Hospitality Financial Leadership – Money Never Looks After Itself

By David Lund - The Hotel Financial Coach

11 October 2021
  • Hospitality Financial Leadership – Money Never Looks After ItselfHospitality Financial Leadership – Money Never Looks After Itself — Depositphotos

Lund

I do not know about your experience, but for me growing up in the hotel world, and especially my first decade working in F&B and rooms, the adage, “Look after the guests and the money will look after itself,” was literally beat into my head.

But not so fast, now I know the truth and it is this: The money never looks after itself. You, me and everyone else must have a plan and a system to “look after the money.”

That’s what this piece is all about. What is the plan to look after the money in the hotel and better still – What exactly is the system we need to use and follow to make it work? My pledge to you right here and now is as follows: It’s not a complicated plan. Anyone who is organized and focused can execute the plan. The system requires no additional apps or software, just a commitment to continuously practice and never give up. If you think you can manage those two hurdles then read on:

The plan is simple. It’s a 1, 2, 3:

  1. We want each department manager with P&L responsibility to know what is in the middle of their statements, actual, budgets and forecasts. They must know in detail what is included in their lines of the P&L. Items, quantities and dollars in each account. This is accomplished by their research and record keeping, check books and staffing formulas.
  2. The same managers need to construct their annual department’s budget and monthly forecast using the detailed knowledge they have acquired from Step 1. Their budget and forecast submissions must be used in the final product, no late night or last-minute changes by the DoF to the department head’s numbers. If changes are necessary, they are completed by the same managers until they are acceptable.
  3. The same managers are responsible for their monthly departmental financial results, right down to the last nickel. No ambiguity. It goes like this. Imagine, if you will, that you own a business and you have an accountant on the side that you contract with to do your books. You are the supplier of information and the engine for the results, they just write the story based on what you give them. The same relationship with your DoF and department heads is what works.

The system is designed to continually produce the same product, month after month. We steadfastly and continuously repeat the same moves every month. The month is our friend because every month it is the same process. Yes, dissimilar business volumes and even new and different department managers pass through, all the while we repeat the same processes.

  1. All department managers prepare their own forecasts using the detailed expenses data they have. For the payroll piece they use their staffing formula and guide. Both reflect the daily business volumes forecast in rooms and F&B.
  2. The same managers are plugged into the revenue and business in the month for the month, paying particular attention to rooms occupied and customer covers served. Both actual, month-to-date and the forecast to the end of the month. The hotel senior leadership through the daily reporting and morning meetings make the numbers and the forecast comes alive with a commitment to make the numbers just another part of what they do, like service and engagement. This is practiced every day.
  3. The pivot comes when these managers adjust their schedules and purchases in the month for the month based on their detailed forecast and the projected month end revenue and business volumes. The pivot allows the hotel to manage the financial flow thru.
  4. At the end of the month the same departmental managers eagerly await their month-end P&L and general ledger listing. Once received they ensure the detail and values in their accounts reflect the correct results ensuring any errors or discrepancies are investigated and fixed before the books are closed ensuring a clean month end.
  5. The final act of the monthly system is each manager writes their departmental commentary. Paying particular attention to what worked and even more attention to what did not. Focusing on what we learned and taking that knowledge forward so we can ensure we do not repeat the same mistakes.

Having a plan to communicate to your team and a system for them to follow is magic. Shake, bake and repeat every month with your team. Never losing sight of the fact that the numbers are just like guest service and colleague engagement. They are never going to be perfect and they are not going away, and most importantly – they never look after themselves. That’s your job!

Click here to view the original version of this release.

Return to overview

David Lund

28 Kineo St
Portland, ME 04103
United States
Phone: 4156969593
hotelfinancialcoach.com

David Lund

David Lund is The Hotel Financial Coach, an international hospitality financial leadership expert. He has held positions as a Regional Financial Controller, Corporate Director and Hotel Manager with an international brand for over 30 years. He authored an award-winning workshop on hospitality financial leadership and has delivered it to hundreds of hotel managers. David coachs hospitality executives and delivers his Financial Leadership Training throughout the world, helping hotels increase profits and build financially engaged management teams. He speaks at hospitality company meetings, associations and he has had several articles published in hotel trade magazines and he is the author of three books on Financial Leadership. David is a Certified Hotel Accounting Executive through HFTP and a Certified Professional Coach.

David Lund

The Hotel Financial Coach
Phone: 4156969593
david@hotelfinancialcoach.com