Understanding the Hotel’s Financial Issues as a Busy Hotel Manager
After I was promoted to my first managerial post, my own Hotel Manager made it clear that gaining management experience and continuing education wasn’t my only priority (read on or watch the video).
Despite being a non-financial manager, he also expected me to become equally comfortable with understanding how to read the Hotel’s Balance Sheet and Profit and Loss Accounts, how to understand Asset Depreciation and Cash Flows, and other financial topics?
Senior Hotel Managers made it a constant (and terrifying) exercise to review Hotel Accounts in our group meetings with Hotel Managers – and to then randomly call upon those of us who were non-financial managers to interpret some of the numbers and to explain their significance within the context of their Hotel Department’ business. Aaaaaahhhh…..
It wasn’t until several years later that I began to appreciate the purpose of the training, because in myself and in other non-financial managers, there were definite shortfalls in our understanding of the financial side of the Hotel. And this should not be the case!
Perhaps this is why educating non-financial managers in the fundamentals of finance is so important for Hotel Managers. This supplementary training should enable Hotel Managers to better interpret financial reports, income statements, important financial ratios, costs and budgets, working capital, pricing strategies, and capital expenditures.
It also would enable Hotel Managers to hold more productive discussions with Hotel Accountants and other financial professionals during their regular work in the Hotel.
On the other side of this exercise are the Financial Professionals who are sometimes not the strongest of communicators! They could cut costs within my Department, but they might have very little knowledge or on-the-job experience about What it took to Run a Kitchen or Manage Bedrooms – or what it takes from a resource standpoint to keep a Hotel Department Effective and Efficient on a Saturday Late Shift!
For these Financial Professionals, being able to clearly communicate and to develop effective relationships with others within their Hotel is a highly relevant skill. Hotel Financial Executives and Hotel Managers must be able to develop relationships and communicate with one-another so that they can overcome any financial divide between them and their Hotel Managers.
How can any financial divide be Managed?
In one Hotel I was managing in, Financial Executives projected that the Hotel Department that I was working in would likely fall short of our budgeted revenue projections, which meant that there had to be a downward adjustment in expenditures.
Instead of the Hotel Financial Executives simply finding ways to keep the Budgeted Revenue projections successful and sending me a note telling me what to do unrealistically. Hotel Manager and Hotel Financial Executive brought together their respective skills (as neither had the total set of problem-solving skills needed to address the situation), and discussed the issues (the financial divide), so that we could create a solution as a joint exercise and find a way to make both the Department and the Budgeted Revenue projections succeed.
The Hotel achieved its Budgeted Revenue projections. But this was only possible because the Hotel Manager and the Hotel Financial Executive understood each other.