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  • Letter from the HFTP Global President: At the End of the Year, We Reflect on the Best of the Year

    As we prepare to transition to the new HFTP Global board at the 2018 Annual Convention in October, I would like to take the time to reflect on my year serving as HFTP Global president.

  • Members Only: 2018 HFTP Compensation and Benefits Report

    By Tanya Venegas, MBA, MHM, CHIA. Results to the biannual survey conducted by Hospitality Financial and Technology Professionals (HFTP). Information includes data on compensation and benefits trends for finance and technology professionals in the club and lodging industries.

  • IT Spending in the Lodging Industry Three-year Analysis: 2015–2017

    By Agnes DeFranco, Ed.D., CHAE; Arlene Ramirez, CHE, CHAE; and Tanya Venegas, MBA, MHM, CHIA. PART II: An analysis of IT spending data in the lodging industry based on reporting in the new USALI Schedule 6 — Information and Telecommunications Systems.

  • HITEC Special: Revenue Strategy: Not Just a Fancy New Name for Revenue Management

    By Cindy Estis Green. A strategic view of revenue calls for proactive business mix planning and decision-making around deployed resources, well beyond reacting to what comes over the transom. Excerpt from the 2018 HITEC Bytes Special Report.

Delos, EDGE Partner to Advance Healthy Building Management Systems

green lodging news | By Glenn Hasek·16 October 2018
EDGE Technologies and Delos announced a collaboration to explore the integration of their respective platforms and capabilities toward advancing the deployment of smart-healthy building management systems for commercial buildings. Delos’ DARWIN Wellness Intelligence, paired with EDGE Technologies’ all-inclusive building technology platform, has the potential to deliver the most comprehensive confluence of data, data analytics and real time space optimization to benefit users and owners within the commercial real estate industry.

Positioning: Bringing brand equity to the bank

hotelnewsnow.com Featured Articles·16 October 2018
Positioning defines the unique value your brand delivers to customers—and every business decision can contribute to or take away from your brand’s equity. A “brand equity bank account” can help fortify your brand and lead to business growth.

Hospitality Financial Leadership - Understanding RevPAR and RevPAR Index

mycloud HOSPITALITY·15 October 2018
It is the cornerstone of the hotel world and rightfully so. It is the product of occupancy and rate smashed together. The acronym stands for “revenue per available room.” In a simple example: If my hotel was 60 percent occupied last night and my average rate was $100, my RevPAR would be $60 (100 x .6). The other way to calculate this would be to take the total rooms in my hotel—in this example it is 500—and divide that by the total room revenue last night.

California Enacts Two Laws Aimed at Combating Human Trafficking

green lodging news | By Glenn Hasek·10 October 2018
If you operate a hotel or motel in California, you need to be aware of two new laws that help combat human trafficking. The first is Senate Bill (SB) 970. The new law requires hotels and motels subject to the Fair Employment and Housing Act to provide at least 20 minutes of classroom or other effective interactive training and education regarding human trafficking awareness to each employee likely to interact or meet victims of human trafficking. This training must be completed by January 1, 2020 for workers employed as of July 1, 2019, and within six months of hire for workers employed after July 1, 2019.

