• Value Added Tax in the GCC

    Details on the new VAT established in the region covered by the GCC, including implementation best practices and documentation requirements. By Tanya Venegas, MBA, MHM, CHIA

  • Members Only: A Room for Robots in Hospitality

    Realistic uses for artificial intelligence are increasing, making way for machine-based assistance in accounting, marketing, customer service and more. This feature details current scenarios where robotics is used in the business environment, such as for accounting tasks.

  • Letter from the HFTP Global President: A New Year Equals New Possibilities

    Written By: Timothy G. Nauss, CHAE - We are officially in the year 2018. Now is the ideal time to reflect on the successes of the old year, and prepare to make this new year the best one ever. Just as we set goals for ourselves to make us healthier, happier and more successful, HFTP as an organization sets goals each year to better meet the needs of our members and the hospitality industry.

  • GDPR in Hospitality: Vendor Compliance Query Template Available to Industry

    As a professional association, Hospitality Financial and Technology Professionals (HFTP®) created a group of hospitality industry experts to develop hospitality-specific guidelines to assist with preparation for General Data Protection Regulation (GDPR) compliance.

What (I think) we'll be talking about at ALIS next week Featured Articles·18 January 2018
Next week is the Americas Lodging Investment Summit, or ALIS, which kicks off the season of big hotel investment conferences, at least here in the U.S. It’ll be my 11th time covering ALIS. Let me just tell you, I still long for the days of Beverly Hills and San Diego, though downtown Los Angeles isn’t without its charms. (May I recommend breakfast at Fernando’s Taco Inn?) I’ll never forget my first ALIS, in 2007, when my colleague Elaine gave me tips about how to set up meetings in the lobby of the Hyatt Regency Century Plaza. She told me to look up people’s pictures online before arranging to meet them in the lobby, because otherwise “you’ll look into that lobby and just see a crowd full of white guys in dark suits who all look the same.”
Article by Carolyn Childs

How Destination Marketing Organisations Can Better Defend Their Budgets ·17 January 2018
Don't wait for budget kick-back to happen. Here's how to be better prepared with data and arguments so you can retain valuable destination marketing budgetBy Carolyn Childs, co-founder and strategist, MyTravelResearch.comIt's brutal reality. Many destination marketing organisations (DMOs) are now tasked with doing more with a lot less money. Marketing money is tight most places. US States are facing dramatic budget cuts. (Brand USA may even be scrapped.) Visit Britain has suffered years of cuts. There are many examples around the world.So what can DMOs do to better manage the process?Having worked closely with DMOs over the years, believes it's time for destination marketers to quietly review their budget defence assumptions and techniques. It's not just about this year or next year. It's a long-term strategic issue.Having looked across the range of successful strategies and talked to a variety of DMOs from national tourism organisations to local government areas, councils and towns, believes there are three indispensible elements to defending your marketing budget.We call it the "ACE" strategy.A is for Allies. Gather Them Around You The most successful DMOs we have seen have a network of people to support them that is both deep (within the visitor economy) and broad (across other sectors).You need to ask yourself, "Whose views are CFO and public auditors going to respect and trust?" "Who is too important to ignore?" To use a case study from Australia, it was the political clout of the farming sector that helped the tourism industry mitigate the impact of thebackpacker tax in 2016-17.Furthermore, don't underestimate the importance of the public in this. Call upon as many allies as possible - the public, different sectors, chambers of commerce, NGOs. Build a network of allies with skin in the game.The Big C: Collaborate With Your AlliesOnce you have your network built, speak with one voice. As tourism is a sector with competing destinations and many players - theme parks, attractions, restaurants, nature reserves -- there is a temptation for everyone to put their own spin on the story and try to lead it.Don't let that happen. Identify who should lead the message and keep it consistent across stakeholders. Policymakers have told us that it is the industry's inability to do so that makes it financially vulnerable relative to other sectors of the economy.E is for Evidence. Master It Finally, you need to support your allies and your case with firm evidence. What would be the effects of a budget cut? Which of your allies has evidence that might help? How robust is their data? Can you verify it?But beyond allies and evidence, we've found that you need to understand the mindset and concerns of financial controllers if you want to persuade them.Belief in the value of destination marketing varies a lot amongst legislators and budget controllers. Marketers often have a limited idea about those doubts and concerns. Understanding and speaking to those concerns is vital. Just as with customers, we need to see the process from decision maker's point of view.Budget kick-back could happen tomorrow. Plan for it.It's not a guaranteed approach, but we have found the three pillars of "ACE" to be most effective when securing or defending a budget. Indeed, an ACE strategy might even help you increase it.There's more information on defending destination marketing budgets here. members can hear me talk through this topic and download an infographic on the key points to keep by their desk. Want to access this? Become an MTR member here.

3 key themes for budget season Featured Articles·16 January 2018
The budget process is a time to reflect on both successes from the prior year, but also to take a step back and evaluate the upcoming year both financially and holistically. The following provides a summary of common themes surfaced during this year’s budget season, broken into three key areas: revenue, expenses and capital. 1. RevenuePrognosticators such as STR, CBRE and PwC are expecting industry-wide revenue-per-available-room to grow or decline in the range of 2% in 2018. While these may be aggregate estimates, each market, competitive set and hotel may react differently based on market-specific and hotel-specific issues. Challenge to push outside the box on RevPAR growth: In many cases, hotel teams are finding themselves “boxed into” RevPAR growth percentages by above brand guidance, with little (or no) margin to deviate from directives. This creates a conundrum for owners. Ideally, the hotel teams and ownership had discussions on RevPAR growth expectations prior to submitting the budget.
Article by David Lund

Hospitality Financial Leadership - Recording Average Length of Stay

The Hotel Financial Coach ·16 January 2018
The one thing I see time and time again with clients is just how poorly their financial statements are set up. The statements almost always lack basic information that is readily available and is critical information for maximizing profitability: poor design and missing features. If they were a car, I would want to call them a Lada. My apologies to any Russian readers.The flip side of this challenge is all the information that is needed to fix this reporting problem is at your fingertips. No new software is required. No real investment. Your team just needs to use what they already have and put it to work.Typical stumbling blocks to creating better more useful reporting are twofoldBefore I get into the two areas that typically hold us back from creating better reporting, let us remind ourselves why we are interested in having good and complete financials at our hotels. The reason we want to have great financial statements is that we want to use these instruments to make better decisions today for tomorrow's financial performance. If you cannot see the results of a certain critical aspect of your business, then how are you ever going to improve it? How will that ever translate into increased efficiency and profits? It always comes down to this simple reality: What you can't see you can't measure. What you can't measure, you can't improve.Imagine if you drove a car without a speedometer, and you kept getting speeding tickets.... The financial statement at your hotel is exactly the same.If it is not hooked up and working properly you have no idea how fast you are really going. Or better still, how fast you could be going.Back to the two stumbling blocksThe hotel business is more like the art world than real hardcore business. At least that is my take on it over the last 35 years. What I mean by that is most of our senior operational leaders are not financial people.They typically come from sales or operations and they have little formal training on the financial piece. This is not a slight to their experience or impact--it is just a fact.They are not programmed or predisposed to getting in the middle of the financial engine and ripping it apart, let alone asking or mandating reporting changes.Their modus operandi is the glitz, the spit and polish, the fun stuff, the art.They love this part and they dig in and put on the show. The show is what they get paid for, or at least that is what most leaders believe. So, they do not usually have any ideas or designs of the financial reporting piece.They take what is given and hope no one asks too many in-depth, detailed questions about the numbers.They are typically handicapped on the financials and they rely on a strong financial manager to make up for their lack of knowledge and experience with the presentation and breadth of the financial statement. This is a big mistake because getting comfy with the financials is not difficult. Once we are comfortable with what we have, we almost always see a way to get more.The second stumbling block is the somewhat typical financial leader who is not really interested in making their day or their job any more elongated or complicated: The fewer interruptions the better.They are already busy enough. Doesn't anyone know how busy I am?They want fewer questions--not more--and they certainly do not want people asking them to add more information to their financial statements.Why? Why is this the case more often than not? Again, I am not trying to paint the entire field of hotel financial leaders with the same brush. I am trying to make the point that most will not take it upon themselves to add financial statement features, or reporting statistics with an eye to having the best financial statements.Why is this the case? Well, I think it comes down to two elements: One, they usually have the attitude that operations people do not know what they need when it comes to the financials. Two, it is in their mind that it is just way too much work to stop the machine, pull out the gears, insert the new gizmo feature, re-boot and see what comes out the other end in the form of a change to the financials.In most hotels, it takes an act of Congress to make changes to the financial statements. Paramount to parting the Black Sea, it seems. But it does not need to be this way and it is certainly not complicated or expensive to make this happen. It is what I call evolution. We never really stand still. We are either hopefully moving ahead or we find ourselves silently moving backward.Back to the title of this piece: Recording average length of stayWhy would you want to have this in your financial statements? What purpose would it serve and exactly how do you calculate this statistic?The reason why you want to know the average length of stay for your hotel as a whole--and let's take it one step further, by major market segment--is to understand your different customers, their stay behavior and to ultimately maximize the average length of stay. Fewer arrivals and longer stays equal lots of good things for your hotel operation and profit.Fewer arrivals and a longer length of stay "usually" equalLess wear and tear in your lobby, hallways and room productLower labor costs at the front, in housekeeping and with your room attendantsLower amenity costsLower laundry costsLower linen replacement costsLower guest supplies costLower energy costsFewer guest requestsBetter capture ratios in your restaurants and barsLess congestion at peak times in your lobbyA better opportunity to capture a return guestLower online travel agency feesMore time to make a lasting positive relationship with every customerDon't forget for a moment that the hotel business is a game of inches. There is no holy grail waiting to be discovered that will save your way to prosperity. We are a high-volume transaction-based retail business. If your hotel has 250 rooms and you run 75 percent occupancy, you sell 69,000 rooms each year. How can you save just a little on each item on my list times 69,000? That is a nice number. Flip it around and ask how much inefficiency you can create and multiply that by the same number. That is kinda scary.Calculating the average length of stay could not be much more straightforward. You only need two numbers: room nights and arrivals. In this example last month, the hotel had 8,900 room nights (rooms sold) and 5,500 arrivals. Both numbers are readily available from your property management system or, heaven forbid, your daily reports. Just dig a little and you will find it.(8900/5500) = 1.62 nights as the average length of stay for the entire hotel last month.If understanding and maximizing the average length of stay is important to you then you will want to take it one step further and measure it by major market segment. In this example, we will use just three major segments. In your hotel, it might look different: tours, crew, sports teams, etc. If it does just pull the numbers apart so you can isolate the activity in the segment you want to measure.Transient, 2300 rooms sold and 1600 arrivals (2300/1600) = 1.44 nights - average length of stayCorporate, 3200 rooms sold and 2700 arrivals (3200/2700) = 1.19 nightsGroup, 3400 rooms sold and 1200 arrivals (3400/1200) = 2.83 nightsIncluding these statistics on financial statements is rather straightforward. You create a stat account in each department of your general ledger and an overall stat plug to zero out the P&L effect. If you do not know what this means, ask your financial leader. If they do not know or say they do not know, then get some help. Having these numbers magically appear on your financials requires a mildly skilled person to go under the hood and add the formula to your reporting application.Again, ask your finance person to just get it done!You will also want these stats in your daily reporting, so you can see in the month how things are developing. Another key aspect is including this information with your rooms forecast. This provides your operations people valuable information for their expense and labor forecasting.The last and equally important aspect of capturing the average length of stay by customer segment is how it should affect your marketing and sales plan.How can you design your M&S efforts to go after the most profitable business from an operations angle as well as wear and tear on your asset?What's the right balance between the different segments mid-week and on the weekends?How does seasonality play into this?How does demand in these segments affect this?These questions lack a definitive black and white answer. However, your ability to answer the questions better will be greatly enhanced with reporting on the average length of stay by segment in your hotel.What are you waiting for?Unlocking this information in your hotel is this simple. Go on, and get on with it already!If you would like a copy of any of the following send me an email at david@hotelfinancialcoach.comEFTE and Productivity ExerciseHotel Financial Policy Manual - Inventory of "Sections"Hotel Financial Coach "Services Sheet"F&B Productivity SpreadsheetRooms Productivity SpreadsheetFinancial Leadership Recipe F TAR WHotel 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 howyou can create more profit in your hotel.

