Hospitality Financial Leadership – What Everyone Needs to Know About Hotel Financial Skills 1-10
By David Lund - The Hotel Financial Coach
24 August 2020
Applies to financial leaders' and operational managers' roles:
On the eve of starting my financial leadership course for the third year with Royal Roads University it occurs to me that most people have it somewhat wrong when it comes to how they think about the financials inside the hotel business. It's almost like they think that a mechanic is the only person who can drive a car. On that note many great drivers possess great knowledge about how the car works but they're not mechanics; it's not a requirement to be a great driver. You would never take your Ferrari to the driver for a repair, but man can they drive it. The exact same goes for financial skills and understanding. You don't need to know how to be an accountant to be very well versed in hotel financial leadership knowledge and be a hotel numbers pro.
Here is a list of what to know and how best to think about the numbers in your hotel. No matter what your role is.
It's not accounting, it's business thinking.
People naturally think that the numbers are the accounting people's thing and they are correct about that to a great extent. But it's the forward motion we want to capture and that's clearly a different action than capturing and being the master of the recording process. Having financial skills means you possess business thinking or what we would traditionally call business acumen. Your business thinking allows you to capture and communicate the essence of the company's business strategy. Developing your team and department and communicating and delivering on business objectives is your goal. Understanding what the enterprise is saying and being able to translate that and act is business thinking.
Treat the numbers the same as the Guests and the Colleagues.
The hotel business is premier, one of the originals and leaders, in providing great guest service. That service is delivered by engaged colleagues. Put the two together and you have just created an environment that allows our guests to have a great experience and that's the essence of hospitality. Behind that curtain lies the truth about this business. A slightly complicated and somewhat misunderstood beast that is crying out for the attention it needs. Make the numbers just another part of what you do every day. Everyone in management has a role to play. Play your role well on the financial stage and your career grows. Skipping the numbers is a big mistake.
The numbers behave the same as guest service and colleague engagement—they are never perfect. People confuse the recording of the numbers in accounting with playing their part to be involved in developing business strategy. The answer to these challenges is never finite. What would you rather have, two points of occupancy or $5 in rate next year? That's a very different question and discussion compared to the accuracy of the bank reconciliation. Learn to distinguish yourself from the idea that what you want is the numbers to be perfect in your budgets, forecasts and business discussions. Take the pressure off and welcome the contribution and know it's never going to be perfect.
Everyone needs to play together.
Your accounting leaders cannot sit in their offices and dream up what's going to happen next month or next quarter in the operation. It does not work that way. They need operational managers to be involved from inception all the way to the end and repeat, never stop. If there is a separation between creating budgets and delivering results it will not create traction in your hotel and the engagement you desire will not develop. Everyone has a part to play and in order to play the game well we must learn to play together.
Get and be a mentor.
Everyone is better with a mentor. Someone who has traveled that road before. If you're a leader, part of your responsibility is to develop the next wave of soldiers. If you're a soldier, then make sure you have the guidance of the experienced campaigner. Don't try and re-invent the wheel—ask for help. Getting and being a mentor to others creates lasting relationships that produce amazing results. Remember those that helped you? What would you be willing to do for them? Create this kind of environment and support for your leadership and people will want to follow you. Look for and cultivate this kind of relationship throughout your career and you will flourish. Pay it forwards and backwards.
Nothing happens without it. Nothing good ever happens by itself, it requires practice and dedication. The numbers in your career or hotel are just another example of the fact that a price must be paid to gain entrance. If we think we can prosper and grow without the rigor of practice than we are going to be less than and ultimately not reach our potential. Practice is the quintessential ingredient and teaching and learning what makes good practice is critical. Practice the wrong moves and techniques means you won't be successful.
They're not going away.
The numbers are omnipresent, in other words, they're constantly encountered, widespread and common. In the hotel world that simply means the numbers are not going away. If we're an operations or service leader we hope and cling to the idea that someone will just take care of this for us. We think about it like grade 10 algebra, If I can just pass this course, I will never have to deal with this crap again. Wrong, this course never ends. If we're a financial leader we must remove the dread and mundane for the operations leaders so they can see that the numbers are just another part of what we do and we're there to make it easier. If we're an operations leader, we need to embrace this and meet it head on with enthusiasm and vigor.
Teach others what you know.
They're not inventing any new hotel management techniques, just modifications on the current line-up. Your job as a leader in any capacity is to teach others what you have been taught. The numbers are no different. Regardless of what department you lead your job in a large part is to teach people on your team what you have learned. This is the first sign that you are ready for bigger and better things. Clinging to the notion that knowledge is power and should not be shared is like clinging to an ice cube in the Mediterranean. You're going to sink. Being the financial leader is no different. Developing financial communication skills of your team and operational managers is your highest calling.
It's a monthly circle - practice the circle.
Each month in the hotel is an opportunity to begin again. In the financial world our window opens and closes each month. Take what worked and do it again. Figure out what didn't and fix it. You could look at this monthly event and say it's such a pain in the backside. To the underdeveloped that's what it looks like. To the seasoned pro you see this as your stage. Your opportunity to practice. Your opportunity to move in the right direction. In the operational departments the same condition exists, it's just a daily circle. Flipping the house, being ready for service, delivering a function, you name it, it all boils down to the same thing. Learn to see the different steps in the monthly financial circle, focus on these and practice. F TAR W. Forecast, Track, Adjust, Review, Write & repeat.
Remember everyone wants it.
The numbers and being fluent in them are what all the upwardly mobile leaders in the hotel need and all want their share. They want their share because they know it's what is needed to punch their ticket. The ticket that is going to allow them access to the big show. They also know that without the knowledge and moxy with the numbers they are going to be left behind. The great and not so wonderful reality around this desire is the fact that the only place they can get what they need is at work. They don't teach what you really need to know in school. They don't, because they can't. They don't have the one essential ingredient: the playing field.
More later, in part 2.
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