Why You Need to Take a Holistic Approach to Hotel Budgeting

The Rainmaker Group · 9 October 2018
To develop an accurate and functional budget for 2019, hoteliers must take a holistic approach to the process. This involves starting with a big-picture view that includes your top company initiatives, along with a drill-down into the data to identify significant, sustainable cost-reduction opportunities in conjunction with hotel-wide profit optimization strategies. This is all then compiled into a neat package that guides you in capturing the greatest market share and revenue possible throughout the coming year.The Big Picture: Successes, Challenges, & Future ObjectivesThe first step in drafting your budget for 2019 requires an evaluation of your 2018 performance - an in-depth analysis of historical data concerning your successes and challenges. What trends, guest segments, channels, or tactics produced the highest revenues and drove the largest number of conversions? Don't simply make potentially costly assumptions or transfer line items from year to year simply because you've always done it that way.Consider your financial priorities and business goals for 2019, and the primary obstacles you'll encounter that impact them. Then thoroughly examine each area of your business - group sales, food and beverage (F&B), marketing - and explore how they contribute to your company revenue targets. Dig deep into the numbers and determine what exactly is required to meet your revenue goals. Your marketing budget should account for techniques to reach every area of your guest funnel, from those in the top-of-funnel inspiration phase, through research and planning, to building repeat business and loyalty.Complete your big-picture view by combining data with insights derived from discussions with your front-line staff. Conversations between hotel management, sales, marketing, and guest-facing staff provide invaluable information concerning what guests are looking for, happy with, or complaining about.Proactive vs. Reactive"I believe that everyone chooses how to approach life. If you're proactive, you focus on preparing. If you're reactive, you end up focusing on repairing." ~ John C. MaxwellWhen it comes to preparing your budget, it may be tempting to take the shortcut of simply using last year's budget and updating it. However, you'll likely end up with a flurry of short-term "tactical" fixes and fragmented marketing ideas designed to create isolated bursts of revenue. This is a reactive approach, with your budget based solely off what happened in the past and not at all representative of what your business truly needs to move forward.Your hotel budgeting plan should be a continuous, proactive process,1 not a reactive exercise. It should never be simply a Q4 event. Like a golfer who keeps score throughout the game, adjusting to improve performance after each hole, it's important for hotel management to proactively work on budgets year-round. To create the most accurate budget for the following year, evaluate business performance weekly and monthly. Regularly update rolling forecasts2 and measure your performance in relation to those forecasts.Long-term proactive budgets are driven from the top down. More strategic in nature, the proactive approach translates your company goals and objectives into action. It guides budget decisions in advance, and establishes how your hotel can expect to profit throughout the coming year. Further, proactive budget strategy includes accurate forecasting as an essential component.3 By utilizing a revenue management system (RMS) enhanced by the powerful analytics of a modern business intelligence platform, you can incorporate forecasting specifics such as occupancy, arrival and departure patterns, length of stay, and seasonality into your budget plan. These insights ensure you appropriately plan for labor costs and make the most of your hotel resources. You also zero in on which guest segments, ancillaries, and promotional campaigns produced the highest revenue. This places you in a much better position to allocate your resources in ways to help achieve your profit goals for 2019.Budget for Profit Not Just RevenueRevenue-generation strategy is a primary focus for hotel owners planning their 2019 budgets. It's important to remember, however, that revenue per available room (RevPAR) only tells part of the profitability story. For true budget-planning success, don't simply focus on increasing revenue, but profits.4 Is your hotel catering to the optimal mix of business to meet and exceed your financial expectations? Are you looking beyond room revenue to optimizing non-room revenue streams as well?Here again an RMS and forecasting functionality play a role allowing you to identify ways to target your highest-value guest segments in 2019. An accurate demand forecast includes unconstrained demand, stay patterns, and booking pace, which directly impact your bottom line. If your property is forecasted for a period of high occupancy due to high unconstrained demand, for example, then a revenue manager can plan to sell on low-cost/high-rate channels to maximize profits. Alternatively, forecasted low-occupancy periods could trigger an increase in promotional campaigns across all online channels - and customized promotions for off-line customers - in order to produce incremental demand. In addition, demand forecasts allow you to anticipate the additional revenue that will be generated from other departments that are proportional to room occupancy, such as F&B, spa, and other ancillary services.Take a Strategic Approach to Reducing CostsBudgeting for profit means analyzing your operational costs in relation to revenues, including purchases of perishable and non-perishable goods. As an illustration, during projected low occupancy, a hotel can plan to decrease food purchases for its buffet offerings, and reduce labor expenses by scheduling less staff in housekeeping and F&B services. In addition, you should accurately track acquisition costs5 - costs incurred to acquire reservations - for your individual property and the industry at large. By tracking both you obtain a more transparent indication of your customer acquisition efficiency, as well as the direction its trending.Many hotels will be deploying capital towards renovations in the coming year. Take a strategic approach to how you budget for your own hard and soft renovations. Projections of consistently high unconstrained demand may lead management to decide a major hotel expansion is called for. And in terms of soft renovations, a close examination of your guest segment trends and preferences will pay dividends in your budget planning success.First Forecast of the YearYour budget is truly your first forecast of the year, but no one sees into the future with 100 percent clarity. The twists and turns of this dynamic, competitive marketplace may make what seems crystal clear today, appear quite different tomorrow. A holistic budget strategy anticipates change. For optimal results invest in a flexible and robust technology solution6 that not only helps account for the multiple "what if" scenarios that will arise, but provides a distinct path toward creating operational efficiencies, improving performance, and increasing your profits - always guiding you in the direction of selling the right product, to the right customer, at the right time, at the right price, via the right channel.For more on the topic of taking a holistic approach to your 2019 plans, join Kristi White for a webinar assessing "Are You Ready for 2019?" on 10/30 at 2PM EST. Click here to register.SOURCES:1Braun, Robert, and Global Hospitality Group. "Hotel Lawyer: Tips on Negotiating Your Annual Hotel Budget." Hotel Law Blog, Global Hospitality Group, 12 Oct. 2017, hotellaw.jmbm.com/hotel-budget-tips.html.2Mest, Elliott. "10 Ways to Manage Expenses in 2018." Hotel Management, 14 Feb. 2018, www.hotelmanagement.net/operate/10-ways-to-manage-expenses-2018.3Aghazadeh, Seved-Mahmoud, "Revenue Forecasting Models for Hotel Management." The Journal of Business Forecasting, Flushing, Vol. 26. Issue 3 (Fall 2007): 33-37. https://search.proquest.com/openview/3f34c7f72d098b825231f99aed460ae8/1?pq-origsite=gscholar&cbl=281444Enz, Cathy, et al. "Study Highlights Growth of Strategic Hotel Profit Management." Admissions Statistics | Undergraduate Program | Cornell SHA, Cornell SC Johnson College of Business, 18 Apr. 2017, sha.cornell.edu/centers-institutes/chr/blog/2017/04/18/study-highlights-growth-of-strategic-hotel-profit-management/.5Starkov, Max, and Mariana Safer. "Whitepaper Available: The Smart Hotelier's Guide To 2018 Digital Marketing & Technology Budget Planning." Hotel Internet Marketing | HeBS Digital | Hotel Website Design, HeBS Digital, 15 Sept. 2017, www.hebsdigital.com/blog/must-read-whitepaper-available-the-smart-hoteliers-guide-to-2018-digital-marketing-technology-budget-planning/.6Winata, Lanita, and Lokman Mia. "Information Technology and the Performance Effect of Managers' Participation in Budgeting: Evidence from the Hotel Industry." International Journal of Hospitality Management, Academic Press, 25 July 2004, www.sciencedirect.com/science/article/pii/S0278431904000362.

