Hospitality Financial Leadership — Photo by David Lund

With the rapid changes we have seen since 2020 in hospitality comes many additional challenges. It seems like everything is up for grabs these days. Our employees, our distribution, our markets, our customers, and most of all our bottom line. What you do now and into the future is going to determine the health and longevity of your hotel business. That’s what this piece is all about. I’m going to lay out the strategy that will give you the greatest change of “operational” financial success. This strategy works best when its lead by the owner or the GM.

No matter the type of hotel or it’s market it’s in make any difference to executing this strategy. Whether your branded managed, a franchise or an owner operator doesn’t matter either. Your size, the name on the door and the competition are also of no consequence. There is no capital required and no brand standards to implement. You see this strategy is simply a choice. A choice of how you will manage your leadership team.

In hospitality we have no choice when it comes to service. We must provide it, or we perish. A hotel with a poor service reputation won’t last and it certainly won’t be prosperous. The way we treat our colleagues and how we manage our employee relations is also very telling. You cannot be successful unless you’re an employer of choice in today’s world. Employees have way too many options these days to replace you if you’re not a great place to work. The choices you make with your guests and employees are paramount to your survival.

But what about your financial health. What choices do you have to make the biggest positive impact? One choice that you can make is more important than any other when it comes to your operational finances. That choice is to make sure every department manager has their “stick together” when it comes to managing their payroll and expenses.

So how exactly does one go about ensuring each hotel leader who is not a financial genius can be and stay on top of their numbers? The choice is # 1 to make the numbers just as important to your department managers as their guests and their colleagues. # 2 Is making sure as the GM you’re the number one numbers person. Some of you may rail at this but abdicating this to the Controller is not helpful because your managers report to you, not to the financial leader. #3 Is an obsession you have to ensure that each manger knows what’s in the middle of their departmental statement. #4 You realized a long time ago that its business thinking that you want your managers to have not accounting skills and this is the message you deliver over and over again.

Ok so that’s quite a mouthful but how exactly does this happen? Well, it doesn’t happen by itself you need to lead and make it happen.

First thing is ensuring that everyone on the team gets and hears the financial message from the very beginning. All new hires and promotions need to know that their departmental numbers are their responsibility. The same message needs to go out to the existing managers. The accounting department’s role is to provide the reports and information on a timely basis, but the owner of the results is the departmental manager. No skirting this one.

You ensure each operational leader is responsible to do their own detailed budget annually and provide a 30-, 60- and 90-day expense and payroll forecast in detail based on the latest rooms forecast. Having budgets and forecasts prepared by someone other than the department managers is forbidden. Ongoing training and support are required but make no mistake, each leader needs to own their numbers. And – this is a big AND - No one gets a pass because their just so great at their day job.

Managers need to know where the ship is heading and be able to adjust spending accordingly. Tracking revenues and pick up in the month for the month is a daily group exercise with the morning meeting. Again, your leadership is critical to make sure this happens. Coasting threw the month for a department manager is not only a no no, it’s simply not how you do business. Being able to mange their expenses means knowing what’s in their accounts and maintaining an up to date check book. Each leader also masters their departmental staffing guide, making sure the productivity targets are maintained. Monthly you ensure each manager reviews their P&L results before the books are closed, and they write their own management commentary. Leaving the numbers up to chance is not how you do business.

To recap. Detailed forecasting monthly, tracking revenues and pickup in the month for the month at the morning meeting, adjusting their spend on expenses and payroll in order to manage the flow thur, reviewing their financials before the close and writing a meaningful commentary that leads to continuous improvement. This is your monthly financial circle, and you make sure every manager is on board each month. You also ensure the financial manager meets their obligations with high quality reporting on a timely scheduled basis.

To keep and stay in shape you accept the fact that the numbers are never going to be perfect and they’re not going away. Every month we have new targets, and we never take our foot off the gas. When you think about the hotel with its guest service and colleague engagement you can certainly understand that perfection is something a rookie might think is possible but not you. You realize that the hotel business is not a science but rather an ongoing dance that requires all participants to play full out in order to tame the beast. The numbers are just another part of the gig and it’s your party.

Choose to make the numbers just as important as the guests and the colleagues in your hotel and you will have a team that can generate the greatest success on all fronts.

David Lund
The Hotel Financial Coach
+1 415 696 9593
David Lund