Tips for adapting and reusing your hotel asset Featured Articles·12 January 2018
Major hotel companies have been refining their new construction prototypes during the past few years. The idea is to provide a better guest experience while being more cost effective and with a quicker build time than with previous designs. That’s good news, but when it comes to adapting an existing structure, efficiency and a fast path to opening may take a bit more thought while trying to meet brand requirements. Here are a handful of things we have learned from decades of experience that can help an owner achieve the brand objectives when looking at conversions in their market. Certain markets are better for conversionsMarkets that have a high barrier of entry provide better opportunities for a conversion due to the complexity of the planning approval/entitlement process for new construction. Adding this time element with the length of time it takes to construct a new hotel can tie up a site for between two and four years before the hotel opens and starts creating revenue. On a conversion, there is typically a structure already in place with a physical plant that may be able to be repurposed.
Article by Andrew Duguay

Foreign economic growth will be a boon for U.S. travel and hospitality industry in 2018

Prevedere ·11 January 2018
When reflecting on the lackluster growth of the travel industry and international travel during the last few years, experts have been pointing to recent geopolitical explanations as the cause for the lack of international travel to the U.S. But the reality is that the answer is economic, as the decline of international tourism has been weak since 2014. The true culprit has been the very strong U.S. dollar that began before the presidential election and continued afterward, making it more expensive for foreign travelers to come to the U.S. As a result, the U.S. travel and hospitality industries weakened. However, over the course of 2017, we've seen positive indicators that inbound travel to the U.S. will begin to pick up again; the U.S. dollar began to soften and tourism was up year-over-year from 2016.By far, the biggest indicator that international travel to the U.S. will continue to rise in 2018 is the strengthening foreign economies in Europe and Asia. The European economy has recovered from the initial shock and fear of Brexit, leading to the stabilization of the economy in both the EU and UK. We've also seen stronger GDP growth in Europe overall in 2017, a trend that's predicted to continue in 2018 leading to what some are calling a "golden period" for the Euro.In Asia, the economy in Japan and China are both growing. The third quarter of 2017 marked Japan's seventh consecutive quarter of economic growth. With government stimulus programs in place, unemployment is at a multi-decade low and persistent wage and price deflation have eased. We also saw strong consumer spending in Q2, followed by increased foreign trade in Q3, both of which have buoyed the economy.The Chinese economy, for the first time, is growing on the shoulders of strong consumer spending. Even with manufacturing weakening, consistent wage growth coupled with a stable cost of living has given rise to a new Chinese consumer, as evidenced by the fact that the service sector accounted for more than half of China's GDP in 2017. Similarly, consumer sentiment in China is up, and the yuan has strengthened while the U.S. dollar softens. Overall, China's economy is maturing from a manufacturing-based to a consumer-based economy, opening up new opportunities for American companies to market their goods and experiences to the Chinese consumer. Additionally, the Chinese Millennials are benefiting from economic reforms and western-style upbringing. These Millennials have more disposable income than past generations and are paying top-dollar for spending more on travel, often spending more than $14,000 during trips to international destinations, according to the results of a survey by Singapore Tourism Board.While strong foreign economies and a comparatively weak U.S. dollar will largely drive growth in the U.S. travel and hospitality industries in 2018, the domestic economy is also growing. As a result, domestic travel will also play a role strengthening travel and hospitality. We know that millennials value experiences and like to travel, and boomers have more disposable income than any other segment of the population thanks to the fact that they're working longer and that their wages have remained higher than at any point in history. With the opportunity to amass more wealth than any other generation, boomers have more money to spend, a portion of which we can expect to go towards domestic travel.As we enter 2018, we can expect a good year for U.S. hospitality and travel industries, both from domestic and international travelers. But the major change for the industry will be to refine their focus towards international tourists who often plan trips to the U.S. six months to a year in advance.

Lodging industry investors varied in type, motivation Featured Articles·10 January 2018
My, have times changed. There’s no question that the lodging investor of today is far more business savvy than 10 or even five years ago. While there are certainly a few individuals who are simply in the “game” to own that trophy property in a luxurious location around the globe, many investors today are looking for a specific return on their particular lodging investment. They ask sophisticated and intelligent questions to ensure that the investment is worth their while and that the ROI is going to be there.

Build, buy, hold or sell? Late-cycle owner strategies Featured Articles· 9 January 2018
This year, some analysts talk about how the cycle is “getting long in the tooth” since we have been expanding for over 90 months. Since the tourism industry is resilient and still growing, success is very possible for another several years. Further, 2018 will be very prosperous with the likelihood of tax reform, strong consumer confidence, a durable job market and a robust global economy. If you’re considering whether to buy or hold a hotel today, the quality of your team is paramount. One operator cannot optimize revenues and expenses, make sales calls and handle the financial end of the business. Substantial due diligence is required to ensure the hotel has the right management, brand, renovation and business plan/budget. Hospitality might be an art, but it surely has become a science with revenue management, distribution-channel management, social media marketing, website development and much more. If building or renovating, an architect, designer, contractor, lawyer, brand, management company, engineers and lender are required as well as a great operating team.
Article by David Lund

Hospitality Financial Leadership - Any Monkey Could

The Hotel Financial Coach · 9 January 2018
A very colorful GM that I worked with many years ago had a lot of slogans he would use to get his point across. One of my favorites is, "Any Monkey Could Fill This Place When the Phones Are Ringing!"He would say this to our director of sales quite often, not only to ridicule their efforts but to remind them that the business is there-- and it's really about maximizing the opportunity and knowing that this telephone ringing condition will not last. It never does. So, what are they doing, and what is the plan to $eize the day?This is the tale of any and every hotel. "The rising tide lifts all the boats." This quote was made famous by JFK and it is said that he got it from the Chamber of Commerce in a small New England town, probably a resort town. The relationship from this idea to your financial leadership is one of opportunity. We all know that when we have a good month, season or year we know it is because the business is there. It all starts with that. Without the business being there and coming in like spades we are sunk. The reality in that statement is true, but we also need to see that we can have a much bigger impact when we have a high tide.We seldom examine the excellent results for ways to improve. Why would we bother to do that? We just had a record year, double-digit RevPAR increase and profits are off the charts. All indications point to the fact that we are doing an excellent job. But we also know deep in our soul that the volume hides a multitude of sins.The opportunity in all of this is to step back and look to see what these sins are and how we can correct them when business is good. We seldom or never do this exercise when it is actually the best time to do it. Imagine doing a staffing review in the middle of the best year we have ever had? That is right, doing the staffing review on a full tide will yield much more treasure. In addition to finding more opportunities, you will see that finding the money to do this is much easier when times are good. Why wait for headwinds in your business and your pesky asset manager telling you it is time?The same also true for an expense reviewLooking at your spending when you are spending the most will uncover the biggest opportunities. There is a reverse psychology that appears when you do things that all others miss. People are much more willing to adjust and change when times are good. Try and do this when your business is in the tank and you will meet resistance and bad morale.The same for looking at ways to increase revenuesDo this when business is strong and you will have more creativity and certainty. Being the leader that always looks for the opportunities to grow--especially when all others look away--is the greatest use of your talent.There is a quote by Earl Nightingale and it goes like this, "Enter a market and observe what everyone is doing and do the opposite." To sum this up, look at what everyone else is doing in business and especially when business is strong, and find the opposite. Do that, seize the opportunity.Creating this kind of culture inside your business and inside the hearts and minds of your team will have an amazing effect and create superior results every time.Any monkey can follow the crowd. It is the clever chimp that knows there are more opportunities when the house is full.If you would like a copy of any of the following send me an email at david@hotelfinancialcoach.comEFTE and Productivity ExerciseHotel Financial Policy Manual - Inventory of "Sections"Hotel Financial Coach "Services Sheet"F&B Productivity SpreadsheetRooms Productivity SpreadsheetFinancial Leadership Recipe F TAR WHotel 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

2018 starts with resigning CEO, cream buns, lost drones Featured Articles· 8 January 2018
The New Year has started off in grand style, with an inspirational CEO on the move, an Italian town with sticky buns and remote thermal pools and guests deciding to ditch those annoying drone thingamajigs. First CEO casualty of 2018Back from my Christmas holidays in Spain (my wife Francesca’s twin sister lives in Valencia) and Italy (the twins grew up in Rome), I see that on the back of my 26 December article on the CEO changes seen in 2017, the first one has gone in 2018. Robert Nadler, CEO of Nadler Hotels—with four United Kingdom assets with two in the pipeline—resigned on 3 January following disagreements with shareholders as to the future path of the hotel firm Nadler founded a dozen years ago.
Article by David Lund

Hospitality Financial Leadership - Financial Statement Analysis and Your Hotel Career