Your Department Managers Really Want to Do Their Monthly Financial Forecasts

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

Hospitality Financial Leadership: Your Department Managers Really Want to Do Their Monthly Financial Forecasts

Hotel Online· 8 October 2018
You probably read the title and said to yourself, “No way, that’s a load of BS. There is no way my managers want to do their financial forecasts. Heck, I can’t even get them to submit their accruals or commentaries. We ask them to do their forecasts but rarely do we get them on time or even halfway making any sense. How on earth can I get my department managers to want to do their forecasts?”

Trump Administration Immigration Enforcement Measures Shine Spotlight on Hospitality Industry

HFTP Connect· 3 October 2018
Since taking office, President Trump’s administration has ramped up enforcement measures on various industries – especially when it comes to immigration. The hospitality industry took center stage this month when the U.S. Department of Labor (DOL) and U.S. Citizenship & Immigration Services (USCIS) announced separate, new H-2B enforcement initiatives that are focusing specifically on the hospitality industry. As a reminder, H-2B visas are seasonal visas that are used by several industries, including the hospitality industry, to adequately staff for their peak seasons.

Hospitality Financial Leadership: Understanding Liabilities

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

Hospitality Financial Leadership: Understanding Liabilities

Hotel Online· 1 October 2018
When I do financial leadership workshops with hotel teams we often talk about liabilities. I tell my audience that I know for a fact that each one of them have at least two liabilities. I get some puzzled and Kreskin-like looks from my audience as I tell them I can see two numbers floating magically above their heads. I tell them that I know for a fact that each student also knows the same figures, they are just not aware, yet!

Pressuring Congress to Pass Tax Reform 2.0 After TCJA 2025 Expiration

Lodging Magazine·26 September 2018
I speak often about the importance of tax reform because the key to opening the door to the American Dream lies in free market expansion. Allowing people to keep more of the money they earn encourages entrepreneurship, risk taking, and investment. When the Tax Cuts and Jobs Act (TCJA) became law late last year, hoteliers, small business owners, and taxpayers rejoiced at the first major overhaul of the tax system in nearly three decades.

