The Practical Guide to Understanding and Raising Hotel Profitability  book cover
1st Edition

The Practical Guide to Understanding and Raising Hotel Profitability

ISBN 9780367218287
Published September 16, 2019 by Routledge
190 Pages 15 Color & 1 B/W Illustrations

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Book Description

The Practical Guide to Understanding and Raising Hotel Profitability offers a comprehensive, easy-to-follow breakdown of how to understand profit and loss accounts for hotels. It offers practical advice on how to maximise the profits of this customer-facing business and improve performance results.

Chapters cover every aspect of the profit and loss account including marketing, accommodation, food and beverage sales, quality, budgeting, event sales, and all the corresponding costs involved. It explains all the relevant KPIs and industry quirks within the profit and loss document as well as industry benchmarks to equip the reader with the skills to attend high level meetings, complete finance-based assignments and ultimately run their own business. Valuable tips from leading professionals within the industry are included throughout, giving advice on how to improve hotels’ financial results and positively influence net profit through everyday actions.

Packed full of practical case studies and written in an easy-to-read-style, this book is essential reading for hospitality students and current hospitality and hotel managers.

Table of Contents

Chapter 1- Understanding and Raising Profits in Hotels

1.0 Introduction

1.1 What is a profit and loss account?

1.2 The different sections of the profit and loss account

1.2.1 Revenue

1.2.2 Costs of Goods Sold

1.2.3 Expenses

1.3 How to improve the Net Profit of a hotel

Chapter 2 – Maintaining and Improving Quality

2.0 Introduction

2.1 Knowing your product

2.2 Picking apart the detail

2.3 Find ways to improve

2.4 Improve and Measure

Chapter 3 – Marketing and Sales

3.0 Introduction

3.1 Knowing your customer

3.2 The Dangers of Overselling

Chapter 4– Budgeting

4.0 Introduction

4.1 Where budgets come from

4.2 How to create a budget

4.3 How budgets are developed

Chapter 5 – Accommodation Sales

5.0 Introduction

5.1 How to measure performance in room sales

5.11 Occupancy percentage

5.1.2 Average Daily Rate (ADR)

5.1.3 Revenue Per Available Room (RevPAR)

5.2 Where the measure comes from

5.3 Revenue Management

5.4 Overbooking

Chapter 6 – Food Sales, contributed by Dimitri Lera

6.0 Introduction

6.1 Measures

6.1.1 Increasing loyalty

6.1.2 Alternative Payment methods

6.1.3 Maximising table turnover rate

6.1.4 Enhancing online presence

6.2 Upselling and cross-selling

6.2.1 What upselling and cross-selling mean

6.3 Sales Techniques

6.3.1 Know the customers

6.3.2 Know the dishes

6.3.3 Know the drinks

6.3.4 Know the extras

6.3.5 Know thyself

6.4 Oversell

6.5 Menu positioning

6.6 Conclusion

Chapter 7 – Beverage Sales, contributed by Jennifer Kaye

7.0 Introduction

7.1 Merchandising, upselling and revenue generation

7.2 Factors that can improve beverage revenue

7.3 Weights and Measures Act

7.4 The Licensing Act 2003

Chapter 8 – Event Sales, contributed by Philip Berners

8.0 Introduction

8.1 The problem with hotels

8.2 Why use hotels for events?

8.3 Winning Event Business into hotels

8.4 Pricing

8.5 Managing event costs

8.6 The one-person management structure

Chapter 9 – Accommodation Costs

9.0 Introduction

9.1 Calculating the cost to clean each room

9.2 How to reduce the cost of cleaning bedrooms

9.3 Impact of savings

Chapter 10 – Food Costs

10.0 Introduction

10.1 Calculating the food cost %

10.2 Calculating the food cost in recipes

10.3 How to increase profitability in kitchens

10.3.1 Wastage

10.3.2 Supplier prices

10.3.3 Order and delivery check

10.3.4 Menu flexibility and seasonality

10.3.5 Forecasting and over-ordering

10.3.6 Storage

10.3.7 Staff meals

10.3.8 Theft

10.3.9 Accounting errors

10.3.10 Pricing

Chapter 11 – Liquor Costs

11.0 Introduction

11.1 Calculating the liquor cost %

11.2 Calculating the liquor cost in recipes

11.3 How to increase profitability in bars

11.3.1 Ullage

11.3.2 Supplier prices

11.3.3 Order and delivery check

11.3.4 Theft

11.3.5 Accounting errors

11.3.6 Pricing

Chapter 12 – Payroll Costs

12.0 Introduction

12.1 Calculating the payroll cost percentage

12.2 Reducing payroll costs from the turnover of staff

12.3 Calculating levels of staff

12.4 Calculating what to pay

12.5 Training costs

12.6 Motivating employees

Chapter 13 – Marketing Costs

13.0 Introduction

13.1 Getting the message out in a cost effective way

13.2 To spend on marketing or not to spend

13.3 Social media

Chapter 14 – Fixed Costs

14.0 Introduction

14.1 Accounting costs

14.2 Depreciation costs

14.3 Refurbishment/ Equipment Maintenance

14.4 Utilities

14.5 Insurance

14.6 Online travel agent commission

14.7 Tax

14.8 Bank charges and interest

14.9 Bad debts

Chapter 15 – Net Profit and EBITDA (Earnings before interest, tax depreciation and amortization)

15.0 Introduction

15.1 What is Net Profit?

15.2 How incremental changes to the hotel affect Net Profit

15.3 EBITDA and valuing a business

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Adrian Martin is Vice Principal of the Edge Hotel School, University of Essex – the UK’s only Hotel School.


‘A welcome and easy-to-read book to help Hospitality students and hotel management teams become financially literate and understand all aspects of the business. Financial management has never been more important as all costs, especially labour costs, continue to rise. Many hospitality businesses fail due to poor business acumen and lack of experience in improving financial performance. This book includes industry benchmarks to help measure performance and will give you the tools you need to improve the profitability of your business.’

Harry Murray, MBE MI FIH, Chairman Lucknam Park Hotel & Spa & President of HOSPA

‘Understanding profitability and finance is crucial to the success of any hospitality business. As a lecturer and head of a hospitality department in a university for 40 years, this subject was always very difficult to teach to non-financial students. Many students required extra tuition in order to understand the concepts and apply these concepts and theories to real industrial operations. This book will become a very useful resource that will both assist the students’ learning and aid lecturers in preparing teaching material. I would recommend that this valuable resource become a compulsory text.’

Professor David Foskett, MBE CMA FIH BEd (Hons) FRACA HMCGC, David Foskett Associates, Chair of the International Hospitality Council

‘Strong financial management is such an important part of running a successful hotel and is a skill that many hospitality team members struggle with as they progress into management roles. Adrian has successfully captured the fundamentals of this in his book and communicated them in such a way that both students and professionals at every level can absorb the knowledge and put it into practice. There is something for everyone at every level of hotel management – a must-read in my opinion.’

Adam Rowledge, GM, Georgian House, Independent Hotelier of the Year 2018