The Hotel Financial Coach · 3 January 2018
If you google the words "financial statement analysis," you will get a long list of definitions like this one by Wikipedia:"Financial statement analysis (or financial analysis) is the process of reviewing and analyzing a company's financial statements to make better economic decisions. These statements include the income statement, balance sheet, statement of cash flows, and a statement of changes in equity. Financial statement analysis is a method or process involving specific techniques for evaluating risks, performance, financial health, and future prospects of an organization."What it will mean to you as a leader in the hospitality business is exactly the same and then some."What information can I get from my monthly P&L to understand my business and make better decisions?" and "What's going on in my business?" The latter is the better, more applicable, piece for an operations manager who has a healthy sense of curiosity and a leader who wants to make a difference.Anyone can look at the statement and see that one number is higher than another. Anyone can see the variance between the budget and actual for an expense line or departmental result. It does not take a rocket scientist to see the discrepancy between this year's result and last year's. It also does not take an accountant to see the variance between the actual and forecast results and do something about it.Seeing the variance is one thing. Doing something about it is quite another. Most leaders will do nothing about it unless they are specifically told to do so. Most leaders will not naturally go there. Why is this the case?Consider this:Leaders typically see that variance as someone else's responsibility. Maybe accounting or some other magical entity will swoop in and make everything all right. Someone or something will come in and sprinkle some fairy dust on things and clean this mess up.Leaders are too busy to bother with the numbers and what is the point anyway? They are just numbers someone else created that really do not have anything much to do with leaders and their performance.These are the problems and they really are masking the career opportunity you're looking for. These attitudes are problems because the messes do not fix themselves. The messes will only ever be corrected if there is a joint effort. The problems reflected in the variances on the financials run deep. Is it the budget or forecast that is inaccurate? Is it the actual spend that is wrong because of timing or changes in the business needs? Are there items that are miscoded due to errors in the data or source documents. Is the alignment of the expenses correct to the budget and forecast plan? All of this is like a big pile of cow dung and it usually reeks just about as bad.So, where is the opportunity for the operations manager?The opportunity is to become the leader that sees a problem, owns it, fixes it and ultimately becomes a star because of it! That is a big statement. I want to tell you I have seen it happen many times. Most operations managers are new in their roles and they are interested in one thing: Getting on their departmental horse and riding. That is one of the secrets in hospitality. We regularly "drain the swamp" and give a new leader a new shot at cleaning up the mess. The mess is always in need of cleaning up. That is the hotel business. Guest service and colleague engagement in that department you just took over needs your fresh set of eyes and heart. Well, guess what? The numbers need cleaning up, too, and the great news is it is not a difficult task to get the numbers working for you.If you just inherited a P&L section and it is a mess here is what to do:Make friends with your payroll, accounts payable and purchasing people. Show them you are interested in helping get things right. They will love this because you just went from being on their list of managers to chase to the much shorter list of managers who have their $@(! together. Now you have allies and they are going to help you.Stop the machine when it comes to the paperwork. Sit down with your invoices and POs and time sheets. Make sure that your processing lines up with the proper GLs. Your new friends in the administration will help you sort it all out. Just ask!When it is your turn to submit the next month's forecast, take the time to have a deep look at what you are projecting. Chances are you do not have the zero-based detail to work from. This is where you put your stake in the ground. What is in the expense accounts and what is the staffing formula for your department?First, look at the expense accounts. Most hotels do their budgets on a cost per room occupied/customer or a percentage of revenue basis. This will not help figure out how to control expenses. You need to do some research. Go to your accounts payable friend and get the details of the last three months for each of your accounts. Get them to run the GL details for you. Then pull the invoices and see what items and their corresponding quantities and prices were expensed in your area. Make your list. What will you need next month to operate? How many of each item and the price? This work will pay off in spades because you will see the inefficiency and what will emerge is a clear picture of what you need to run your department. What should be in your accounts and what is not?Payroll. You have two parts to master: fixed and variable. Fixed positions in your department are the salaried, non-scheduled employees like yourself. You need to know these positions and their pay and their holiday and vacation accruals. Next, the variable positions. What is the staffing formula? If you are running guest services you need to know the seven-day, 24-hour staffing guide. Arrivals and departures, bag pulls, rooms in the house and guest count, both on their own and in groups. From this structure, develop your schedule based on business levels. So many in-house + so many arrivals + so many departures = an 8-hour shift. Do the same for all parts of your day and week. This is where a fresh set of eyes can find gold. Redeploying inefficient labor to need periods and trimming the sails where possible can net you big savings.So, from the chaos, clean up the swamp and what emerges is a new and vastly improved department, including the service, engagement and financial piece. You don't want to be the leader that misses this opportunity.The second and more elusive opportunity comes from gaining perspective through financial statements. What is my business all about? How does what happens inside my business relate to what is on my financial statements? Here is a big clue for this piece and it takes curiosity again. What are these numbers for? Why is certain information that you do not understand included in your departmental financials? Have you ever looked at a map and said to yourself, that place looks cool and interesting? You want to go there and explore things, check it out? Well, your financial statement is exactly the same. Everything included in your statement is there for a reason. It is part of the statement because it is material to the mission of effectively running your department. Like your map, get curious and find out what that information is there for, what does it mean and how can you learn from it?As a leader, your opinion matters--I can guarantee you--and that is a bold statement. Here is what I mean. The hotel business is not a science. It is art, business and personality all mixed together. If I asked 10 of you what you would rather have: a point of occupancy or $5 in rate and why? I am sure I would have at least 12 different answers. If I asked you why your productivity slipped in the last month in housekeeping the same dynamic kicks in. What really happened, how did it affect my team's efficiency? What events and customer mix impacted my result? How about the newly renovated product and the challenges were having with visible dust? What about all the rain we had last month and the hallways needing more housemen hours? What about the flu that spread through the staff and management last month?This page could be filled with what ifs. The point is you need to have an opinion based on what happened and the result. Be the color commentator and tell us why something happened the way it did and on the other side of that coin is a clearer understanding of what you can do to get it just a little better this month.I once worked with a young lady that I will call Anne. She would come to me month after month with all the crap she found in her department's financials. It was really a mess and so was the rest of her department. She never really complained about the content, rather than that she set about doing her piece to fix it, and like magic her understanding of what it all meant arrived like a prime delivery. Before I knew it, she was telling me what it all meant--her version. Man, did it all get better fast in her department. Not long after that, she was promoted to manage another larger, more complicated, better-paying department. Today she is a GM. And she did not get there by accident. She got there through hard work, curiosity and a willingness to drain the swamp.These are the muscles you need to develop as a hospitality financial leader. It is not up to someone else (accounting) to chase you down and to get you on top of your numbers. It is the other way around. The sooner you see the opportunity in all of this the better for you and your career. It is not difficult. If someone stands in your way, find a way around them. Like I said at the beginning of this post, most leaders will not naturally do this, will you be one that does?

China - Hotel Asset Management in Numbers

Hotel Online·28 December 2017
A period of irrational hotel development drive by ulterior motives has seen properties being built that are not economical in operations, use of real estate and ultimately investment. The industry must depart from its obsession with full-service hotels and embrace more realistic investment criteria, should hotels ever become a trading asset class with reasonable liquidity, attracting investors from around the globe. Controlling labor cost is paramount and too many properties cannot drive sufficient business to justify their expenses. Most hotels are too large, both in number of units and gross floor area and feature excessive food and beverage and meeting facilities. The combination of the above factors creates poor investment returns that cannot be, and were rarely, justified on a standalone basis. By Daniel J Voellm
Article by David Lund

Hospitality Financial Leadership - A White Paper on a 6-Month Client Workshop/Coaching Engagement - Part 3

The Hotel Financial Coach ·27 December 2017
The following is an overview of a six-month financial leadership project that I recently completed at a full-service hotel. The project consisted of six half-day hospitality financial leadership workshops delivered in house and monthly 1-1 leadership coaching appointments with the 15 managers assigned to the program. Each month of the project we completed a group workshop and each manager had a coaching meeting with me.The project goal had five measurable elements:Complete Forecasts--get the managers and leaders of this hotel to complete their monthly departmental financial forecasts.Track their results throughout the month.Adjust their spending on labor and supplies according to business volumes.Review their month-end statements for accuracy, and finally,Write their departmental monthly hotel management commentary.Get the core management team to do this each month, while improving these forecasts and the hotel's financial results.Part 3 of 3The new GM attended the last two months workshops. I must say that I was a little concerned that he might cancel the whole deal. No reason to think this way other than my own imagination. We completed workshop five and he participated. Throughout the morning I was not sure how he was feeling or what he was thinking. He stood up in front of the group with the talking spoon in hand at the end of the session. He said he had been skeptical about the project given all he had heard and he was not sure at all what was going on. (After all, this is Southern California and the Left Coast.)What he said next was incredible. He said he was totally surprised by the content and the outcome of the workshop."I had no idea what this was all about," he said, "I saw how much it cost and I want to tell all of you I was skeptical that the former GM was smoking the curtains, but I completely see the value and, David, I want to thank you for leading us with this project."He continued, "To me, nothing is more important than each one of you making your own contribution to our success and I see how this program is exactly what we need to help all of us do that with the finances."We finished all six months and here are some takeaways. First off, on our second to the last workshop, I had to stop short on our individual check-ins. People were just taking too long to tell their team all the wonderful things they created, learned and put in place in their department. At the right is the last check-in.I spoke a few times with the President and he reported great things back to me about what he was hearing and seeing from the property. He told me the forecasts coming out of the hotel were now the best and he attributed it to the project. He also reminded me that in the beginning, they were the worst.In months five and six the hotel missed their top line by more than $200K. In both months the retention (negative flow) was more than 75 percent. This was attributed to the team's ability to react to the revenue picture--in the month for the month.The director of finance reported to me that the hotel's performance in these months was much better because of departmental cooperation and communication with serious savings in expenses and payroll when the revenues did not materialize as planned.Making claims about numbers and profitability is impossible. There are just too many factors to consider. However, in a hotel, you know if the team has its act together with their finances or not. When we completed the project, it was clearly a different hotel with a strong foothold in its financial leadership culture.Here are some individual reflections on some of the managers in the programThe housekeeper was a tough nut to crack. He had created an amazing scheduling tool that really helped him control his room attendant labor. Right down to the hours per room occupied every day. On the schedule and the actual monthly results. The problem was he did not want to share his little secret and he certainly was not willing to tell the DoF what his monthly labor forecast was. He had his own financial reporting and he did not believe the hotel financials. He was also pretty sure he would be asked to cut even more. With a little coaching we got him to tell the world what he had created and now it is a tool that other departments use: Hours per room occupied.The chef told me he was very proud of himself. I asked why. He said, "Before the project, I was a good chef who knew how to cook and lead his team. Now, I'm a chef that knows how to run my department like a real business. I now understand what it means to be a real chef." One that can wrap his arms around the financials too. I asked him what was so tough. He smiled and said nothing was tough, he just thought it was.The front office manager was another star in the show. He caught on quickly and was one the first to get his forecasts complete and very accurate. He worked with what I call the back of the house coordinator with what he had created. She, in turn, worked tirelessly to get people's checkbooks and purchase orders lined up.She also worked closely with accounts payable to ensure checkbooks were up to date. He supported her and the system they created for the rooms side was adopted for maintenance, guest services, and housekeeping. These little "bonuses" were not part of the plan, but they were welcomed. I always find a surprise or three like him and her. Leaders want to learn and contribute and sometimes they just need the right invitation.The spa manager was amazing. After the first month, he returned to show me what he created to forecast his payroll. The last I heard it was being rolled out to the other hotels in the company with spas. He used a function in Excel that I had never heard of. It looks at historical data and your latest drivers and it predicts the labor you need! Who knew? This process and his forecasts helped the department to a plus-20 percent contribution margin.--in a hotel spa that had been open less than one year! That is amazing.The restaurant managers were another story. Full of positive intentions but their operation was just too--I'm searching for the right words here--OK, screwed up. In the six months that I was there, we had three different restaurant managers. There is still hope!The conference services and catering manager was a challenge. A challenge because of the business volumes and the structure relative to the sales department, but in the end, she came through. This position is the toughest to get on board. They want to but they are too busy. This department is critical to the efficient operation of so much of the F&B operation. The MO here was like housekeeping. They had their own system and what was reported in the financials was of little importance. We broke through this barrier, albeit much later in the project than I would have liked.The DoF's contribution to the project was significant. He was willing to take the time to work with the other managers as long as the other managers stepped up. It is an interesting dance to watch. Who is helping who? Who thinks they are more important? These are all behaviors that emerge when you are working to draw department managers into the financial game. If the DoF cannot make time for the leaders and do it in a way that is genuine and safe--game over. This DoF made the difference and the results were not 100 percent but the hotel went from zero participation to well north of 66 percent in six months. It is impossible to put a financial return on investment this way but I know the DoF is very happy with the results of the project.The original GM who left after month four was a steady hand throughout the project. He also was frustrated with the turnover, as we all were. He was very quick to point out the positives and the results his team was making via the comments from corporate and feedback from the DoF and department managers. We commiserated more than once over a couple of key players and how to get them to step up.I would ask, "Do you sit down in your 1-1s with these managers and remind them that the numbers are just as important as the guests and the colleagues?"He would smile and say yes, but, "That's also why we have you here, David."The triangulated fire was effective and I know if we had to do it all over again, knowing what we learned, we would have got a couple of more.The new GM was the one who inherited the hotel that missed the top line forecast on his first two months. He was very quick to point out that the retention was impressive. He also wants to circle back and start over with the new managers. To train them and get them on board. I reminded him that I'm available to help and he also has a core team that can do the same.From my perspective, the project was a big success. When I started there was zero participation in any monthly process other than the revenue manager's forecast. When we wrapped up the hotel had a solid process in place to produce monthly departmental forecasts, leaders that now had a new passion for tracking the financial results in the month for the month, managers that wanted to find adjustments to schedules and expenses when revenues did not materialize, a team that eagerly reviewed their month-end statements and GLs for accuracy, and team members who write their commentaries.These are the hotel financial muscles we found and exercised. You can do the same at your hotel. It is not difficult.It does require vision, commitment, and persistence-- but after all, that's the hotel business!If you would like a copy of any of the following send me an email at david@hotelfinancialcoach.comEFTE and Productivity ExerciseHotel Financial Policy Manual - Inventory of "Sections"Hotel Financial Coach "Services Sheet"F&B Productivity SpreadsheetRooms Productivity SpreadsheetFinancial Leadership Recipe F TAR WHotel Financial Coach - "Speaking Sheet"Flow Thru Cheat Sheet - Enhanced

