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.

The conference, hosted by Horwath HTL and the China Tourist Hotel Association, was held at the W Shanghai. As the leader of hospitality total solution, Shiji was invited to participate in the forum to discuss the development of the hospitality and tourism industry.The conference attracted more than 800 representatives from hotel and tourism industry owners, developers, hotel management groups and other industry leaders.The Problems of Hospitality's Digital TransformationGuest data, scattered in multiple locationsKevin King pointed out that the core points of digital transformation in the hospitality and tourism industry are the guest. The process of digital transformation is the process of continuously enhancing the guest experience, guest interactions, and converting guests into returning visitors and ambassadors thus increasing their lifetime value.In the process of digital transformation, hotels need to focus on the consumers themselves, not just servicing them when they ask for it but being ahead of their requests. The guest demand for digital solutions, today is much higher than what most hotels are able to deliver. To accommodate for the higher expectations hotels need to obtain more guest data through different consumer touchpoints for analysis and management. This isn't just about collecting a lot of data, but rather being able to effectively anticipate guest needs and thus improving the guest experience.Hence, the key to improving hotel operations technology is improving the guest profile.Consistency and uniformity of guest profile dataHowever, it is not easy for travel companies to manage guest data. The primary problems are guest data collection and the establishment of a unique identifier. The touchpoints by the guests in the hotel environment involve eating, sleeping, shopping and entertainment. For hotel and travel companies managing larger programs, such as destination projects or complex travel itineraries, the guest data is fragmented and often not manageable. The multiple touch points not only make it difficult to collect the data and use it, but it also increases the difficulty of establishing a single identifier for guest profiles.In the hotel industry, guest data can be processed by over 10 different systems before a reservation is booked, which is why the industry has been having problems with consistency and uniformity of guest profile data. The matching, deduplication and final identification of guest data is a circular and continuous accumulation process and requires new technology and systems to be truly realized. In addition, guests want more control their travel experience which is now a digital as well as physical journey. It means that a hotel needs to be able to provide a more friendly and seamless travel experience for guests and potential guests, and with increased privacy concerns of guests, this becomes an even bigger task.Understanding guests, their needs, and their preferences is the way for hotels to truly improve guest experience across the travel journey.For Change to Happen, the Hotel Industry Needs a Global and Open SolutionThe cost for hotels to build single guest profiles that work across all systems has not yet been measured in full. But it is clear that the change to a guest-first approach to hotel technology needs to happen.The solutions need to come from global and open systems that will allow the various technologies to communicate and share data. But the hurdles are more than just having APIs and open systems. There are privacy concerns that must be taken into account and more importantly, these systems need to work globally across local and international standards.In the process of researching how such a system could work, Shiji has been collecting user feedback, insights and needs from hotel customers internationally. Feedback has been organized in the following four key points.Deliver core hotel functionality to organizations small and large.Offer open integration capabilities and embrace global uniform industry standards.Improve design and user-friendliness for hotels and guests.Relevant for scalability and security across networks.While such a system doesn't yet exist, the industry has been making great progress in coming closer to one, through the adoption of open APIs and further improvement in industry standards the possibility of such a platform exists.Technology Drives Business Innovation, Cloud leads to futureThe four key points of hotel operation technology are Cloud, Open systems, Connectivity, and Guests. Cloud architecture is a prerequisite for data flow.From the current development, we believe that cloud technology can provide a strong guarantee for the deployment of open and interconnected global platforms. Cloud technology can provide unlimited possibilities and stability for global hotel operations. It requires the joint efforts and participation of all hotel groups to achieve a global journey of guest data through cloud technology, and ultimately to the guests.Today, the battle is won or lost depending on whether one exceeds guest expectation.TakeawaysThe hotel industry has always been a guest first industry, but the technology and often even processes in hotels haven't been created in the same way. As guests expect faster and more personalized service at every step of their travel and stay, it is more important than ever to think of the guest as the center of the hotel technology stack and hotel processes.In a recent interview with the CEO of Hotelbeds pointed out that hotel processes are often "hotel first" rather than "guest first" citing the example of travelers needing to wait until 2 PM for their room to be ready. While there are many reasons why such processes exist, it serves as a very graphic example of being customer first versus organizational processes first.As improvements are being made in the sector to put the guest back in the center of processes and decisions, new technology needs to be built that will assist the hotels in doing so.The endgame is an improved guest experience in both the digital and physical journey.

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.

