Managing Hotel Financials
By Chetan Amin
As with many industries, successfully managing a business can be dependent upon an understanding of the various nuances of that industry. The hotel management industry is no exception, and the ability to successfully manage hotel properties is largely dependent upon recognizing which key indicators can impact a hotel’s financial performance the greatest. Following are several considerations to keep in mind when evaluating a hotel property’s financial performance.
- “Know” the Specific Hotel – So many variables contribute to a hotel’s performance, and often those variables are unique to a specific property. They distinguish the “personality” of the property. A property with a certain address or location could have completely different average occupancy rates than a property located only a block away, due to slight geographic differences. Likewise, food and beverage figures could also vary significantly between properties due to other competitive offerings near the property. It is important to recognize the “norms” for specific properties when comparing operations between various locations.
- Identify Trends – Repeated growth in certain indicators (or conversely, negative growth) should be evaluated over specific time periods. This allows property managers to assess if trends in room occupancy or banquet revenue is a result from seasonality or an increased overall market demand (or retraction) for amenities.
- Recognize Impactful External Variables – Being able to identify critical external variables allows hotel managers to plan and account for fluctuations in resources, such as staffing. Possessing a complete understanding of the hotel property’s current financial status as it relates to external variables (local events, weather, etc.) provides the hotel manager with the tools necessary to react quickly and confidently in making key business decisions about the hotel’s operations.
- Leverage Reports – Perhaps one of the most essential tools in accomplishing the above is the availability of operational and financial reports. Hotel managers with access to timely, current data which discloses figures ranging from average daily revenue to cost per occupied room possess the information to impact profitability real time. These reports are an extremely powerful tool and should be leveraged to the fullest extent. Even more beneficial are reports that integrate data from multiple systems and properties, which in turn provide the manager with a complete picture of all the properties in relation to key benchmarks and to each other.
Solid financial management practices and processes combined with an innate understanding of the hotel industry’s nuances contribute to increasing profitability at hotel properties. The team of professionals at Analytix Solutions has expertise in guiding hotel management and property owners through the process of establishing strong financial management practices. We are currently offering a free analysis of your existing business processes. If you would like to learn more on how Analytix Solutions can help your hotel with customized solutions, visit us at https://insight360.analytix.com/hotels/ or email us at [email protected].