position. They would input the forecast rooms and the system produced a schedule. They would compare the actual standard to the scheduled standard at the end of each week. All of this sounded familiar. I asked him what the problem was. He said, "We use this tool but at the end of the month the payroll on the financials is always too high and as a result, no one likes the tool."We looked at two things during that first callHe was able to find the latest schedule and tell me how many rooms were forecast for the next week and he also ran another report from the labor tool and was able to tell me the hours that the system had scheduled. We then broke down the hours into the following buckets: front office, reservations, bell desk, room attendants and general housekeeping. We had a subtotal for each and a total number of hours for the week. Then I had him do the division on each subtotal and the overall number. Now we were getting somewhere. Now we had the productivity for each sub-department. This took us most of the hour to unravel and he was excited to see the results. His hours per room occupied by sub-department and for the rooms division for the next week's schedule. He then asked, "Now what?" What I explained next was what he needed to do to make this weekly number relevant. I told him to go back for the past 12 months and get the hours by month for the same sub-departments and in total. Once he had that, I explained he then need to total each month's hours, for hourly and management and divide those subtotals and the total for each month by the rooms occupied for each month. I then told him to only get the productive hours: hours of regular, overtime and double time. No holidays or other hours are needed. He said, "That's a lot of work." I replied, "Not really when you consider what you will have as a result--the baseline productivity for an entire year by sub-department and in total for the rooms division." Then I moved to wrap up the call. I asked him if the information was helpful. He exclaimed that it was indeed, and we agreed on a regular series of calls. In a few short weeks, he was able to start scheduling based on productivity targets and he taught all his managers the productivity system. We then turned our attention to expenses and devised a system for him to zero base his departments' expenses. He, in turn, got his team on board to do the same exercise in each area. We worked hard to get numbers figured out. The last piece we worked on was him producing the commentary for the monthly manager's report that he submitted to his GM. Again, we worked on all the pieces and getting his managers to do their individual parts of the commentary using what he created with the labor productivity and expense management tools. In a few short months, he really grew as a manager and leader. The exercise I put him thru paid off. His department's results--the rooms profit--finished the year ahead of budget. The flow thru to the previous year was off the charts and he accepted a promotion to a bigger hotel and a bigger job. All because he got some help to learn how to use his financial muscles. It's not accounting--it's business thinking--and it's not the hard part of hospitality.For a complimentary copy of my guidebook on creating a finically engaged team in your hotel head over to my website, www.hotelfinancialcoach.com and don't forget to email me david@hotelfinancialcoach.com for some of my free spreadsheets.

Hospitality Financial Leadership - The General Manager's Yardstick

The Hotel Financial Coach ·29 May 2018
The typical GM I have seen, worked with, and gotten to know over the last three and a half decades is hardworking, dedicated and a bit of an egomaniac. Let's face it, to rise to the top in any vocation you need to have all three of those traits. They are not handing out keys to the oval office for the meek and mild, and never to the stay-at-home crowd. The job of a GM is incredibly demanding and responsibilities are huge. The place never closes, the guests always want something, and employees are never satisfied. There is always a pot of trouble cooking, and it is usually wrapped in some mystique and intrigue. I have said this before and I will say it again. GMs usually come from the sales world or an operations background. Which makes complete sense given the long hours and the schmoozing that is required for the job. What GMs bring to their job is energy, enthusiasm, creativity, and passion.What the typical GM does not bring to their role: administrative skills, focus, number savvy, computer skills, finance knowledge, business acumen, and what I always found missing the most was interest to learn any of these skills. GMs rely in large part on their financial person to carry the day. Why not? The hotel is full of parallel examples. They rely on the chef to hold the expertise of the kitchen and produce great food and not kill anyone in the process. They rely on the director of maintenance to make sure the boilers and the chillers are operating. They rely on the human resources manager to ensure the benefits and programs are in place. You would never see or expect the GM to jump in the middle of any of these functions because that is not their job. They rightfully so rely on the expertise of these professionals, right or wrong, to carry