Staying Aware of New Housekeeping Legislations

Hotel Mogel Consulting Limited ·26 September 2018
It would appear, though, that labor unions throughout the United States are starting to gain ground with new legislation in several territories that mandate enhanced protocols for housekeepers' safety. Given this momentum, no matter your municipality, state or country, you would be wise to keep track of these new laws and preemptively make the necessary changes to your operations so that you don't have to play the costlier catch up game later on.On the one hand are the now-required panic buttons for room attendants, most prominently coming into effect for all hotels in Chicago and with rollouts in several other key cities. Given the way IoT technologies are progressing, equipping your entire team with small devices that can perform this function as well as integrate into your WiFi network should not be onerous. Plus, we're talking about mitigating a security risk, so everyone wins.More complex and comprehensive, California has just ratified a new law requiring specific training of housekeepers to help prevent the onset of musculoskeletal injuries as well as instructions on proper use of hazardous chemicals, all for the benefit of protecting workers from chronic medical conditions.These new programs must be specifically designed to help reduce the onset of bodily injuries through proper training for all employees, and all training must be recorded for the government to give its stamp of approval. Moreover, these regulations apply to outsourced labor - anyone who works on-property.All the mandated safety and training programs must be set up by October 2018 with hefty fines for hotels that are not compliant (roughly $13,000 USD per incidence for first-time offenders to $130,000 USD for willful or repeated violations).In terms of what's required for Californians, the core of this new legislation is the setup and enforcement of a musculoskeletal injury prevention program (MIPP). Starting with periodic evaluations of any potential onsite risks, hotels are also required to create a pervasive reporting structure for all occupational injuries as well as all steps taken to prevent onsite injuries.These MIPPs must involve extensive training of both the room attendants along with their supervisors on SOPs and proper ergonomic movements with annual retesting. Conducted in a language that the worker readily understands, everyone must now be educated and intermittently updated on the risk factors and symptoms of workplace injuries.Putting the housekeepers aside for a moment, an unhappy team can cause a serious disruption to the bottom line. A stressful environment means low morale which in turn means lower employee retention, pesky staffing issues and extra resources devoted to onboarding. Moreover, short-term disability leaves resulting from repetitive motion injuries (RMIs) or prolonged exposure to chemicals can also result in additional staffing problems, not to mention the possibility of insurance payouts.So, what can you do? As a start, you should monitor how events unfold in California and other territories where the panic button is now in effect over the next several months. With an aging workforce and more conclusive data to support labor unions' petitions across the nation, you may soon be compelled to act. From there, it would be prudent to investigate your options, then put in place your own panic button and MIPP equivalents as the benefits to your bottom line from having a healthier, safer workplace are clearer now than ever before.To read all the exact details and guidelines of this new law in California, go here: https://www.dir.ca.gov/oshsb/documents/Hotel-Housekeeping-Musculoskeletal-Injury-Prevention-proptxt.pdf
Article by Thomas Hazinski

2018 HVS Lodging Tax Report - USA

HVS ·25 September 2018
In this seventh annual Lodging Tax Study, HVS Convention, Sports, and Entertainment Consulting surveys lodging tax rates and revenues across the United States. Our study includes a broad range of cities and tracks policy trends in lodging tax impositions. This research identifies the lodging tax rates levied at the state, county, city, and special district levels. We provide data on the collection and distribution of revenue from lodging taxes levied in all 50 States and the 150 largest cities in the United States.

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

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

Multiple Ways to Reach an Ethical Conclusion: Considering Real-life Professional Dilemmas

HFTP Connect·24 September 2018
It has been many years now since Ethics education was added as a requirement for CHAE/CHTP maintenance. It was an addition that the HFTP Global board approved of during my tenure as a way to not only account for a designee’s knowledge of the industry, but also as a benchmark for the high standards established relative to behavior and decision-making.

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

Hotel Online·24 September 2018
It’s nothing new to hear about hotels or owners who have said “good bye” to brands and have gone on their own as an independent hotel. This is the story of one such hotel and a look at their results. I am also going to highlight the typical costs associated with being affiliated with a brand and what some say is the biggest reason to get out while you can.

