Do your hotel financial statements give you the information you need to effectively run your business? Are you able to see if your profits are where they should be in an enhanced top-line statement?
NB: This is an article from Hotel Financial Coach
Do your statements measure flow thru? Do you record your room’s business by proper segments and track the rooms occupied, rate and revenue in each segment? Do you record customers served in F&B and do you separate meal periods? Do you record liquor, beer, wine, and mineral sales on your financials separately? Do you measure labor productivity in your financials? Do you record hours of work in your financials? Do you have payroll segmented by management and hourly classifications? Do you have a separate supplemental payroll and benefits statement? Do you track arrivals and departures?
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Most statements I see do not have most of these critical elements. They’re lacking these incredibly effective items that easily can be added. Most people use the standard format as outlined in the 11th edition of the Uniformed System of Accounts for the Lodging Industry. This is great; however, you have the ability to produce an enhanced statement with just a little more detail added that will greatly assist you in effectively managing your business.
How would these financial elements add insight and value to your business?
Let’s explore this:
Top-line property operating statement showing divisional results in a summary format
This simple and incredibly effective presentation is almost always absent. Hotels will have what they think is a top-line summary but it is usually not properly set up.
A proper and useful top-line financial statement will have total hotel revenue first. The statement has the current month on the left and it is compared to budget/forecast and last year, descriptions down the center and actual year-to-date on the right followed by budget YTD and YTD last year.
Next the rooms section: total room revenues, total payroll, total other expense.
Next is total rooms expenses and finally rooms profit, 5 lines total. Beside every number is the percentage, so 100% for the revenue, 15% for the payroll and 10% for the expenses, 25% for the total expense and 75% for rooms profit. Right off the bat, you see what matters and we see the same percentages in the budget and last year columns.
Next the total F&B section with total food revenue, total beverage revenue, total other F&B revenue, and then total F&B revenue. Next is food cost, then beverage cost, and if applicable other costs of sales, then the total cost of sales. Next, its total F&B payroll followed by F&B expenses, total F&B departmental expenses, and then total F&B profit, 11 lines.
Again, and always we see percentages within the department. What percent of total F&B sales are beverages? What’s my food cost percent this month compared to the budget and last year? It’s all here.
Next are the same totals for all minor operating departments, with the cost of sales, payroll and expense totals, then MOD profit.
The next line is other income not including store rents.
This brings us to the line, GOI, gross operating income line which equals all profits from all operating departments a critical navel-gaze in your hotel.
The next part is for non-operating departments. We start with A&G: total payroll, total expenses, then total A&G, 3 lines. Then it is sales and marketing then POMEC or as some like to call it, maintenance, and it has an extra line for total utilities. The next line is total non-operating department costs, the sum of the three departments above. In most hotels, this is the protruding waistline and it’s critical to see it clearly.