the day.When something is amiss in these areas the owner or brand is typically sympathetic and either grant a pass or add resources to fix the problem.What the GMs do not and should not get a pass on is poor financial management. After all, finances are a pillar of the hotel business. Right up there with their brother guest service and their sister colleague engagement. That is what is front and center in a GM's job description and it is how they are additionally compensated. Guest service scores, employee engagement survey results, and the profits. The 1-2-3 of the hotel business.So, why don't more GMs jump into the middle of the financial machine and make the kind of splash that they typically do with service and engagement? I believe the answer is close by. They do not have the training and experience with the numbers and as such, they hesitate to challenge the financial person or processes. There are many things going on in the financial world and they are seemingly complicated, and who wants to go there anyway? It is accounting and numbers and mumbo-jumbo balance sheets and yucky stuff. So, most GMs just tune it all out. Sure, they get and read the P&L, they know what the score is after the game. But few will jump in front of the train and wrestle their department heads to the ground and create the kind of business that holds their direct reports responsible for their results. GMs seldom go there because they are unsure of what they do not know.The typical scenario when dealing with a department head, GM and controller goes something like this: The statements come out and the GM sees the expense spending and labor are out of control. They are over budget and forecast-- way ahead of last year--and why? She or he asks the controller for an explanation and they convincingly blame the department head who did not do their forecast and had little to do with the annual budget because they just do not care. The GM now has another conversation with the department head and they put the blame squarely on the controller and his staff who are certainly inept because half the crap in their accounts is old, not right and subject to great suspicion.So, now what is the GM to do? She has two very different stories and whom should she believe? It seems every department is in the same boat. No one knows what is going on financially. They are seemingly flying by the seat of their pants. Good months only mean a bad one is around the next corner. Surprises are everywhere. Like mines in a field, they just go off when they should least expect them. With all this, the GM is convinced more than ever to stay away from the numbers. Focus instead on relationships with her direct reports and try to get everyone to play well together. This is usually the strategy because the GM has no idea where to begin to get her hotel finances in order. She did not sign up for this part of the game. And none one is telling her how to fix it.Meanwhile, the asset manager, owner and everyone else involved including the department heads and the controller are waiting for some leadership and someone to make sense of it all. The GM tries but really the effort is far short of being effective because they all think the numbers are different. They think there is a magical solution to all the infighting and confusion around who is accountable. They believe the solution lies outside of their scope. Can't someone just fix this mess?Back to the hero of this storyI met our hero rather early in my career when I was an assistant controller in a 500-room full-service hotel. I had been on the job for less than a year and my boss announced that he was taking the month of August off and I would be responsible for putting together the first full draft of next year's budget. This meant a few things, but the biggest thing I feared was having to talk to our GM. Prior to this my exposure to him was very limited and he had a reputation for being a tough cookie, to say the least.As the month went by I set about preparing the budget and the GM called me to his office. He outlined to me how each manager would present their expenses and payroll and how he would be "approving" any and all budget submissions before I did anything with their numbers. Interesting and somewhat surprising. But, then again, who was I to say otherwise--I was a super green rookie.One by one the managers had their appointments with the GM and I rode shotgun. He had instructed me to send each one their part of the four-year statement wherein four columns you could see the annual total for each line of expense and payroll. He then instructed his managers to prepare their expenses for the budget and to have a list of items for each account. No approval would be given on a cost per room occupied or cost per cover or a percentage of revenue basis. He insisted on the detail and he made each one of his managers responsible for getting their facts together. I have never seen so many people in accounts payable, sifting through files and invoices. The same for payroll. He set the standard.Each manager needed:An approved staffing guide for the budgetA clean list of salaried positions for the fixed payrollA formula for each employee in the variable positions that equated in total to hours per month on a per room occupied or per cover basis for each