Recognizing drug use in your employees

hotelnewsnow.com Featured Articles·19 September 2018
The warning signs of a drug problem aren’t always evident or clear, and sometimes it takes prodding before you can understand the proper course of action to take.
Article by Hans Detlefsen

Hotel Underwriting Tips

Hotel Appraisers & Advisors, LLC ·19 September 2018
As the owner of a hotel appraisal and advisory company, I get the opportunity to review hundreds of hotel appraisals, feasibility studies, investment pitch books, and offering memoranda each year. One of the things I've learned over the past two decades is that a few small changes in underwriting assumptions can greatly affect how hotel deals looks to investors. If these underwriting assumptions are not carefully considered, then they can represent big pitfalls for investors, appraisers, and others involved in the underwriting process.The following is a list of 12 issues and pitfalls I encounter frequently. This is not intended to be a comprehensive list. But the items on this list often lead to significant flaws in hotel underwriting.New Supply - One of the biggest risks for hotel owners and investors is new supply. If new supply is not adequately addressed in the investor's underwriting, then occupancy projections could end up being way off the mark.Ramp-Up Periods - Most hotels ramp up very quickly in the first one or two years after opening or being renovated. But I have reviewed numerous offering memoranda that show occupancies ramping up for four or five years after an anticipated sale. This can create the illusion that no big changes are assumed in the underwriting. However, it can lead to cash flow projections that are unrealistically high in later years.Declining Expense Projections - Underwriters should carefully review each expense line item they are projecting and compare them to historical expenses. While there can be legitimate reasons to project declines in certain expense line items, this can also sometimes be a red flag for overly optimistic underwriting. If expenses are projected to be lower in the future than they have been in the past, then there needs to be a convincing explanation for why this would happen.Sudden Revenue Growth - When showing a big jump in projected revenues from one year to the next, underwriters should support such projections with specific reasons. I've reviewed countless financial projections that show revenue bumps in excess of 20 percent for a new owner, often with the only explanation being that the new owner is going to have better management. While this may be true in some cases, a good analyst should dig deeper. Are there specific problems with current management and has the new management team identified specific strategies that are likely to produce significant revenue growth?Temporary vs. Stabilized Labor - Hotel underwriters should investigate whether recent financial statements reflect a fully staffed hotel. In a tight labor market, it can be difficult to keep certain hotel positions filled, especially if they are vacated without much notice. From an owner's perspective, this can be a good thing in the short-run, as the reduced expenses from having unfilled positions can increase the hotel's bottom line. However, if extended too long, such strategies can eventually catch up with a property and result in reduced guest scores, poor reviews, or declining morale among staff. Therefore, it is important for underwriters to understand whether there are any temporarily vacant positions that may be causing historical financials to appear artificially better than one should expect during a stabilized year.One-Time Expenses - On the other hand, one-time operating expenses can occasionally make historical financials appear artificially worse than a stabilized year. So, underwriters also need to research whether any of the expenses shown in historical financial statements are unusually high and temporary.Defining the Competitive Set - When underwriting proposed new hotels, it is important to consider which existing hotels are defined as the proposed hotel's competitive set. If you are building an upper-midscale hotel and all the hotels in your competitive set are in the upscale chain scale, then underwriters need to factor this into how they position the projected average daily rate (ADR) for the subject hotel relative to the competitive set. Don't automatically assume that a new hotel will achieve ADR levels in line with existing competitors, especially if the competitive set generally represents a higher or lower chain scale.Holding Period - When underwriting a stabilized hotel, tinkering with the holding period assumption should not affect the projected investment returns. In practice, sometimes analysts adjust the holding period without making appropriate adjustments to other valuation parameters, such as the assumed terminal capitalization rate. This erroneous procedure could produce changes in the calculated returns. If substantial changes in a hotel's value result from changing the holding period assumption, then this could be a red flag.Reversion Assumptions - Seemingly small adjustments to the terminal capitalization rate and inflation assumptions can sometimes have big effects on valuations. Since most hotel cap rate surveys and most inflation surveys exhibit wide ranges of projections, there can be a lot of wiggle room for underwriters, while still remaining inside the ranges shown in national surveys. My advice to hotel analysts and underwriters is to consider your valuation assumptions in aggregate and make sure they make sense together. For example, if EBITDA projections are on the aggressive end of the reasonable range, then discount rates or cap rates should reflect the riskiness of such projections.Capital Deductions - Many hotel acquisitions are planned in conjunction with a property improvement plan (PIP). Even when rebranding is not part of the strategy, hotel companies often require a PIP simply to maintain the existing flag. Underestimating the cost of these PIPs, or other necessary renovations, is one of the biggest potential pitfalls for investors considering a hotel acquisition.Replacement Reserve and Management Fees - Hotel owners account for replacement reserves in varying ways. And some hotels that are owner-operated may not incur management fees. Most hotel cap rate surveys assume a replacement reserve and professional hotel management. Similarly, most hotel financial projections assume stabilized occupancies and ADRs; ongoing capital improvements and renovations will be needed to achieve such stabilized performance. As such, hotel underwriters should reflect appropriate expenses for replacement reserves and management fees.Franchise Term - Strong branding and reservation systems often contribute to a hotel's success. Therefore, it is important to understand the length and terms of a hotel's franchise agreement. Some investors are reluctant to acquire hotels with fewer than 10 years left on a popular franchise agreement. If a hotel's franchise agreement expires and cannot be renewed, an owner may be limited to inferior branding options that will negatively affect revenue and earnings. Therefore, if underwriters don't accurately account for a hotel's franchise term, then their EBITDA and reversion estimates could be seriously flawed.Hotel appraisers, investors, and underwriters typically must make decisions about dozens or hundreds of assumptions throughout the course of analyzing a single hotel deal. The preceding tips are intended to invite additional attention to certain assumptions and topics that frequently lead to flawed analyses. The author welcomes comments and feedback. This report is intended for discussion purposes only and is not intended to be construed as investment advice.

