1st Edition

The Practical Guide to Understanding and Raising Hotel Profitability

By Adrian Martin Copyright 2020
    190 Pages 15 Color & 1 B/W Illustrations
    by Routledge

    190 Pages 15 Color & 1 B/W Illustrations
    by Routledge

    190 Pages 15 Color & 1 B/W Illustrations
    by Routledge

    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.

    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

    Biography

    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