In Vacation Rentals YOU declare what your Mortgage Payment Will Be

The Revenue Report Card ·27 December 2017
Unlike their hotel brethren, who require large outlays of cash and mortgage financing, Vacation Rental Companies typically carry very little debt on their balance sheets.Should expansion come about through the purchase of an existing Vacation Rental Company or if the Vacation Rental Company chooses to buy "homes" that they rent, this changes the debt dynamic. Know that, Vacation Rental businesses can often be purchased inexpensively because wary buyers often don't fully understand what they're buying nor the overall concept. The value of a Vacation Rental business is derived through their existing "Rental Management Agreements" that usually self-renew every year or two. What Vacation Rental Company purchasers are buying are existing and renewing Rental Management Agreements.The renewal clause is what often spooks the inexperienced buyer. "How can I be sure homeowners will renew?" For seasoned veterans, however, it is commonly known that if homeowners are kept happy and informed they are unlikely to leave a program.The result of that discussed above is that you can often buy a prospering Vacation Rental business using a lower than normal "times earnings" factor. In turn, it means that debt service compared to earnings is kept on the low end of the spectrum when adding an existing company to your operation.Renting what you own or buy often requires sizable debt, yet the return on those careful investments can increase the Vacation Rental Companies bottom line significantly.The lion's share of all Vacation Rental cost is dictated by "the Rental Management Agreement" in declaring the distribution percentage that will be paid to homeowners. These agreements dictate what your monthly "mortgage payment" or homeowner distributions will be. It is therefore, critical that before "leaping", the Vacation Rental operator understand his/her costs and, in turn, the ability to generate a 15% to 20% bottom line profit.Revenue types, labor practices and operational costs in different regions, of course, differ. So study's will vary and must focus on local markets and practices.Because Vacation Rental Company's require such a nominal capital outlay, they can afford to pay homeowners more than condo-hotels and even traditional realtors. The Vacation Rental norm in the industry is to pay a 65% to 75% distribution on Gross Reservation Revenues.The norm in the industry for condo-hotels falls within a 42% to 48% distribution range directly on Gross Reservation Revenues. The differential in that range occurs as a result of the diamond rating of properties.Condo hotel program owners purchase "space" in the condominium. This could include the front desk, back office, executive offices, the housekeeping department, engineering department, closets and so forth. They also must pay monthly commercial Association Fees and Special Assessments. This is why they are unable to match distributions of Vacation Rental Programs.Additional "revenue types" generate income for Vacation Rental Companies that ARE NOT shared. From housekeeping fees, to resort fees, parking fees, credit card fees, refrigerator stocking fees, transportation fees, concierge fees and the like, Vacation Rental Companies keep 100% of these ancillary revenues.Add that the homeowner, in most cases, pays their own utilities, Wi-Fi, cable TV, insurance, condo fees, towels, linens, semi-annual deep cleaning fees and replaces furniture, fixtures & equipment when needed and you can see why Vacation Rentals are able to afford to pay these higher distributions and still bring respectable profit to their bottom lines.A Vacation Rental Companies Gross Operating Profit can be as high as 70% compared to average hotel Gross Operating Profits of 32%.You can also view an example of bottom line profitability in the illustrations provided below at various distribution levels.Some Vacation Rental companies absorb some of the costs mentioned; but that would not be the norm in the industry. When this occurs, of course, it has a direct impact on Gross Operating Profit and ultimately the bottom line.The mix of revenues and variable costs described means that before the Vacation Rental Company decides what to declare as their distribution percentage to homeowners, they should do a careful study of all these considerations. Providing homeowners with sizable distributions always makes a strong case to entice homeowners into a Vacation Rental Program, however, like your mortgage, you must be able to sustain that "debt service" in order to succeed. For me, taking on debt in order to sustain cash flow should never be an option; nor need it be.At times I see clients who take bridge loans during off season, but careful planning and declaring the right distribution percentage avoids this.Vacation Rentals are very unique; how often are you able to declare what your mortgage cost will be and change it if you need too?! Declaring the right "mortgage" (distribution percentage) means you will insure success, maintain your cash flows and truly enjoy the Vacation Rental experience! Below, please find an example I provide in my book, "the Definitive Study of Vacation Rentals, of a fictitious 75 "home" vacation rental operation when distributions are (a) 75% and (b) 65%.You can purchase the book on Amazon at am grateful to have been invited to speak at the upcoming "VRMA Xtravaganza Conference" on May 23, 2018. My segment will be entitled "Revenue, Metrics, Profit Margins & Establishing Vacation Rental Standards". I'd be delighted, if you're there, to meet you personally! Hope to see you. - Mail me if you'd like to meet RichE1212@gmail.comLink to VRMA Xtravaganza:

Strike One and You're Out! Five Ways to Ensure Your Customer Service Is a Hit

Shepard Presentations, LLC. ·21 December 2017
Here is a sobering statistic. According to the Five9 Customer Index 2017 report, 77% of customers in the B2C space will not do business with you again if you give them bad customer service the first time they do business with you. This is huge. That means that more than three-quarters of your customers will not give you a second chance if you don't give them the customer experience they expect the first time around. Now, while the survey is focused on retail and consumers, don't be fooled into thinking someone in the B2B space is exempt. The numbers are different, but the concept is valid for any business in any industry.Our customers are smarter than ever, at least as customer service is concerned. They know what good customer service is and they aren't just comparing you to your direct competition. Anyone that has delivered a stellar customer service experience - in any type of business - to one of your customers has just set the bar higher for you.Customer service is your competitive advantage. Numerous surveys are proving that customers are starting to shift toward service being more important than price. And, a large majority of executives have announced a major push toward creating a better, more competitive, customer service experience. Five9 surveyed 1,138 consumers and found that 89% said a "great customer experience" is a key reason that helps them decide which company to do business with. And, that reasons trumps price, product quality, and even recommendations from friends.So, what is a company to do? Here are a few suggestions. By the way, I've written about these before, but after seeing the Five9 report, this is a perfect time to remind ourselves of some of these important strategies and tactics that will help us with each and every one of our customers.Customer service doesn't just happen on the front line. It happens throughout the entire company. It's part of the company's culture.Be present in the moment. What are you doing right now - what kind of experience is the customer having at this moment - that is going to ensure that the next time he or she needs what you sell, they will come back to you?No company and no person is flawless. You can't deliver a perfect customer experience all of the time. So, when there is a problem or complaint, don't just fix it. Restore the customer's confidence. Assuming you handle the issue well, it validates the customer's choice to do business with you in the first place and proves why they should come back.Speaking of managing complaints, don't argue with a customer. You'll never win. There's an old saying that says, "You're not trying to win an argument. You're trying to win a customer."Always show appreciation to your customer. Say "Thank you" over and over again. They want and expect to know you care.Some of you may say that these five ideas are common sense. Yes, they are! However, it's not always as common as it should be. Number one, which is focused on the culture, is strategic. It takes time and an effort that is never really finished. The other four concepts are tactics. They are easily carried out by any person on your team. So, take the time to share these ideas with your colleagues. As the Five9 statistic teaches us, most of the time you only have one shot at impressing your customer. Don't strike out!

Boosting employee performance in hospitality

EHL ·21 December 2017
With that goal in mind, a new study from Ecole hoteliere de Lausanne highlights the key elements that would encourage employees to perceive themselves as insiders. In this study of more than 200 restaurant employees, EHL Professor Steffen Raub confirms that employment status drives employees' perceptions of insider status, particularly when a job involves a permanent, full-time position rather than seasonal or part-time work. But even employees in part-time and seasonal jobs can gain a greater perception of insider status when their jobs are well designed.Raub explains that core job characteristics generally promote employees' belief in the meaningfulness of their work, together with taking responsibility for outcomes and building their knowledge of work activities. Based on previous research, the elements of a well-designed job are: skill variety (that is, the variety of different activities that need to be carried out in a job); task identity (the degree to which the job allows for the completion of a whole identifiable piece of work); task significance (the degree to which the job has a substantial impact on the lives or work of other people); autonomy (the extent to which the job provides for independence and decision-making); and feedback.In addition to examining the benefits of having employees making helpful suggestions and showing initiative, Raub looked into the effect of specific job characteristics on two of the industry's greatest issues, job satisfaction and turnover. To do this, he surveyed 203 employees and eighteen of their supervisors in nine casual-dining restaurants operated by a firm in Singapore. The male-female ratio was about 2:1, most of the employees were in their twenties or early thirties, and the average tenure was about one year.Work status (permanent versus seasonal, as well as full-time versus part-time) had a noticeable effect on employees' perceptions of whether they regarded themselves as insiders. Permanent employees were more likely to see themselves as insiders, with permanent full-time workers scoring significantly higher in perceived insider status than permanent part-time employees. The perception differences between seasonal full-time employees and seasonal part-time workers were not significant, although the part-time seasonal employees did report the lowest insider perception.The study found that employees' perceptions of being insiders were significantly related to their job satisfaction and their intention to remain on the job (that is, turnover intention). Insider perception also drove higher in-role performance, voice behavior (such as making helpful suggestions), and personal initiative.Even more important for those five outcomes are core job characteristics. Employees in well-designed jobs are also more likely to stay in the job and experience relatively high job satisfaction, in-role performance, voice behavior, and personal initiative. By the same token, poorly-designed jobs make for diminished outcomes. Some of those poor outcomes can be offset somewhat by improving workers' perception of insider status. The study showed that insider status can limit the negative effects of a poorly-designed job on turnover intentions and performance, but that is not the case for other outcomes. Instead, insider status boosts the willingness of employees, who are already in well-designed jobs rather than poorly designed jobs, to make suggestions and show initiative. Raub sees the relationship as being synergistic, rather than identifying insider status as a compensatory factor.Given the importance of insider status - and the beneficial outcomes of those perceptions - one implication of this study is for managers to re-examine job design. In that context, however, we know that most hospitality operations need part-time and seasonal employees. For this reason, Raub suggests that managers do what they can to make the part-timers feel that they are an integral part of the organization. One step in this direction would be to bring human resources policies in line as far as possible between permanent full-time employees and their part-time and seasonal colleagues. Raub also proposes that managers create a supportive company culture that encourages all employees to feel they are "part of the team."To underscore the study findings, these recommendations are not just "feel good" policies. By encouraging all employees to regard themselves as insiders, managers can bring about positive outcomes for the organization, based on employees' performance and their willingness to make helpful suggestions, while reducing staff turnover.

