In the hotel industry, the deeper decision-makers can drill down into departmental figures, the easier it is to generate revenue, chisel away at unnecessary costs and post a healthy profit. Simply put, the best decisions are driven by in-depth analysis of departmental revenue and operational costs. Sound like too much work? Analyzing these critical figures and unlocking higher profits may be easier than you think.
Most hotels measure payroll as a percentage of revenue or, as it is commonly referred to, labor cost percentage. This is not helpful. Why, you ask? Well, first of all, if sales magically increase because of an increase in the average room rate or average cover, your labor cost will automatically improve. Did anyone actually do anything better with the payroll?
How can you forecast for meetings, business conferences, weddings and special holiday gatherings like those that take place at Christmas when you have no solid idea what restrictions the future holds? How can you accurately build your budget assumptions if you are not sure when regular business and leisure travel will resume to drive up occupancy rates?
The global economy appears headed for a rebound in the third quarter after the first recession in more than 11 years
As COVID-19 continues its charge unabated, its natural for hoteliers to feel like theyre on loose financial footing. And as room revenue becomes less predictable, many hoteliers are seeing their revenue-only strategies give way beneath them. Want to build your plans around a more solid hotel performance indicator? Look no further than benchmarking hotel profitability.
The Baird/STR Hotel Stock Index dropped 7.1% in September to a level of 3,329. Year to date through the first nine months of 2020, the stock index was down 36.8%.
Whats the problem with a RevPAR-only hotel performance focus? Imagine youre trying to bake a world-class cake. Youve picked out the best ingredients, tossed them in a bowl, and … youre done, right? Of course not.
Utilities can have a massive impact on a hotels profit. And even before the global pandemic tore through the hotel industry, those sneaky costs were growing rapidly. According to Energy Star, energy is the lodging industrys single fastest-growing operating cost. This means that many hoteliers are unwittingly flushing a growing amount of cash down the drain.
Bloody is a great word. Its English and Im Canadian so thats close enough and Im adopting it for this piece. The word is so descriptive, and it immediately conjures up images of battle and of great suffering. Much the same as the annual carnage we refer to as budget season in the hotel business. Its the epic contest between line managers and executives, hotel leadership teams and the brand and hotels and their owners.
Hotels stocks outperformed in August, surpassing both the S&P 500 and the MSCI US REIT Index.