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

The housekeeping department more often than not represents the heart of a hotel's operations as a clean room is an essential part of guest service delivery. Moreover, it's backbreaking work with wages that aren't exceedingly high, while the room attendants themselves can be put in compromising situations as they roam the corridors by themselves.It would appear, though, that labor unions throughout the United States are starting to gain ground with new legislation in several territories that mandate enhanced protocols for housekeepers' safety. Given this momentum, no matter your municipality, state or country, you would be wise to keep track of these new laws and preemptively make the necessary changes to your operations so that you don't have to play the costlier catch up game later on.On the one hand are the now-required panic buttons for room attendants, most prominently coming into effect for all hotels in Chicago and with rollouts in several other key cities. Given the way IoT technologies are progressing, equipping your entire team with small devices that can perform this function as well as integrate into your WiFi network should not be onerous. Plus, we're talking about mitigating a security risk, so everyone wins.More complex and comprehensive, California has just ratified a new law requiring specific training of housekeepers to help prevent the onset of musculoskeletal injuries as well as instructions on proper use of hazardous chemicals, all for the benefit of protecting workers from chronic medical conditions.These new programs must be specifically designed to help reduce the onset of bodily injuries through proper training for all employees, and all training must be recorded for the government to give its stamp of approval. Moreover, these regulations apply to outsourced labor - anyone who works on-property.All the mandated safety and training programs must be set up by October 2018 with hefty fines for hotels that are not compliant (roughly $13,000 USD per incidence for first-time offenders to $130,000 USD for willful or repeated violations).In terms of what's required for Californians, the core of this new legislation is the setup and enforcement of a musculoskeletal injury prevention program (MIPP). Starting with periodic evaluations of any potential onsite risks, hotels are also required to create a pervasive reporting structure for all occupational injuries as well as all steps taken to prevent onsite injuries.These MIPPs must involve extensive training of both the room attendants along with their supervisors on SOPs and proper ergonomic movements with annual retesting. Conducted in a language that the worker readily understands, everyone must now be educated and intermittently updated on the risk factors and symptoms of workplace injuries.Putting the housekeepers aside for a moment, an unhappy team can cause a serious disruption to the bottom line. A stressful environment means low morale which in turn means lower employee retention, pesky staffing issues and extra resources devoted to onboarding. Moreover, short-term disability leaves resulting from repetitive motion injuries (RMIs) or prolonged exposure to chemicals can also result in additional staffing problems, not to mention the possibility of insurance payouts.So, what can you do? As a start, you should monitor how events unfold in California and other territories where the panic button is now in effect over the next several months. With an aging workforce and more conclusive data to support labor unions' petitions across the nation, you may soon be compelled to act. From there, it would be prudent to investigate your options, then put in place your own panic button and MIPP equivalents as the benefits to your bottom line from having a healthier, safer workplace are clearer now than ever before.To read all the exact details and guidelines of this new law in California, go here: https://www.dir.ca.gov/oshsb/documents/Hotel-Housekeeping-Musculoskeletal-Injury-Prevention-proptxt.pdf

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

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.

Environmental performance accounting systems have become key in corporate social responsibility (CSR) strategies and are the focus of attention in international business conferences. From the integrated reporting initiative led by the International Integrated Reporting Council to the Environmental P&L published by Kering in 2016, from the 'True Value' accounting methodology published by KMPG in 2014 to the Natural Capital Coalition standard released in 2016, the world is full of environmental accounting initiatives. On paper, setting up an environmental accounting program is attractive because it allows companies to account for their environmental performance - but is it that simple?Companies wanting to measure their environmental performance have faced major challenges around the development of ever-refined standards, the relevant knowledge to spread in their teams, and the definition of their 'scope of responsibility'. They have also faced challenges in designing and implementing their own measurement tools. Stakeholders - including rating agencies, investors, non-governmental organizations (NGOs), and governments - have all influenced the development of both reporting frameworks and, incidentally, performance measurement systems put in place by multinationals.In this context, we have spent several years studying how one of the world leaders in the agri-food sector - Danone - has tackled environmental performance. Danone already had a strong CSR track record when it embarked on an ambitious environmental accounting program in 2007 to find a new way to measure its environmental performance.In our research, we explore its strategic choices and show the different steps it has made in implementing a company-wide environmental accounting program.We answer the following three questions:how did Danone build an entire carbon management system?what organizational structure did Danone choose for carbon accounting?which stakeholders did Danone involve in its project?In this study, we highlight among other things, the reasons for Danone's decision to measure its carbon emissions.A number of indicators can be chosen as representative of a company's environmental performance. A non-exhaustive list includes waste output, air pollution, water consumption (water pollutants released if applicable), biodiversity loss, ecological footprint, land and raw materials use, or any weighted combination of two or more indicators.Several criteria can be also considered when deciding on the main indicator of environmental performance. Again, a non-exhaustive list includes comparability with other companies, ease of use, auditability, verifiability, relevance, rigor, replicability, consistency, and how material it is to the company's stakeholders [i].Carbon was considered by Danone as a good idea for several reasons: it is understood on a global scale, is already somehow "measurable" as well as under the spotlight, and it was also able to represent the whole chain (from agriculture to landfill/recycling). Other environmental areas do not possess such features. For example, water is more local or there is very little consensus on how best to represent the impact of organizations on biodiversity to date.Tourism currently accounts for about eight percent of global greenhouse gas (GHG) emissions and significantly contributes to global warming, according to a recent study. In addition, annual growth of some four percent is anticipated over the next few years, outpacing most of the other sectors. In this context, tourism-related companies may want to address global warming and climate change and, as the adage of "what gets measured gets managed" states, set up a system to measure their GHG emissions as Danone did. Obviously, the road was full of obstacles.The main challenge Danone had to face was choosing the "right" carbon accounting standard.As Danone initially decided not to use the dominant standard (the GHG Protocol Corporate Standard), it was then difficult to communicate carbon performance results externally. They finally had to converge different accounting approaches as well as professionalize its environmental accounting system. We have seen the emergence of new roles, from carbon masters to carbon accountants, with Danone consolidating its carbon accounting through an ERP (enterprise resource planning) system.The lessons learned from the Danone example (e.g. the human resources organizational structure built to develop carbon accounting and the roles played by direct and indirect stakeholders on how to design an environmental accounting system) can be useful both for tourism or hospitality firms that have already started to tackle GHG emissions, as well as for firms that want to start and learn from the experiences of others.[i] See definitions in the IIRC, GRI, CDSB, and Natural Capital Coalition documents, as well as the SASB, FASB, and IASB.