Hotel Underwriting Tips

Hotel Online·18 September 2018
As the owner of a hotel appraisal and advisory company, I get the opportunity to review hundreds of hotel appraisals, feasibility studies, investment pitch books, and offering memoranda each year. One of the things I’ve learned over the past two decades is that a few small changes in underwriting assumptions can greatly affect how hotel deals looks to investors. If these underwriting assumptions are not carefully considered, then they can represent big pitfalls for investors, appraisers, and others involved in the underwriting process.

Hospitality Financial Leadership: Using Expense Checkbooks

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

Which Acquisitions Will Generate Negative Stock Returns?

CFO Magazine·14 September 2018
If the acquiring company elects to exempt the target from Sarbanes-Oxley Section 404 internal controls attestation, negative stock returns may follow.

Selling your business? Find the emotional buyer

BERKONOMICS by Dave Berkus·13 September 2018
This is one of my favorite insights, since I lived this one in a positive exit from my computer business.
Article by Richard Evans

Spot Check your Vacation Rental Reservation Platforms

The Revenue Report Card ·10 September 2018
Perhaps me being from a different era, I never fully trust automation until I test and verify that the numbers placed in my vacation rental Property Management System and, in turn, that transfer through my Channel Management Program are actually what potential guests are seeing on my reservation platforms (Website, Booking.com, Expedia, Homeaway, AirBNB, etc.).As a consultant in revenue management one of the first things I do with a new client is to test these platforms. Sometime when you aren't producing reservations in certain revenue channels it's because of unaudited results that are ASSUMED to be providing parity to consumers between revenue channels.While the Property Management System and Channel Management Program for which results are shown below will remain nameless, the following illustrations are actual results I just pulled up on a current project. My client assumed that all channels were reporting the same amounts.This Vacation Rental Company was not seeing reservations coming through Homeaway or AirBNB. This could be one of the reasons why.TIP: You can see that in Illustration 4 AirBNB isn't pulling up the correct nightly rate resulting in Reservation Revenues being approximately $250 higher than the three other platforms! In Illustration 3 you can see that Homeaway Reservation Revenues are close to the PMS but that metrics, like sales taxes, are far off.Your Channel Management Program has to map which rates and multipliers are being pulled and/or applied from your Property Management System.TIP: Different states have different sales tax requirements. You'd like to think that your Channel Management Programmers know this information, but often it's up to you to alert them. They're often handling business, sometimes, from all over the world. The onus falls on you.Some states require that sales taxes are applied only to Reservation Revenues while others require that they also include housekeeping fees, service charges and other revenues.TIP: Check that your minimum length of stay restrictions are also being applied consistently.Every time you add a new reservation platform to your revenue mix you should immediately audit the results to insure parity with your other reservation channels or that the platform is presenting what you wish and that it is being calculated correctly.Vacation Rental Revenue Management - VRMA 2018 - http://bit.ly/2lxFZlr

Hospitality Financial Leadership: The Morning Meeting

Hotel Online·10 September 2018
The morning meeting is a mainstay in almost every hotel. All the key department managers and leaders gather, usually in the front office or sometimes an in-house meeting room, to devour the day’s business at hand. It is a great way to distribute last minute information and highlight important changes to groups and business volumes.
Article by David Lund

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

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

Hospitality Financial Leadership - Who Inspired You?

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

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