payroll classification equaling the best year-over-year or improved productivity compared to the four-year reportThe meetings were telling. Several managers were shown the door and were told the information they had was either incomplete or it had too many dollars. He simply looked at the information and asked what was in the expense line, comparing the four-year summary for each line and the departmental total. The same with payroll and the line-by-line productivity. Not rocket science but he sure had his managers in line. Several managers made return visits to re-present their numbers until they got it right and had his approval. What came to me to be added to the budget model was already approved.I quickly changed my opinion of this man from one of distrust and fear to one of respect and admiration. This guy knew how to manage his team. He was fair and objective and if you had good reasons for increases he listened and, more than anything else, he asked good questions. I just sat there and took it all in, a great lesson on management, organization, and budgeting. I will never forget what he taught me that August budget season. In that month I learned more about inner workings of each department in the hotel than I did in the previous five years, and so did he. That is what a good budget process will teach you.Many of his managers would come to see me after their meetings, to whine about their budget ordeal with the GM, and I would listen and commiserate. After they all "passed mustard" with the boss, the level of their knowledge and engagement around their numbers went through the roof. They had to know what was in their accounts and payroll and the boss used the budget season to get them all in shape. From this exercise, he took the review process to another level. Every month in the following year he would do the same one-on-one review of their departmental monthly financial results. This guy was on top of his business.Back to budget seasonThe following month my boss returned, and I was somewhat sad that he did. I was having a lot of fun with the budget and the GM. Two weeks later and it was time to go to a nearby city to present the budget to the corporate team including the company's CEO and a long cast of other characters. This would be the GM and my boss doing the presenting or, as we like to call it, the dog and pony show. To my complete surprise, my boss came into my office a couple of days before the scheduled review with corporate and said, "The GM wants you to go with him to present, you did the work and he wants you there with him." Wow! Was I in shock.Two days later I was on a helicopter with GM and off to the presentation. Here I was, the green rookie assistant controller, helping to present my hotel's budget to the corporate people. My GM did most of the talking. I do not remember saying much. He did take a moment when we were done and the budget was approved to tell the corporate squad what a great job I had done in the absence of my boss in putting the budget together. It was a great moment for me and my young career.I can honestly say that I have not worked with a GM since who had as much interest or backbone when it came to the numbers. GMs leave it up to the controller to try and sort out the wants and BS from department managers. This causes a lot of wasted time and effort. Usually, the managers have rose-colored glasses when it comes to budgeting. They think budget time should right all the wrongs and they add copious amounts of payroll and expenses. This then gets flushed out with budget consolidations and reviews, but what happens, as a result, is people waste an inordinate amount of time and they typically get discouraged and feel put upon because they do not get what they want in their budgets. All of this is nonproductive work. In as many times that I have prepared budgets, the only one in my opinion who got it right was that GM. He took the time to organize his department heads and he used the budget process to educate them, himself and me on what was going down in each area of his hotel. That, my friend, is how it should be. It's not magic but the results are magical.I vividly remember my boss telling me the budget is the GM's yardstick. It is his deal to get his managers to come to the table with what they need to run their departments. It is also his deal to make sure they understand what they have for payroll and expenses to operate their department. Equally as important is what they do not have to play with.Most GMs do not use their yardstick. Why? They think the financial piece is something else. Some weird concoction of computers, numbers, all things outside of them. But it is not. It is the same as the other pillars. They just need to take an interest and work it like he did.The moral of the storyThe GM did not know squat about accounting. He did not know the difference between a debit or a credit. All he needed was a keen interest in knowing that his department heads had their financial stick together.Simple and incredibly effective.For a complimentary copy of my guidebook on creating a finically engaged team in your hotel head over to my website, www.hotelfinancialcoach.com and don't forget to email me david@hotelfinancialcoach.com for some of my free spreadsheets.Give the coach a call and let's get going!