Tax-bill benefits likely offset by other Trump policies Featured Articles·20 December 2017
Tax reform is the hottest legislative topic in Washington as Congress lurches toward its holiday break. As I write this, passing a bill and getting it to the president’s desk before Christmas is certainly not a done deal. Time is running extremely short. The details of the legislation are evolving daily. So, it’s impossible to say with certainty whether the eventual final package is good or bad for a particular industry.
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Hospitality Financial Leadership - A White Paper on a 6-Month Client Workshop/Coaching Engagement - Part 2

The Hotel Financial Coach ·19 December 2017
The following is an overview of a six-month financial leadership project that I recently completed at a full-service hotel. The project consisted of six half-day hospitality financial leadership workshops delivered in-house and monthly 1-1 leadership coaching appointments with the 15 managers assigned to the program. Each month of the project we completed a group workshop and each manager had a coaching meeting with me.The project goal had five measurable elements:Complete Forecasts--get the managers and leaders of this hotel to complete their monthly departmental financial forecasts.Track their results throughout the month.Adjust their spending on labor and supplies according to business volumes.Review their month-end statements and general ledger listing for accuracy, and finallyWrite their departmental monthly hotel management commentary.Get the core management team to do this each month, while improving these forecasts and the hotel's financial results.Go to my blog for last weeks, part 1. 2 of 3The DoF has three critical roles to play in this project. I worked closely with him throughout the assignment to ensure he stayed on track and to coach him on how to get the team to all produce.One, the DoF must really want to get their managers doing their forecasts. Not all financial people are comfortable with this. Many would rather sit in their office, do the forecast and speak to as few people as possible. This will not work. The DoF in this property was very willing to open up to the leader's needs. The first part of this process was to schedule monthly 1-1 meetings with each leader on the project. They met with the DoF and agreed which lines of the P&L they would manage and what exactly that meant as far as data and reports that the manager would need to do forecasts and the numbers the DoF needed from that manager and when. Each leader's needs are different, depending on the department they manage and their level of experience. It is key that the DoF take the individual approach to ensure no one gets left behind. These monthly 1-1 meetings are a mandatory part of the project for the DoF.Two, the DoF needs to communicate the monthly schedule and deliver on their dates and agreements. Critical cutoffs need to be understood by the management team and handicapped by the DoF.If corporate needs the forecast by the 28th, do not set the 27th as the internal forecast deadline. Give yourself time to go back to the department managers after the original forecast has been consolidated to make changes. Make sure the final numbers in the forecast are the numbers the managers produce. This is the number one challenge DoFs have.Here is how it plays out: The DoF schedules the forecast submissions from the department managers, these are consolidated, and the financial picture often does not add up. They are on a deadline from corporate, so they change a few numbers here and there to make the forecast work. You know what i mean, tweak a bit here and there. Meanwhile, the department manager gets the forecast back and someone has changed his or her submission. BIG MISTAKE. This is the number one "manager doing their own forecast" killer. Who would be willing to do this work to have someone change it in the 11th hour? DoF's need to give themselves the time to work with the departments to produce forecasts that will work.Three, the DoF must be comfortable with a little tough love and be able to hold their managers accountable. The monthly check-ins after workshop two are telling. I invited all managers to the front of the room one by one and they told their peers how they did the previous month."Did I do my forecast? Check or not? Did I track, did I adjust, did I review, and did I write?"Sometimes the managers think they delivered, and I want everyone to know it is a black and white answer.I asked the DoF after each person checked in, "Hey, DoF, are you in agreement? Did Chef do what he said he did?"This kind of accountability and the communication of it in a group setting takes a certain kind of loving action and reaction because we are human, and we do not always want to confront one another. This is something I feel is a critical step in the team getting its wings. Are we willing to hold each other accountable?The flip side of this is also key. Are my department managers willing to call out the DoF when they dropped the ball?This particular DoF and hotel were challenged with this confrontation. He moved the needle considerably with managers' accountability and his own responsibilities in the team setting. This was powerful stuff.Switching gears now... about workshops and coachingThe anatomy of the workshops is a 50/50. Half of the time and effort is spent educating managers on the financial system. I incorporate the hotel's actual current monthly statement in my content every month. I can fill the pages with what I teach over the six months, but here are a few of the menu items:Hotel financial statementsP&L and balance sheets--how to readAssets and liabilitiesPrinciples of accounting, the fundamental accounting equationThe accounting function in hotelsForecasting and budgeting techniquesREVPAR analysisFlow-thruEvery line needs an ownerROI analysisCapital planningManagement commentariesGAAP, SOX,F TAR WProductivity, EFTE'sThe 11th addition of the uniformed system of accounts for hospitalityTerms and acronymsThe link between the income statement and the balance sheetBasic business typesmarket segmentationDaily reportsPayroll and benefitsFood and beverage costsSchedulingCheckbook accountingBenchmarkingHMA's, etc. etc.The other half of the time in the workshops is spent in group leadership exercises where we play games and interact. This is definitely the fun part and it is also how people learn best. Teaching adults accounting theory and principles is tough. Hotel leaders are not wired for this. They are GO GO people. The interaction and play time is essential to bring the learning home and allow them the opportunity to express themselves. This connects them with the content and their own personal commitment to moving forward and doing their part.The one-on-one coaching time creates the catalyst to make the program much more effective.Trust. I build a 1-1 relationship with each of the core leaders including the GM and DoF. The coaching is a confidential exchange. I do not share the leaders' concerns or comments with the GM. I encourage the leaders to tell me what is going on and what is holding them back from their financials. What I learn I in turn use to "clear their path."The Want To. If you ask leaders if they would like to be "financial leaders" and have skills and confidence around the discipline, they are all going to say YES. I unlock their want to and turn it into how to. What do they need to do to take the next step in their journey? What do they specifically need to do in their department to get their forecast going? Payroll, expenses and their creativity combined with the overall monthly financial circle.Innovation. Managers of the various departments have an arsenal of tools that no one knows about. I have seen amazing ingenuity and creativity in scheduling and expenses that managers just want to keep to themselves. I encourage them to share their ideas. It always amazes me to see what people have created, but are not willing to share. I make the sharing happen and we celebrate this with the team, and it is contagious.Building a bridge. My coaching helps build the bridge that is always misunderstood in the hotel. That is the bridge between the operations people and the financial leader. They naturally do not understand each other and this masks itself in distrust. I remove this and build the bridge.The last thing I will say about the coaching is it helps your leaders get really clear on who they are being. In the beginning, there is finger pointing and victim thinking. We remove this way of thinking and replace it with what actions they will take. Action is always the remedy.With monthly workshops and coaching what we see is the team members starting to get on board with their financial work. They get on board because their team is counting on them and vice versa. They also get into the game because now they want to. Now they have a system to follow. They get their individual acts together because they see it is not so hard. Each month after the second month we do a check-in. Each team member is accountable for their individual contribution to the group. It is very interesting to see the team's dynamics change as members get on board...and not.The Only Thing We Know For SureI love teaching this part."The only thing we know for sure about the forecast is it's wrong." This is the truth about budgeting and forecasting. Knowing that the answer we produce is wrong is actually very good news. Why would you not want to take a shot and produce your department's numbers for the monthly forecast knowing the results you are going to produce are always wrong? Zero risk is the answer. This is quite often the game changer that helps managers get into the project with both feet. Just do it once. Produce your department's forecast--on time. Once this monkey is off their back, managers are on their way.Management turnover is a killer and at the same time, it is the lifeblood of any hotel especially one that is new. Turnover in the hotel featured in the above workshop, during the six-month project window, was almost 50 percent. The turnover included the general manager. Every month there was another departure, sometimes more than one. This was a challenging aspect of the project and it was also a good thing: A challenge in the fact that the investment of time and resources into that leader was now gone. A good thing in the fact that the standards were suddenly upped. New leaders were interviewed with a much greater emphasis on their financial skills and commitment. New faces attended the workshops and coaching to express all the positive things they had heard and experienced in the financial aspect of their new roles. They were excited to be part of a team that had this financial thing going on. They knew something was up--something different--and each one of them brought new life and energy to the team.The financial leadership bar had been raised.If you would like a copy of any of the following send me an email at david@hotelfinancialcoach.comEFTE and Productivity ExerciseHotel Financial Policy Manual - Inventory of "Sections"Hotel Financial Coach "Services Sheet"F&B Productivity SpreadsheetHow the Hotel Financial Coach Helped MeRooms Productivity SpreadsheetFinancial Leadership Recipe F TAR WHotel Financial Coach - "Speaking Sheet"Flow Thru Cheat Sheet - Enhanced
Article by Robert Mandelbaum

How the Composition of RevPAR Growth Impacts Changes in Profits

CBRE Hotels ·18 December 2017
Within the lodging industry, there are other metrics that have historically been reliable indicators to measure the potential for hotel profit growth. One is the change in rooms revenue, or RevPAR. Using data from our annual Trends in the Hotel Industry, we find an 86 percent correlation between annual changes in RevPAR and Gross Operating Profit (GOP) from 1960 to 2016. This implies that changes in RevPAR do provide a very strong indication of changes in GOP.The strong relationship between changes in RevPAR and changes in GOP becomes evident when analyzing data from the 2017 Trends report. From 2015 to 2016, the entire sample of 3,331 operating statements averaged a RevPAR increase of 2.6 percent, while GOP for the sample grew by 3.7 percent. However, when stratifying the sample by the magnitude of RevPAR change, we see a linear relationship between RevPAR change and GOP change (see Chart One).The Composition of RevPARChanges in RevPAR are dictated by the relative increases and decreases of occupancy and average daily rate (ADR). As shown in Chart Two, hotel RevPAR growth typically is dominated by occupancy gains during the early stages of an industry recovery. Conversely, as industry performance approaches the top of the business cycle, occupancy growth slows and ADR growth drives RevPAR increases. GOP growth can occur when RevPAR gains are driven predominantly by occupancy, or by ADR.It has long been believed that the efficiency of hotels to convert revenue to profits (flow through) is enhanced when ADR growth comprises more than half of the RevPAR gain. Conversely, GOP growth is assumed to be muted when occupancy is the main driver of RevPAR. This theory is based on the incremental variable costs associated with servicing the additional rooms that are rented as occupancy increases.On paper, this theory seems perfectly rationale. However, in recent years, we have seen a departure from this long-held belief. Econometrically, we estimated an equation to explain the 2016 change in GOP from changes in occupancy and ADR. The following equation shows that the influence of the changes in occupancy resulted in a coefficient of 1.9, while the changes in ADR lead to a coefficient of 1.8. The closeness of the coefficients can be interpreted as an indication that the influences of changes in both occupancy and ADR on movements in GOP are almost equivalent. The same analysis performed in 2013 yielded similar results.GOP Change = -0.01 + 1.9*(Occupancy Change) + 1.8*(ADR Change)The Optimal Mix in 2016When stratifying the 2017 Trends sample based on the RevPAR contribution mix of occupancy and ADR changes, the results confirm the recent diversion from long-standing thumb rule (see Chart Three). Among the four categories where the hotels achieved increases in both occupancy and ADR, the GOP increase was greatest when occupancy contributed to more than 50 percent of the RevPAR growth. In addition, GOP growth was greater at hotels that achieved an occupancy increase and ADR decrease, compared to those properties that saw their ADR rise, but occupancy decline.The recent departure from historical beliefs can be partially explained by the following factors:Since 2012, the national inflation rate has been less than 2.0 percent. In a low inflation environment, hotels are not penalized as much for the incremental variable expenses associated with rising occupancy.Contemporary revenue management systems analyze the complete profitability of potential sources of demand. This includes the other revenues generated by a piece of business, not just the rooms revenue.Implications For 2018According to the September 2017 edition of Hotel Horizons, CBRE Hotels' Americas Research is forecasting U.S. hotel occupancy to increase by 0.1 percent, along with a 2.3 percent rise in ADR during 2018. The net result is a RevPAR growth rate of 2.4 percent.Given the modest outlook for revenue growth, concurrent with the upward pressure on labor costs, hotel owners and operators are already concerned about their ability to increase profits. Unfortunately, the solace historically gained from the knowledge that revenue growth will be driven by ADR does not appear to be available as a comforting factor.
Article by Chris Mumford and Thomas Mielke

