hospitality financial leadership
Hospitality Financial Leadership: What Are CAP Rates and How to Use Them
David Lund | November 4, 2024
A capitalization rate, or cap rate, is a measure of the income return on an asset, such as hotel or rental property, relative to its purchase price. It is calculated by dividing the net operating income (NOI) of the asset by its purchase price. That’s what this piece is all about. It also must be said from the get-go that understanding cap rates is not so difficult. “Normally” NOI is calculated using all income less all operating expenses but does not include costs for debt, depreciation, amortization, reserve for capital expense or income taxes. That’s the typical basis for the calculation of the hotel’s value, est...
Hospitality Financial Leadership: Managing F&B Expenses and How to Record Them on Your P&L
David Lund | September 30, 2024
As I have said in many of my earlier posts, Food and Beverage is special. And I mean that with all sincerity because it's an integral part of our business especially with a full service offering. However, there are challenges that we need to overcome and one big one is how to report the profit and loss activity so that it is as meaningful as possible. I say “possible” because there are no absolute methods to get 100% of the picture that really work. Many try to get and stay on top of their costs and payroll and that’s the right thing to do. The reality is that it’s never going to be perfect. It’s not going to be perfect because w...
Hospitality Financial Leadership: Why You Want to Use a Rolling Forecast
David Lund | September 9, 2024
Rolling forecasts are nothing new but I must point out that most hotels don’t use them, and they really should. It’s an incredibly useful tool that is literally worth its weight in gold. That being said, it doesn’t weigh much but once you start to use one it’s an indispensable tool that you must have each month, and its impact and importance usually gains weight and momentum into the final few months of the year. Like the plot in a good mystery, it can take a sudden turn and produce an unexpected ending. To start out we need to define how we produce a rolling forecast and point out the best practices around its creation. Then, we w...
Hospitality Financial Leadership The Number 1 Financial Mistake Hoteliers Make
David Lund | August 12, 2024
Now that’s a big statement to put out there, but I’m very confident that I’m pretty close to 100% correct with my observations. The reason why I’m so sure is that I know most hoteliers are not financial people and they are oblivious to the issue I am going to explain. On top of that – I see this all the time. It’s also pretty clear that most hoteliers don’t have an accounting background and knowing this fact prompts me to write this piece and hopefully clear up the picture for others. The catalyst for my article is the many discussions I've had with my clients over the years around this topic. Here is the...
Hospitality Financial Leadership: The Early Arrival Program
David Lund | July 29, 2024
With my workshops and speaking, I often do an exercise where I challenge each leader to find a minimum of $250 in next month's forecast. That can be savings in the form of reduced payroll or expenses. It can also be a source of new revenue. The participants come up with some amazing ideas that really work. The great thing about these ideas is that we almost always get to repeat and compound. An idea that works next month just works EVERY month. Read more about creating asset value here. In this piece, I am going to share one of the best revenue-generating and guest-pleasing ideas that my clients have come up with. It’s something that ju...
Hospitality Financial Leadership: The Top 10 Accounts Receivable Controls
David Lund | July 2, 2024
“AR” as we commonly refer to the sub department of the accounting function is a mainstay in any larger group-based hotel. In these juggernauts the importance of efficiently collecting your money is mission critical. Not only do we take the chance that the group will come and stay after we hold all those rooms, but we also roll the dice and give them credit. In today’s business world it would shock many to realize that credit is a common element in these group hotels. It’s common because we need to be competitive; that other hotel around the corner offers a master account and we need to as well. But be warned. Offering credit comes wi...
Hospitality Financial Leadership: Putting a Dollar Value on a Hotel
DAVID LUND | May 20, 2024
By David Lund Determining the current selling or asking price for a hotel is a bit tricky. Compared to estimating the present value of a house it’s more like a detailed math exercise rather than a google search on Redfin. That’s what this piece is all about, how you can estimate the value, AKA sales price. Commercial real estate firms specializing in hotel valuations are what your bank is going to require that you use if you’re asking them for financing to buy a hotel. That makes sense because the bank will want to protect their interest. If you own a hotel and want to sell it you can go that route as well but it’s not like two ...
Hospitality Financial Leadership: $600,000 Trash Can
David Lund | May 6, 2024
David Lund is the Hotel Financial Coach, a thought leader and trainer on using financial data to drive your business decisions and your career. A 30-year hotel vet, David has seen everything, a lot of which he shares in his book, The Prosperous Hotelier. Susan and David talk about railroads, scams, and Russians. What you'll learn about in this episode: Why it is so important to ask questions How to get better at understanding the P&L What railroads have to do with luxury hotels How much time to spend on your expense checkbook What GMs and owners who don't share numbers are up to [00:00:00] Susan Barry: This is ...