Hospitality Financial Leadership - The Three Dimensions of Delegation

The Hotel Financial Coach ·22 May 2018
Delegation has three dimensions that are powerful tools. Delegation is also quite often misunderstood. In this article I am going to explain my thoughts on how to use delegation to be more productive, to grow your own abilities and to help you see the way forward using delegation to develop others.First off let's examine what delegation is all about and clear up some misunderstandings. I for one was not a fan of being delegated to early in my career and I did not understand how to use it properly. I thought I was being "put upon" by being delegated to. It was not until I had my first post as an assistant controller that I started to see delegation in a different light. I vividly remember my boss coming into my office to give me yet another assignment that previously was his task. I had been in this very new and challenging role for about six months. It felt like most days I was drowning. The work just kept coming. Yet again he was giving me a report to put together that needed to be sent to corporate by the next Tuesday. That was it--the straw that broke the camel's back--so to speak."Why do I have to do another one of your chores?" I asked, somewhat frustrated, to put it mildly."Listen, David, I get to decide who is ready for more assignments around here and if you're half as smart as I think you are, you will do the same!"Wow, that hit me like a ton of bricks. My initial reaction was: what a conceited and shallow attempt to manipulate me by dumping his work on my plate. This was yet again his MO and, to boot, he was even doggedly proud of it. This envelope hit me hard. There was no way I was going to be able to swim with this crap piling up and a never-ending supply of new bunk to deal with. I worked late that evening and, on my walk home, I was recanting the episode with my boss and had an epiphany! It flew at me out of the night sky."If you are half as smart as I think you are, you will do the same."What exactly did that mean? How was I going to do the same? What was the real message inside the envelope? I thought long and hard about this and the following day I decided to get some clarity.I went to see my boss and asked him to tell me what I should be doing with delegation in my role. He smiled and said, "I was wondering how long it would take for you to wake up."He explained his view of the hotel finance office work world. It went like this: The work never stops coming. The assignments from corporate, the owners and the GM are not going away, in fact, they are going to get more and more frequent. That is just the way it is. To combat that it is our job to ensure these assignments are dealt with properly and to do that we need to take the work we have, the work we know how to do and delegate it to others. He said, and I will never forget these words, "If you know how to do something, it is time to give it up and teach someone else how to do it.""But how?" I asked, "Everyone is so busy.""By finding out what people want and helping them get it," he said. This sounded like a con if there ever was one, I thought. Then he explained that people all want to grow and have greater responsibility and move ahead.That is what we constantly need to be looking for and developing in our teams--an attitude of learning and progression. If we assume people are at their limits, then we just shut down the machine. Our job and quite frankly everyone's job is to teach and develop, and the fuel for this growth is the work we do. Once he explained it to me that way I began to see what he meant. Could I learn to do the same?First break-through as developerThe following day I sat down with our credit manager who was relativity new and green. I asked her what her goal was in the next two years. She said quite clearly to get out of the credit roll and on a path to be an accountant and eventually Controller. I was blown away by what came next. I offered to help her get there by showing her how to do some journals and reconciliations. I told her that it would be an additional workload, but I could also help her with the development of her credit and collections assistant who was chomping at the bit to become the credit manager. It seemed like someone just changed the music in our office and it now had a fresh and uplifting beat. These development exercises continued, and it was not long before I could see a much stronger and meaningful team developing.I know what some of you are thinking and I want to dispel that right now. You think that some or most of your colleagues are maxed out and on top of that they do not want to move ahead. They are happy just where they are or maybe they are even blockers. This thinking will get you nowhere fast. It is victim thinking and you need to turn it around to owning it and finding a way to lead that means everyone is a development opportunity. People naturally want to make a difference. They just need to see this and it is your job to create this environment, to have those heartfelt conversations and always be creating.The work we do is the fuel for development. When the work is properly positioned it takes on a whole new light. Think back if you will to your own development. Who helped you? Who is that individual that took you under his or her wing? I am willing to bet you that you would move heaven and earth for them. This is the kind of relationship you want to be constantly developing in your teams.This is the first dimension of delegation. Be that mentor, be that trusted guide.The second dimension of delegation is your growth. With an evolutionary plan underneath you, the path is being cleared for you to take on newer and bigger assignments. The people in your organization will see this and your career will be supercharged because you have demonstrated your ability to lead and expand.The third dimension is the most exciting. What I have always learned and seen in the development and delegation of others is what I call one step closer. People always surprise me, and this translates into creating new and innovative ways to do things. A fresh set of eyes and an engaged mind lead to progress. A great example was that credit manager who was a few years younger than me and more than just a little comfortable with macros. She automated several of the journals and created a calendar tab process for the reconciliations. Both processes were her doing and they saved considerable time. This is the by-product of learning and development--new and continuous innovation."Delegation is giving others the opportunity to participate in the story. If you have a good story, people will line up to get involved - to play a part in the story." - Eric PhillipsFor a complimentary copy of my guidebook on creating a finically engaged team in your hotel head over to my website, www.hotelfinancialcoach.com and don't forget to email me david@hotelfinancialcoach.com for some of my free spreadsheets.

Hospitality Financial Leadership - Is Teaching Hotel School Students About Accounting a Waste of Time?