2018 Predictions for Human Capital Issues in Hospitality

AETHOS Consulting Group ·15 December 2017
AETHOS Managing Directors Chris Mumford and Thomas Mielke, both based in London, share commentary regarding trends affecting the lodging and cruise sector as well as the restaurant industry, whilst also proving specific market insights for Europe, the Middle East and Africa (EMEA) and Asia Pacific region:In the lodging and cruise sector, expect the following trends to shape the industry going forward:There will be a continued breakdown of the 'barriers' between work and life. Mielke believes this will result in more lodging companies developing informal, experience-led hybrid models centred around co-working and co-living (with shared spaces for eating, entertaining/socializing and working out). In other words, "a soft evolution of the harsh revolution we have witnessed in the past few years," says Mielke.There will be an ever-greater divergence of the spectrum - from ultra-high-end-luxury to no thrill back-to-basics concepts. Hotel companies have already been flourishing with the addition of luxury air travel and/or branching-out into the luxury cruise sector, while others have been implementing basic concepts in the motel, budget, and hostel sectors. "This divergence will not result in a considerably widening gap between the 'haves' and the 'have notes,' but instead cause a severe distinction from the 'unrestrained' traveller and the 'minimalist," says MielkeTwo seemingly opposing ideologies and brand concepts will stand out among the rest: Altruism and Hedonism. As a politically, socially and economically 'restless' world continues to trouble travellers, these two concepts will, more markedly, influence business practices and consumer behavior during 2018. Altruistic concepts will center around authenticity, community engagement, and 'giving back' - such as the sustainability-focused 1Hotel brand and Six Senses, or the greater number of 'exploration tours', coupled with 'social tourism', which we are starting to see in the cruise sector, says Mielke. Hedonistic concepts, he says, will centre around self-indulgence and pampering of the mind and body, resulting in a significant growth in the Spa sector, private clinics, and wellness services, whilst also encouraging more lodging and cruise companies to 'go boutique'.In the Food & Beverage sector, AETHOS predicts the following three trends to be points of discussion during 2018:Mainstream trends will break away from the norm: With the increasing popularity of vegetarian, vegan, and lactose-intolerant diets, Mielke believes restaurants will continue to focus on specialty items targeting the mass market, while continuing to incorporate new concepts that centre around health and sustainability. On that last note, he adds that it is probably fair to say that 2018 will be the 'year of the [superfood] avocado'!'Off-premise consumption' and 'going digital' will continue to be embraced by restaurateurs: As the disruptors, such as UberEats, Deliveroo or JustEat, have established themselves in the consumer mind, Mielke says restaurant owners and operators will increasingly join hands with the delivery companies to give rise to increasing convenience for consumers.New competitors enter the market - ones that no one saw coming: With Amazon acquiring Whole Foods, furniture retailer IKEA creating an open-kitchen concept and select clothing retailers, such as H&M, launching in-store food concepts, in addition to delivery companies setting up blind-kitchens, Mielke believes that "the restauranteurs of this world will need to 'buckle-up' and become more creative and innovative in defending their wallet share in 2018."The AETHOS Managing Directors also comment on the broader geographic trends in European, Middle Eastern and Asian regions:EMEA:Brexit will have lasting impacts on the industry and the possibility of a labour government will be a concern for the UK economy, says Mumford. Its effects are also detrimental to the hospitality sector in regard to recruitment and retention rates.Mielke and Mumford agree that Germany will continue to be a key player socio-politically in 2018 whilst Spain has become more relevant - although uncertainty remains regarding Catalonia.Dubai's business levels have been 20% off this year due to regional instability, mainly in Qatar and Saudi Arabia, says Mumford. He says "expect 2018 to be a tough year for the region, but it will start to look up in 2019 ahead of Dubai hosting the World Expo in 2020."Asia Pac:Hotels in key markets such as Japan, London, Paris, Dubai, New York will need to increasingly adapt to the increase in Chinese travellers, Mumford says. This traveller will become even more sophisticated and discerning. Specifically, the cruise sector is readying itself for an influx of Chinese travellers and has already taken concrete actions to 'beef-up' its talent pool that has the know-how and skill set to better cater to this client-base, Mielke adds.We expect to see few large transactions such as HNA's acquisition of stakes or majority interests in the likes of NH, Carlson and Hilton, comments Mumford. Private outbound investment will continue to dominate, especially in markets where high-net worth individuals are driving single asset transactions.As the Asia expert, Mumford further comments saying "Japan in particular will continue to be a target for developers and brands with overseas visitor numbers showing a 20% growth year-on-year, plus the Rugby World Cup in 2019 and Olympics in 2020 in addition to the Abenomics effect domestically.Overall, Mumford believes that Asia remains a management contract-dominated operating environment. Expect to see white label management companies appearing as local operating expertise improves and the brands start to push their franchise offering.
Article by Jim Butler

California Labor & Employment Law Update: Key Changes in 2017 and What's Slated For 2018

