3 Reports Every Hotel Owner Should Utilize

Occasionally a hotel owner will say to me that they rarely even look at the STR, (STR, ie, Smith Travel Research) report which shows ADR, Occupancy, and RevPAR data for the last week to 4 weeks, and the monthly report which goes back for 12 months at least.  Also useful are the franchise ranking report, and the Medallia report of guest satisfaction ranking. Not reviewing this data regularly is a missed opportunity to study your market performance and your hotel's performance, regardless of the size of your hotel, or the size of your market. Doing this can yield actionable knowledge that can help you improve your hotel's performance and maximize revenue.

If your franchise provides STR reports, take advantage of this data. Look at both the weekly and monthly STAR reports to keep your fingers on the pulse of the market occupancy, average daily rate, and revenue per available room. Use the information to answer questions like, are you maintaining market share? Review your pricing, did you overprice or underprice rooms in the last period? If you overpriced rooms, did your occupancy or RevPAR suffer as a result? Or conversely, if ADR was steady but occupancy was up or down, were there any groups, conferences or large events at your hotel or the competitors? Did you miss an opportunity to drive higher rates when you were 100% occupied?

One reason owner’s may not use the STR Report is that they don’t feel that it is an accurate reflection of their market penetration. Usually this is because the hotels used in the competitive set are not true competitors.  So, change the competitive set. STR allows hoteliers to customize their competitive set, with some limitations.  Most brands also will allow you to get 2 STR reports with 2 different comp sets if you are willing to pay a little extra each month.  This can be very worthwhile for some hotels. Choose the hotels that are similar size, age, and chain scale, or those closest geographically.

STR Reports are always scrutinized by buyers before making an acquisition. It’s an important indicator of market demand and supply changes, the hotel’s relative performance, and the opportunity that a buyer may be able to take advantage of through significant improvements or even a brand change, that will allow the hotel to capture greater market share. By monitoring these reports, you can make adjustments and improve performance, maximizing revenue now and maximize value whenever you decide to sell the hotel.

Another report to review is the franchise brand ranking reports, which are published monthly. Use this report to compare your hotel to other hotels in the same brand. How does your customer satisfaction compare? How are you doing in your region? Use this information to discover the categories where your hotel could improve on it's relative performance. If cleanliness is bringing you down, then work with the housekeeping department to improve guest cleanliness ratings. The goal, of course, is to always try to be best in your region or at least to be improving.

Your franchised hotel probably also gets a Medallia report. Based on guest satisfaction surveys, the Medallia report will provide insight into different areas of the guest experience. For example, the speed of check-in, staff friendliness, comfort of the bed, etc. Medallia also provides trend analysis and a tool emphasizing frequency of common keywords. 

Use your franchise reputation management portal, if available, to link to all third party online travel agencies, social media, and other sites so that you can manage your online reputation from one central location. If your franchise does not have a built in reputation management portal, keep a list of all sites where your hotel is listed to check manually. Create alerts, so you get notifications when there are new reviews, such as on TripAdvisor, Yelp, and Facebook. For sites without alerts, try to check twice weekly, if not more. Maintain your online reputation by responding, courteously, to all reviews. Take action based on reviews to make improvements in guest experiences. For example, friendliness or cleanliness can be addressed with re-training, or avoid long check-in lines by anticipating check-ins and having adequate staff on hand. 80% of travelers now look at a hotel online before booking. If your property had bad reviews, or worse – bad reviews without any management comments or explanations, then you are at risk for a decrease in business.

In the service business of hospitality, utilizing the information provided by these reports will inform better management decisions to improve guest satisfaction and property performance.  In the next Blog, we'll discuss some simple revenue management techniques and data.

‘Till Next Time,

Charlie Fritsch 

P&Ls: Put Garbage In, Get Garbage Out

As a broker, the quality of the profit and loss statements, and quality of the record keeping in general are an asset whenever you decide to exit a hotel investment. First of all, it should go without saying that only the revenue that is shown on the statements is used in any valuation of the hotel.

The old adage, “garbage in, garbage out” applies to a P&L statement. As a broker, to help you get the most return on investment, we want the opposite. Put in quality data, to get quality intelligence out.