The Hotel Financial Coach ·15 May 2018
I have a dream. My dream is that the numbers, the numbers that so many managers agonize over in our industry, are just as accessible as guest service and employee engagement. Let me put this another way for more clarity: I want you and the other leaders and managers in your hotel to be just as comfortable dealing with the numbers as you are dealing with guests and colleagues.You might be thinking that is a tall order. Well, I do not think so. I have seen many managers overcome their fear and confusion with the numbers. I also believe a big part of why the numbers scare so many people off is because we "seemingly" do not know how to teach them to our leaders. I also think that college and university hotel programs that teach accounting are a big part of the challenge.When we look at a college or university hotel management program, it invariably has an accounting for hospitality management course or a course by a similar name. Look inside these courses and you are likely to find all kinds of accounting stuff, from T accounts to trial balances to general ledgers, financial analysis, problem solving, cash flows, balance sheets and profit and loss statements. All of this is OK for a finance major but why are we teaching this to our hotel management students? Repeatedly I have heard from colleagues over the years just how much they hated accounting in hotel school. Over and over again I hear from leaders just how little they learned. Recently, I am hearing from schools too. They tell me just how poor the comments and ratings are for their hotel accounting courses.I remember just how confused and frustrated I was in both first and second year accounting when I attended hotel school. I do not think I learned one thing, at least I cannot remember if I did. It was always too far out there, too mumbo jumbo and, "Why are they doing this to me?" Accounting was like this water torture test we all had to endure--just get through it was our mantra.Well, no wonder no one likes the courses and it is not a surprise that they all complain. What gets taught in hotel school is exactly the wrong thing.Let me digress a littleI remember when I was taking Certified Management Accounting courses many moons ago. We had a law course. Business Law I believe it was called. And guess what? They did not have us prepare a case or defend a client. They did not even have us prepare any summations. They did not have us definitively answer any questions. What they did teach us were some principles and concepts that were in line with where we were at in relation to our other learning. It was not over our heads and when we were finished I had some basic understanding of business law concepts and still do today.When I cross the hall to the hospitality accounting class, the professors were trying to create mini accountants and this is the wrong approach. Do we honestly think that any more than .001 percent of these hospitality students will ever pursue a career in hotel accounting? If they did--like I did--they would need a rather lengthy list of other classes, courses, training, and experience.Young hotel students today will find their way into the industry and like most of us they will land in operations and a few short years later they will be a junior somebody in an operating department. Once this happens we throw schedules, purchase orders and whatever else we can find to throw at them. If they survive this we give them the forecast, budget, and commentary, not to mention all the other "special projects" or, as the job description states, all other duties as assigned. What our leaders need from school is a basic understanding of the business of hotels. What makes them tick financially and operationally--not finance and accounting courses.What students need are Financial Leadership SkillsSchools, please teach them the fundamental accounting equation, explore the basic accounting principles and then turn them on full speed to the business of hotels:Instruct them how to read and understand a hotel profit and loss statement and what constitutes a good one.Teach them about rooms market segmentation and what it all means for profitability and diversification.Baptize them in the world of food and beverage and why we produce statements for our outlets the way we do.Explore banquets and the engine of hotel F&B profit.Introduce them to the Uniform System of Accounts for the Lodging Industry (11th Edition) and why our entire industry uses this book.Stop along the way to examine real hotel ratios that people watch and the expense dictionary.Walk them through operating departments vs. non-operating departments.Tutor them in understanding RevPAR and STR dynamics.Turn them on to basic management and franchise agreement details.Delve into flow thru and labor productivity analysis.Expose them to EFTEs.Show them how to do a zero-based expense budget and forecast.Make them create a staffing guide where they differentiate between fixed and variable payroll.Critique real property commentaries and show them what owners are looking for.Introduce them to a Return on Investment model and CAP rates.I could fill the page with what they want to know and what would be really useful. But please stop trying to make them into mini accountants. This is entirely the wrong approach and a waste of time and energy. Let's start turning out students who have hospitality financial leadership skills!There is so much hotel business thinking that is crying out to be taught.Equip the leaders of tomorrow with industry business-savvy concepts and experiences.They will love it, they will remember it and--most importantly--when they are thrown to the lions they will have skills to fall back on.Try running your trial balance simulation when someone asks for next month's forecast. Good luck!

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