By David Lund
Coaching people around the financials in hotels is what I do. I accomplish this by one-on-one coaching usually on the phone, through Skype, or in workshops where as a group we explore and debunk the mystery around the numbers. Many people are fond of saying the numbers are the hard part of hospitality. That is not true. What is true is we do not exercise these muscles. We do not even know we have a financial muscle in many cases. This story is about one of those people and how I was able to help them. Names and places are changed to keep anonymity.
Chris sent me an email requesting some of my free documents that I offer on my weekly blog posts. I think he had read the article, “Financial Statements and Your Hotel Career. ” His note was uplifting and he thanked me for writing the blog. Short and sweet. I replied and thanked him for his kind words and attached his free stuff to my email. About a month later he wrote to me again and asked if I could help him understand the rooms productivity measurements. I replied and sent him the link to the blog that explains how they are used.
“Read this and if you want more help let’s have a call,” I wrote, “It will be a gift from me to you.” He replied thank you and we scheduled a call the following week.
During the call, he explained to me that he was the rooms division manager of a 350-room hotel in San Francisco, Calif. They had a labor planning tool and daily labor reports but no real productivity measurements to work with and no labor statistics in the property financial statements. What they were using was “the standard” that the labor planning tool generated based on job tasks that each department manager created for each position. They would input the forecast rooms and the system produced a schedule. They would compare the actual standard to the scheduled standard at the end of each week. All of this sounded familiar. I asked him what the problem was. He said, “We use this tool but at the end of the month the payroll on the financials is always too high and as a result, no one likes the tool.”
We looked at two things during that first call
He was able to find the latest schedule and tell me how many rooms were forecast for the next week and he also ran another report from the labor tool and was able to tell me the hours that the system had scheduled.
We then broke down the hours into the following buckets: front office, reservations, bell desk, room attendants and general housekeeping. We had a subtotal for each and a total number of hours for the week. Then I had him do the division on each subtotal and the overall number. Now we were getting somewhere. Now we had the productivity for each sub-department. This took us most of the hour to unravel and he was excited to see the results. His hours per room occupied by sub-department and for the rooms division for the next week's schedule. He then asked, “Now what?”
What I explained next was what he needed to do to make this weekly number relevant. I told him to go back for the past 12 months and get the hours by month for the same sub-departments and in total. Once he had that, I explained he then need to total each month’s hours, for hourly and management and divide those subtotals and the total for each month by the rooms occupied for each month. I then told him to only get the productive hours: hours of regular, overtime and double time. No holidays or other hours are needed. He said, “That’s a lot of work.”
I replied, “Not really when you consider what you will have as a result—the baseline productivity for an entire year by sub-department and in total for the rooms division.”
Then I moved to wrap up the call. I asked him if the information was helpful. He exclaimed that it was indeed, and we agreed on a regular series of calls. In a few short weeks, he was able to start scheduling based on productivity targets and he taught all his managers the productivity system.
We then turned our attention to expenses and devised a system for him to zero base his departments’ expenses. He, in turn, got his team on board to do the same exercise in each area. We worked hard to get numbers figured out. The last piece we worked on was him producing the commentary for the monthly manager’s report that he submitted to his GM. Again, we worked on all the pieces and getting his managers to do their individual parts of the commentary using what he created with the labor productivity and expense management tools.
In a few short months, he really grew as a manager and leader. The exercise I put him thru paid off. His department’s results—the rooms profit—finished the year ahead of budget. The flow thru to the previous year was off the charts and he accepted a promotion to a bigger hotel and a bigger job. All because he got some help to learn how to use his financial muscles.
It’s not accounting—it’s business thinking—and it’s not the hard part of hospitality.