JMBM ·13 December 2017
California Labor & Employment Law Update: Key Changes in 2017 and What's Slated For 2018by The JMBM Labor & Employment GroupThe legal landscape for California employers continues to evolve at the state and local level - ranging from prohibitions on inquiries into an applicant's salary and conviction history, additional sexual harassment training requirements, to new immigration obligations. The following is a high-level summary of the most significant changes in state and local labor and employment laws, which go into effect on January 1, 2018, unless otherwise noted.EXPANDING POWERS OF THE DEPARTMENT OF LABOR STANDARDS (DLSE)DLSE can now independently commence investigations; petition for injunctive relief; and issue citations for suspected discrimination or retaliation based on a wage claim (SB 306). The DLSE has new powers starting January 1, 2018. With SB 306, the DLSE will now be authorized to commence an investigation of an employer, with or without a complaint being filed, when specified retaliation or discrimination is suspected during the course of DSLE investigations. The new law also authorizes the DLSE to petition a superior court for immediate injunctive relief based on a finding of reasonable cause. Such relief can include a court order that the employer reinstate employment or otherwise reverse its alleged retaliatory action against the employee. This is a huge departure from existing law which does not allow for the DLSE to seek this type of relief during an investigation.The new law also authorizes the DLSE to issue citations directing specific relief to persons determined to be responsible for violations. The law establishes review procedures, including procedures for requesting a hearing before a hearing officer, and for a petition for a writ of mandate. The law subjects an employer who willfully refuses to comply with a final order to civil penalties payable to the affected employee. The law also allows employees to seek injunctive relief in court.Contractors can now be directly liable for wage claims against subcontractors (AB 1701).On or after January 1, 2018, a direct contractor which undertakes a contract in the state for "the erection, construction, alteration, or repair of a building, structure, or other work," must assume, and be liable for, specified debt owed to a wage claimant that is incurred by a subcontractor, at any tier. The DLSE is authorized to bring an action to enforce this liability. It authorizes private civil actions to enforce the liability against a direct contractor. The new law does not apply to any work being done by an employee of the state or any political subdivision of the state. It requires a subcontractor, upon request from the direct contractor, to provide specified information regarding the subcontractor's and third party's work on the project and allows the direct to withhold disputed sums upon the subcontractor's failure to provide the requested information.NOTICE REQUIREMENTSHuman trafficking notice requirements extended to hotels, motels and bed & breakfast inns (AB 260 and SB 225).Two new laws which take effect on January 1, 2018 address human trafficking. AB 260 adds hotels, motels, and bed and breakfast inns, not including personal residences, to the list of specified businesses and other establishments required to post a notice with information related to slavery and human trafficking, including information related to specified nonprofit organizations that provide services in support of the elimination of slavery and human trafficking. SB 225 adds to the notice a specified number which a person may text for services and support, and revises the names of the nonprofit organizations listed in the notice. While not specifically addressed to employee issues, the required notice must be posted "in a conspicuous place near the public entrance of the establishment or in another conspicuous location in clear view of the public and employees where similar notices."Employers must specifically provide written notice concerning the rights of victims of domestic violence, sexual assault, or stalking (AB 2337).Existing law (Labor Code section 230.1) prohibits employers from discharging, discriminating, or retaliating against an employee who is a victim of domestic violence, sexual assault, or stalking for taking time off from work to: seek medical attention for resulting injuries; obtain services from a domestic violence shelter or rape crisis center; undergo counseling, or participate in safety planning. Last year, California passed AB 2337, which requires employers to provide written notice to employees about the rights of victims of domestic violence, sexual assault, or stalking. However, employers did not have to comply with this requirements until the Labor Commissioner developed a model notice. In June 2017, the Labor Commissioner posted the model notice. Employers may use the Labor Commissioner's notice, or create their own as long as it is substantially similar in content and clarity. The notice must include the following content:Inform employees that they have the right to take time off to obtain a restraining order/court order, seek medical attention, seek services from a domestic violence shelter, program, or rape crises center, seek counseling, or safety planning.Inform employees that they can use available vacation, personal leave, accrued paid sick leave, or compensatory time off for such purposes, unless they are covered by a collective bargaining agreement which provides different leave uses.Inform employees that they have a right to take time off for these purposes even if they do not have paid leave.Advise employees that they should give advance notice before taking leave. But, if they cannot give advance notice, they will not be disciplined if they provide proof for the absence within a reasonable time. Proof can be a police report, court order, or a doctor's/counselor's note.Inform employees that they can request as a reasonable accommodation that the employer make changes in the workplace to ensure the employees' safety. Advise employees that their accommodation request will be kept confidential.Inform employees that they have a right to be free from retaliation and discrimination and that they cannot be discharged because they are a victim of domestic violence, sexual assault, or stalking; because they asked for leave to get help; or because they asked the employer for an accommodation so they can feel safe at work.Advise employees that they can file a complaint with the Labor Commissioner's Office if they believe their rights have been violated.Employers must update their new hire/orientation materials to include either the Labor Commissioner's model notice or their own notice that satisfies the statutory requirements. Note, while employers must provide new hires with a notice of their rights under Section 230.1 (and other employees upon request), employers should consider providing a standard notice to all employees, not just new hires.PROHIBITED INQUIRIES OF JOB APPLICANTSEmployers cannot seek or use job applicants' salary histories as a factor in determining whether to offer a job (AB 168).Add this to the growing list of questions to avoid asking during a job interview: How much do you make in your current job? AB 168 prohibits an employer from seeking salary history information from a job applicant or using salary history as a factor in determining whether to offer a job. An employer also is not allowed, orally or in writing, personally or through an agent, to seek a job applicant's salary history information. Also, the law requires an employer "upon reasonable request" to provide the pay scale for a position to a job applicant. It does not apply to salary history information disclosable to the public under federal or state law.San Francisco mandates additional requirements on the prohibition of job applicants' salary histories (San Francisco's Parity Pay Ordinance.)San Francisco's Parity in Pay Ordinance is similar to AB 168, discussed above. Under the ordinance, an employer may not do any of the following:Ask about current or past compensation in the applicant's current position, or in any prior position (whether with the current employer or a prior employer).Consider an applicant's salary history as a factor in determining what salary to offer an applicant--even if the applicant voluntarily discloses his or her pay without prompting.Refuse to hire, disfavor or retaliate against an applicant for not disclosing pay history.Release the salary history of any current or former employee to an employer or prospective employer without written authorization.The Ordinance allows an employer to ask about the applicant's expectations with respect to salary. For example, it is permissible to ask about unvested equity or deferred compensation or a bonus that an applicant would forfeit or have cancelled if he or she quit a current job. This may be a way for employers to obtain salary information without asking directly for it. The Ordinance becomes operative on July 1, 2018, with penalties of up to $500 beginning on January 1, 2019.Limitations set on an employers' ability to inquire about a job applicant's criminal history (AB 1008).AB 1008 adds Government Code section 12952, which creates a new protected class under the Fair Employment and Housing Act (FEHA). Employers with five or more employees are prohibited from:Inquiring about an applicant's criminal history on a job application or at any time (i.e. during the interview process) before extending a conditional offer of employment.If employers run a conviction background check in connection with an application for employment, it is prohibited from considering, distributing, or disseminating information about (a) an arrest not resulting in a conviction, except as permitted in Labor Code section 432.7, (b) referral to or participation in a pretrial or post-trial diversion program, and (c) convictions that are sealed, dismissed, expunged, or statutorily eradicated.An employer who intends to deny an applicant a position of employment solely or in part because of the applicant's conviction history must first perform an individualized assessment. The assessment requires analysis of various enumerated factors, including whether the applicant's conviction history has a direct and adverse relationship with the specific duties of the job. If the employer decides to deny employment, it must provide the applicant written notification of its decision. The applicant then has the opportunity to respond by providing evidence challenging the accuracy of the conviction history report and/or evidence of rehabilitation or other mitigating circumstances. The employer must consider any information the applicant submits before making a final decision. If the employer's final decision is to deny employment, the employer must provide written notification to the applicant, including information on any additional appeal process and the applicant's right to file a complaint with the Department of Fair Employment and Housing (DFEH). AB 1008 does not apply to situations where employers (public and private) are required by law to conduct criminal background checks or to restrict employment based on criminal history.Employers should review their job applications, postings, and recruitment procedures to ensure they comply with AB 1008. Employers should also keep written records which demonstrate that they performed the required individual assessments and considered any applicant responses before making final employment decisions. Furthermore, employers need to comply with any related local ordinances, such as the San Francisco and the Los Angeles Fair Chance Ordinance. To the extent a local ordinance provides applicants greater protection, employers must comply with that standard.Los Angeles sets additional prohibitions on criminal history inquiries (Los Angeles Fair Chance Ordinance).Individuals with criminal records may have a better chance of finding a job in Los Angeles under the city's new Fair Chance Initiative for Hiring. Under the Ordinance, a prospective employer is not permitted to ask an applicant questions about criminal history before making a conditional offer of employment - meaning an offer that is conditioned on an assessment of the applicant's criminal history and how it relates to the duties of the job being offered. The meaning of "employment" here is broader than normal, because the law also applies to the retention of independent contractors and unpaid interns. The Ordinance became effective on January 22, 2017. The Ordinance applies to all employers located or doing business in the City of Los Angeles and that employ 10 or more employees.INCREASED EMPLOYEE PROTECTIONSEmployers cannot comply with certain requests from immigration enforcement officers unless a judicial warrant is provided (AB 450).A new law limits how much California employers may accommodate some requests from federal immigration officials. Beginning January 1, 2018, California employers "shall not provide voluntary consent to an immigration enforcement agent to enter any nonpublic areas of a place of labor," unless the immigration enforcement agent provides a judicial warrant. Similarly, employers will not be allowed to "provide voluntary consent to an immigration enforcement agent to access, review, or obtain the employer's employee records" without a warrant, except for I-9 employment eligibility and verification forms and other documents for which a Notice of Inspection has been provided to the employer. Employers must post a notice of any inspections of I-9 Employment Eligibility Verification forms or other employment records conducted by an immigration agency within seventy-two hours of receiving notice of the inspection. Upon reasonable request, the employer must provide a copy of the Notice of Inspection to an affected employee. AB 450 also provides that an employer "shall not reverify the employment eligibility of a current employee at a time or in a manner" not required by federal law. The Labor Commissioner has enforcement authority, and penalties for violations can be up to $10,000.Smaller employers (20+ employees) are now required to provide parental unpaid leave (SB 63).Small employers will need to be ready to give time off to new parents starting January 1, 2018. SB 63 will require California employers with at least twenty employees within a 75-mile radius to provide up to twelve weeks of job-protected unpaid leave to new parents for the purpose of bonding with a newborn child, adopted child, or foster-placed child. SB 63 is similar to the California Family Rights Act (CFRA), which requires employers with fifty or more employees within a 75-mile radius to offer these parental leave protections to new parents. Employers may not "interfere with, restrain, or deny the exercise of, or the attempt to exercise, any right" provided by the new law. Employees may use accrued vacation pay, paid sick time, other accrued paid time off, or other paid or unpaid time off negotiated with the employer, during the parental leave.Public employers who receive state funds are prohibited from discouraging or deterring public employees from becoming or remaining members of an employee organization (SB 285).Under Government Code section 16645.6, public employers who receive state funds are prohibited from using those funds to deter union organization. SB 285 goes a step further - prohibiting public employers from discouraging or deterring public employees from becoming or remaining members of an employee organization. Notably, this statute applies to all public employers regardless of the source of funds, including employers subject to the MMBA, Dills Act, EERA, HEERA, Trial Court Act, Court Interpreter Act, TEERA, and Section 12302.25 of the Welfare and Institutions Code. The Public Employment Relations Board has jurisdiction over any violations. Since the statute does not define what constitutes to "discourage" or to "deter," public employers must be cautious in their interactions with union members and the information they transmit about union membership. Significantly, SB 285 likely attempts to protect labor unions if the Supreme Court holds that agency fees cannot be imposed on public sector employees in Janus v. AFSCME.Amendment to the Military Veterans Code expands protections for military veterans by prohibiting discrimination in terms, conditions, or privileges of employment; violations of the law can result in criminal and civil penalties, and attorneys' fees (AB 1710 and SB 266).AB 1710 and SB 266 amends section 394 of the Military Veterans Code. Existing law prohibits discrimination against service members. These bills expand the scope of the protection for military personnel by prohibiting discrimination in terms, conditions, or privileges of employment. The law covers discrimination by individuals and public and private sector employers. Violations of the law result in criminal and civil penalties, including actual damages and reasonable attorney's fees. Given these remedies, employers need to ensure that their recruiters and supervisors are trained on service member anti-discrimination laws.Health care facilities face increased penalties for whistleblower retaliation/discrimination (AB 1102).Existing law (Labor Code section 1278.5) prohibits a health facility from discriminating or retaliating against a patient, employee, medical staff, or any health care worker because that person filed a grievance, complaint, report with the facility, or participated in an investigation or administrative proceeding related to the quality of care, services, or conditions at the facility. A violation of the statute results in a civil penalty of up to $25,000 dollars. Under AB 1102, a person who willfully violates section 1278.5 is also guilty of a misdemeanor punishable by a fine of up to $75,000 .California's recognition of nonbinary as a gender could result in new employer requirements (SB 179).Through SB 179, California now recognizes three genders - female, male, and nonbinary. This legislation allows individuals to update their gender on a birth certificate, a driver's license (beginning January 1, 2019), and obtain a court judgment (beginning September 1, 2018) without undergoing clinical treatment. Instead, the individual has to attest, under penalty of perjury, that the request for a change in gender is to confirm the person's legal gender to the person's gender identity and not for fraudulent purposes. While the impact of this legislation is unclear - it may impose new requirements on employers and educational institutions to provide additional restroom and locker room facilities.Anti-harassment training requirements expanded to include gender identity, gender expression, and sexual orientation (SB 396).FEHA currently requires employers with fifty or more employees to provide at least two hours of sexual harassment and abusive conduct prevention training to all supervisory employees within six months of an individual's assumption of supervisory duties and once every two years thereafter. SB 396 requires covered employers to include training on harassment based on gender identity, gender expression, and sexual orientation. The training must include practical examples and the trainer must have pertinent knowledge and expertise. SB 396 also requires employers to display DFEH's poster on transgender rights in the workplace.Given that sexual harassment allegations have permeated every industry and have dominated the news cycle - employers must be vigilant in providing anti-harassment training, investigating complaints, and taking prompt corrective action. Employers should review their anti-harassment/anti-discrimination trainings and policies to ensure compliance with SB 396.The Equal Pay Act now applies to both public and private sector employers (AB 46).Existing law prohibits employers from paying workers of one sex/race more than the workers of the opposite sex/race for "substantially similar work," unless the employer can show that any pay gap is justified. AB 46 amends Labor Code section 1197.5 by extending the definition of employer. The Equal Pay Act will now apply to both public and private sector employers. That said, employees still cannot sue public sector employers for penalties under Labor Code section 1199.5.Emeryville requires employers to offer additional work hours to current qualified part-time employees before hiring new employees or using contractors (Emeryville Fair Workweek Ordinance).Emeryville has enacted its Fair Workweek Ordinance which became effective on July 1, 2017. Under the Ordinance, employers must offer additional work hours to current qualified part-time employees (those with fewer than thirty-five hours of work in a calendar week) in writing before hiring new employees or using contractors or staffing agencies. In addition to being qualified to do the work, covered employees are those who perform at least 2 hours of work within the geographic boundaries of the city in a week; and qualify as an employee entitled to minimum wage under the Labor Code. Also, employers must provide new employees with good-faith written estimates of their work hours and schedules. Employers must provide employees with at least two weeks' notice of their actual schedules; notify employees of schedule changes and allow employees to decline schedule changes made without two weeks' notice; pay employees a premium for schedule changes made with less than two weeks' notice; ensure that employees have at least eleven hours off between shifts; and allow employees to request flexible work arrangements without retaliation.San Jose requires employers to offer additional work hours to existing qualified employees before hiring additional employees or subcontractors, and use a transparent and nondiscriminatory process to distribute work hours among existing employees (San Jose Opportunity to Work Ordinance).San Jose has enacted its Opportunity to Work Ordinance which became effective on March 13, 2017. Under the Ordinance, employers must offer additional hours of work to existing employees who (in the employer's good faith and reasonable judgment) have the skills and experience to perform the work before hiring additional employees, subcontractors, temporary services or staffing agencies, and use a transparent and nondiscriminatory process to distribute work hours among existing employees. In addition to being qualified to do the work, covered employees are those who, in a calendar week, perform at least two hours of work for the employer; and who qualify as an employee entitled to the California minimum wage, or is a participant in a Welfare-to-Work Program. A Welfare-to Work Program means the CalWORKS Program, County Adult Assistance Program (CAAP) which includes the Personal Assisted Employment Services (PAES) Program, General Assistance Program and any successor programs that are substantially similar.Please contact us if you would like to discuss any of the issues presented in this Update.JMBM's Labor and Employment attorneys counsel businesses and management on workplace issues, helping to establish policies that address problems and reduce job-related lawsuits. We act quickly to resolve claims and aggressively defend our clients in all federal and state courts, before the Department of Labor, the NLRB, and other federal, state and local agencies, as well as in private arbitration forums. We represent employers in collective bargaining negotiations and arbitration.This Update is provided to our clients, business associates and friends for informational purposes only. The Update included only brief descriptions of the laws at issue. Legal advice should be based on your specific situation and provided by a qualified attorney.
Article by David Lund