The level of detail in the P&L helps to identify any add backs to the net operating income. Keep records of all capital items purchased and note whether the capital expenditure item was expensed, i.e. written off 100% in one year. These expenses are added back to the net income, as well as any other one time unusual expenses. Other items that are added back are owner compensation, and of course depreciation, amortization, and interest on all debt that the hotel is paying. Any expense that is added back can be used to increase the value of the hotel in a capitalization rate valuation, and bring a higher price at the sale.

Having expense line items, such as utilities, broken down into specific line items, like gas, electric, auto fuel, phone, cable, internet, etc. are important in identifying any expenses that may be able to be reduced in the future. For example, the electricity expense, could possibly be reduced by replacing old inefficient equipment, like guest PTAC units, with new, more energy efficient equipment that will save energy and might even generate energy tax credits.

Breaking down labor is also important to help a buyer and/or lender understand the hotel operations and possibly identify opportunities for the buyer to reduces expenses in different departments, i.e. maintenance, sales, or administration.

As a hotel owner, more detail in your profit and loss statements provides the basis for well-informed decisions in operating your hotel efficiently. The bonus is that when you go to sell, the buyer and buyer’s lender can make confident conjectures for future performance and net operating income, getting you the most for your asset.   

If you are interested in a hotel valuation, request one from our website here.

'Till Next Time,

Charlie Fritsch

5 More Money Saving Accounting Features for Hotels

Accounting should be able to provide a hotel owner reliable insight into the operations and financial well-being of their business.  Insightful reports must be available without delay all the time to all key personnel without the owner or others waiting for their accountant to get around to creating the reports.  To operate your hospitality business efficiently, here are some more features available in a good accounting program:

1. Strong Security – With a web-based accounting program you want to know that your data is secure. Data should be kept only on the server and there should be added security measures like encrypted communications and database encryption. Also, advanced security features within the software should allow you to control when and where your staff access the system. Your accounting software should also have the ability to let you assign specific roles and limitations to deny or grant access to individual line item accounts and processes. This specificity of control allows you to delegate more efficiently without compromising confidential information.  You control who sees what.

2. Drill Down Reporting – Have you ever been reviewing past profit and loss statements, and seen an unusually high expense? If you have to go track down invoices, you’re wasting your time. Look for a program that has drill down reporting. ‘Drill down’ means you can easily click on one journal entry and it seamlessly opens another inquiry screen until the original line item entry and even the document is revealed, and you can see who made the entry, or who approved it if it's approved.  Perhaps there was a large party which required extra supplies for that time period. With drill down report, you can accelerate your decision-making with quick access to past information and provide insights into future needs. 

3. General Ledger Consolidation – You can integrate financial reports across multiple hotels, still keeping separate books, to get consolidated financial reports. Use these reports to get an overview of your entire portfolio's performance in any period, or one grouping of hotels, with support for multiple ledgers. Also, it’s a great tool to compare hotel sets within your portfolio. To do this, maintain the three C's, same Chart of Accounts, same Calendar year, same Currency, at the hotels to be rolled up into consolidated reports.

4. Advanced Financial Reporting –Programs with advanced financial reporting offer integrated reporting tools which are customizable so you can design financial statements that are tailored to your hotel(s) and create multiple budgets for different scenarios. Take advantage of built in financial reports which provide year-over-year comparison and budgets versus actuals, or show expenses as PAR or POR, for a deeper understanding of operations. 

5. Integrations – Consolidate the tools you use to manage your business more efficiently with other products which integrate with certain web-based accounting programs. For instance, manage employ functions with an employee portal. Other simplifying integrations available include Accounts Payable Automation, Microsoft Office 365 and Power BI, to list a few. 

We will be hosting a free live webinar on how to get more from your hotel accounting on Tuesday August 2^nd. I hope you join us for this educational event focused on improving hotel accounting efficiencies. Register at http://mbahotels.com/?page=webinar_register

What are your thoughts on or frustrations with your current hotel accounting program?  Are you looking for a better solution?  I’d love to hear from you. Email me at Charlie@mbahotels.com.

‘Till Next Time,

Charlie Fritsch

www.mbahotels.com