Hospitality Financial Leadership - A White Paper - Part 1

The Hotel Financial Coach ·12 December 2017
The project goal had five measurable elements. It was to get the managers and leaders of this hotel to complete their monthly departmental financial forecasts, track their results throughout the month, adjust their spending on labor and supplies according to business volumes, review their month-end statements for accuracy and finally write their departmental monthly hotel management commentary.In other words, get the core management team to do these tasks each month while improving forecasts and the hotel's financial results.Part 1 of 3Early in 2017, I was contacted by a hotel company president who read one of my articles in a hotel association newsletter. He asked me a little bit about how I worked with hotels and then he asked if I would come to his offices and meet with his people. To which I agreed. I went to his office the following week and the receptionist showed me to a well-appointed boardroom with a big table, beautiful art, and 10 chairs. I waited what I thought was a long time, probably no more than 10 minutes.The company president, the CEO, and VP of Human Resources joined me. We exchanged pleasantries, and then they asked me to explain what I do and how I could help them. I started by telling them my story of how I was a failure at a previous role as the controller of a large hotel some 10 years earlier. Not always a strong start but it usually gets people's attention. I explained that the reason I was failing was because I could not get the other managers to give me their monthly forecasts and as a result, I was communicating financial information that was wrong. I then explained that I discovered the cure. The cure to getting my fellow department heads to do their forecasts was to educate them on the hotel financials. I explained that the education was delivered in the form of a workshop that showed the leaders what the profit and loss statement was all about and why we needed their input.Then I explained the results of the work I did in the hotel and that in a very short period of time we totally turned things around and how the managers really liked the training--how they responded and the great results we created.The CEO asked, "In your opinion, who is ultimately responsible for the finances of the hotel?"To which I replied, "The most senior person, usually the GM."To which he replied, "So, not the financial person?""No," I said, "The financial person has a big role to play but the GM must set the tone and lead the team in all matters including the financial piece."With this 5000-pound rhinoceros on the table, my audience had a moment to huddle and the CEO then said to the president, "Well, that's it then, the GM must be the one to lead the charge and they are ultimately accountable for the financial results," to which the president eagerly agreed.I explained to the group the importance of having the senior leadership of the hotel firmly believe that the money is equally as important as guest service and colleague engagement. This conviction needs to be part of the hotel's culture. Leaders in their hotels need to see this, have a system to use and the proper support. Not that service takes a back seat to profit. Equal, that is the key!With my story told and their revelation out the president asked me when I could start and how much for my six-month program. We shook hands and I was told they would contact me shortly with the details of which hotel would be my first project.The revelation we danced around that day is all too common in our industry. Owners, brands, and executive teams are often confused and misaligned when it comes to putting the accountability for the financial results in the right place.I received an email the following week and the note contained the name of the GM, his hotel, and phone number. I called him, and we agreed that I would come and meet with him and his Director of Finance.We got together in a meeting room and I requested a whiteboard. I explained the same story of my failure and finding the cure. I then drew a chart with fictitious names down the left side with five columns: F, T, A, R, W across the top. Forecast, Track, Adjust, Review, Write. I then said to the gentlemen, I was pretty sure that on that day their department managers' report card probably looked something like that whiteboard--blank and empty.Next, I said, "I will work with your managers, educating them with the workshops and coaching them 1-1 to get them to willingly do their monthly forecasts, track their results, adjust their spending, review their statements and write their commentaries."To which I replied, "Just a guess."The GM was very curious about why a six-month program."Why so long?" he asked. "I get this question a lot", I said. I explained that in reality the project really never ends."The financial discipline in your hotel will never be completely mastered," I replied."It's just like guest service and colleague engagement, the job is never done. We use six months because that's how long it takes to educate your team with the workshops, coaching them individually so we can remove what's holding them back, practice for your leaders on their financials, time for your leaders to see your committed to this, time for your leaders to see that it is not going away, and finally time for your team to get their financial act together."In a hotel, each month equals one financial practice. Like anything in business this takes some practice and, if we are willing to stick with it, we will get results! The GM and DoF looked at each other and again smiled. With this out and on the table, I asked them both if they were committed to this plan. I also strongly cautioned them that if they were not committed to walk away! The GM's and DoF's roles in the process are just as important as mine.I explained this important aspect to both and told them we would be coordinating a "triangulated fire" throughout the venture. The three equal forces that need to be utilized throughout the project: My workshops and coaching, their commitment and support with this project from the top with their leaders and, the third piece, the element of time. Me, you and time will win this.The great thing about the monthly financial cycle in business is we get to start over each month. Take what we learned and fix what didn't work. Every month we are improving and that is what we are playing for.With that out, and clearly understood they made the commitment to the project.The first workshop was critical. I coached the GM and DoF on how to invite their team to the party we were throwing. Leaders will sit back and assess the situation and they can smell a rat a mile away. A genuine invitation to learn and grow with financials is what we created. A steadfast commitment to their personal success and prosperity.In the opening workshop, we were joined by three members of the corporate team. You know how the saying goes, "We are from corporate and we're here to help." In this case, they were a huge help. They provided the leadership their support for the project through their participation in the workshop exercises and debriefs. When we wrapped up the opening workshop everyone knew what we were working on, why and, most importantly, they all had the opportunity to verbalize any concerns they had and express their commitment to the project's goals, F TAR W.Another really important element in this workshop setting is the way we present the project. It is like an invitation to the hottest party of the year and you are invited. We make a big deal out of the participants, their learning and most importantly their contribution. AKA - you make the difference. No mention of corporate mandates, financial Armageddon or any other rat-like tactics.If you would like a copy of any of the following send me an email at david@hotelfinancialcoach.comHotel Financial Policy Manual - Inventory of "Sections"Hotel Financial Coach "Services Sheet"F&B Productivity SpreadsheetRooms Productivity SpreadsheetFinancial Leadership Recipe F TAR WFlow Thru Cheat Sheet

Bordering on the ridiculous Featured Articles·11 December 2017
The United Kingdom of Great Britain and Northern Ireland is not an island if the definition of that in sovereign terms is a land mass without borders with neighboring countries. The U.K. does have a land border, the 310 or so miles between Northern Ireland the Republic of Ireland, and it is this border that might create a potential huge headache for hoteliers. This border has been the scene of much strife over the last 50 years or so, most notably during the sectarian violence. Most commentators say a return to that scenario is very unlikely. Everyone is happy those days are over.

Putting fraud to bed in the hotel industry Featured Articles· 6 December 2017
According to the Association of Certified Fraud Examiners, the typical American company loses 6% of its annual revenue to internal fraud. That translates into a lot of towels. Who are the culprits? Unfortunately, fraud can creep into every department of a hotel, including engineering, front desk, housekeeping, accounting and food and beverage. What sets the stage for fraud? It’s a numbers game. The hotel industry is very transactions-based, with millions of transactions per day. Hotels often have many outlets, including rooms, bars, restaurants, retail, casinos and theme parks—many of which are cash intensive. As a result of these outlets, hotels need to keep a significant amount of product on hand, product that can disappear.
Article by Richard B. Evans

Vacation Rental Metrics & Margins Matter (Part 1)

The Revenue Report Card · 6 December 2017
Gross Operating ProfitGOP is a key metric that tells us how well we're performing operationally. Typically,Gross Operating Profit for Vacation Rental runs 68% - 72%Gross Operating Profit for Limited Service hotels runs 46% - 52%Gross Operating Profit for Full Service hotels runs 29% - 33%The leading question here is why there is such a large variance between Vacation Rental and Traditional Hotel Gross Operating Profits.Revenue TypesVacation Rentals and Condo Hotels have additional Revenue Types that come from (1) guests and (2) "homeowners" in rental programs. In the illustration above, 20.5% of revenues collected from guests came from Revenue Types not charged by hotels. To that, add another 4.6% of revenues collected from "homeowners" in rental programs. That's 25.1% in additional Revenue Type revenues.TIP: Revenue Types charged to guests often depend on what your competitors are charging. Please note that I have not used a number of Revenue Types that Vacation Rental Companies may be charging for (i.e. Resort Fees, Parking Fees, etc.) here.My observation on the top line on the financial statement "Gross Reservation Revenues", is that a revenue channel mix that includes Vacation Rental sites (i.e. AirBNB, VRBO, etc.) will typically bring in a lower Average Daily Rate and a higher Average Length of Stay. Hence the difference you see in that line above compared to hotels.In the illustration above, in the left column entitled "Vacation Rentals" I exclude (1) housekeeping and (2) towel & linen COSTS because (a) guests pay for them and (b) "homeowners" pay for them, respectively.TIP: Housekeeping labor and Towels & Linens are the highest line items on a hospitality financial statement.Administrative & General costs are reduced by credit card fees; because guests pay for them.What we refer to as "Sales & Marketing Division" costs in hotels, is largely non-existent in Vacation Rentals, since groups and corporate business cannot typically be entertained because there is no common meeting or banquet space. With that said, Vacation Rental businesses should spend on promotion and I've included those estimated expenditures here.Utility, Cable TV, Wi-Fi and such are costs typically paid for by the "homeowner".NOTE: Please note that I used one $1,600,000 line item under "Traditional Hotels" to account for all the different divisions in a hotel that have no relevance to Vacation Rental operations.Profit CenterVacation Rentals have a number of Profit Centers that traditional hotels DON'T.They include, but aren't limited to (1) housekeeping service, (2) selling damage insurance in lieu of taking security deposits, (3) collecting credit card fees from guests, (4) stocking refrigerators, (5) arranging transport from the airport, (6) collecting maintenance fees from "homeowners" and (6) taking on maintenance jobs for "homeowners" on interiors.Traditional On-Line Travel AgentsOne area in which the Vacation Rental industry has significant benefits over the hotel industry is in cost savings on on-line travel agents. Whereas hotels have traditionally paid 15%-21% to advertise here, Vacation Rental sites are charging 3%-7% and, the guest pays for an additional portion. As you can see, this is a vast savings from Vacation Rentals to hotels.In the next 2 features on Vacation Rental Metrics & Margins I'll discuss (1) remaining costs from Gross Operating Profit to Profit and (2) the most important Vacation Rental Metrics and how to use them."The Definitive Study of Vacation Rentals" By Richard B Evans has been published and is available on Amazon books at for $39.95.
Article by David Lund

Hospitality Financial Leadership - The Trip to the Psychologist

The Hotel Financial Coach · 4 December 2017
In life I have always believed I should seek professional help whenever necessary: doctors, dentists, accountants, mechanics, coaches and psychologists too. My father always said, "If you don't know what you're doing with what you think you are trying to fix, go see someone who knows what the hell they are doing--you have no place messing around with it." He was a master auto mechanic and he was mostly referring to the cars that people had brought him after they tried to fix whatever was wrong and inevitably made it worse, much worse.So I have a similar belief, do not mess with it if you do not know what you are doing. The key word here is "know." Many people think they "know" and that can lead to bigger problems. My trip to the psychologist was a gut reaction to the programming I had: I have a problem and I need some help before it really gets out of hand.The best advice I can give to anyone going through a rough patch is to never be afraid to ask for help. -- Demi Lovato, Stay StrongSo. I had just left my career as a hotel executive. Thirty-one years invested with the same company and I walked out the door. I was not sure that I had done the right thing. I did what was in my heart. I did what I felt I had to do given the circumstances. But still I was questioning myself.Johanne asked, "Why not see someone to talk about what you're going through, a professional?"After a few days of being home and having some really dark days I took a look online with my health insurance and found the nearest psychologist. That was my criteria location, not gender, not name, but could I walk to the appointment. The address was less than a quarter of a mile away. Across the panhandle in NOPA. I made an appointment. Craig was a transplanted Michiganite who had the most eclectic Indian art collection and a very friendly and overweight pug.I went to see Craig four times. I explained how I felt and thought about losing my job. The sessions were 50 minutes and each one was good. I was able to articulate my feelings and mostly he just listened and had the occasional question or two.I vividly remember our last session, when the lid came off. I was telling him that leaving my job was like a river and its strong current was sweeping me away. I really felt like there was something so much stronger than me that was taking me in this direction.He asked, "What was it that was taking me in that direction, away from what was so familiar?"I explained my dream of creating a business around financial leadership, my workshops, my idea to become a coach and change the way an industry leads its managers financially. He asked me why I needed to do this, what was compelling me, and what came out of my mouth was an amazing statement, one that I had no idea was in me.I answered, "I guess I get to decide what I do with the rest of my life."I was stunned, shaken to my core and flying all at the same time. Who was I to say and believe I could decide what I wanted to do for the rest of my life? We don't get to decide these things, do we?The session concluded and I had such clarity and peace in my mind. On the walk home things looked different, clearer and vivid. The smell of the cypress trees in the panhandle was so intense. The sounds of the kids playing in the park was so energizing."There is a tide in the affairs of men.Which, taken at the flood, leads on to fortune;Omitted, all the voyage of their life is bound in shallows and in miseries.On such a full sea are we now afloat,And we must take the current when it serves,Or lose our ventures." Julius Caesar Act 4, Scene 3, 218-224Things happen for a reason in life. That is what I believe. If we fail to see the why and we get hung up on the obvious and misleading misfortune, we miss an opportunity to live the kind of life that is truly an adventure and one that is larger than life. We must be willing to look for and seize the upside.It is always there, you just need to look for it. If you cannot find it - get someone to help you find it.If you would like a copy of any of the following send me an email at david@hotelfinancialcoach.comEFTE and Productivity ExerciseHotel Financial Policy Manual - Inventory of "Sections"Hotel Financial Coach "Services Sheet"F&B Productivity SpreadsheetRooms Productivity SpreadsheetFinancial Leadership Recipe F TAR WHotel Financial Coach - "Speaking Sheet"Flow Thru Cheat Sheet - Enhanced


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