As you know, hotel business is a service business. A lot of valuable things are required to provide the services, but the main valuable thing for a hotel is money. You need to have enough cash to invest in your hotel and make it a successful business. And the only way to get clients is based on how well do you manage your company, what conditions can you offer them and how much will it cost them?
To answer all these questions properly you must be able to read financial reports in Hotel. In this article we’ll give an overview of income statements, balance sheets and cash flow statements.
Income statement
After completing one cycle of work from receiving payment from client until giving money back after deducting expenses – the number of sold service units, expressed in monetary terms is known as revenue. Revenue can be determined by multiplying the number of sold service units by their price.
Expenses are all costs needed to provide hotel services for this period – usually one month. Therefore, expenses will include payroll, heating cost, electricity bill, furniture repair and so on. Expenses are also known as costs. All these items are deducted from revenue to obtain net income or net loss before tax.
Net income is defined as the amount of money earned by the company after taxes have been paid on it during one business cycle (usually one month). The higher your net income is, the more profitable your company becomes. Besides that, it brings you different benefits like paying off debt faster, getting more loans in the future etc.
Balance Sheet
Balance sheet shows your company’s assets, liabilities and shareholders’ equity. Assets are items that are valuable to the company – cash, accounts receivable, inventory, property, plant, equipment etc. The higher value of your assets is much better for you than your liabilities (more on this later). If these two values are equal it means that you have no debt. Shareholders’ equity is the amount of money invested by shareholders or owners in the company plus profit earned by company minus losses made by it. It can be found at the bottom line of balance sheet.
Cash Flow Statements
This statement explains how much cash flow did occur during one month (usually) and what was its source (sources) and destination (uses). It contains three main sections: operating activities, investing activities and financing activities.
Operating Activities ?
all regular payments to suppliers and employees for their services, as well as payments for utility bills and other necessary regular payments. If the business has started using inventories (raw materials, work in progress, finished goods), depreciation should also be included here.
Investing Activities –
all purchases of fixed assets that will last more than one year such as property, equipment etc. They are usually expensive investments that help you earn more money in the future. Purchasing other companies is also included here (company’s name stays the same and it’s treated like an investment).
Financing Activities ?
all your loan repayments, cash dividends paid to shareholders and any other cash that you used. If the company is not very profitable (in terms of net income), it may need to get loan from bank or other source, so this section should be examined closely.
Smith Travel Report
The Smith Travel Report for hotels is yet another reputable source for hoteliers. This annual report is based on the hotels’ performance in 2015 and has been around since 1981. The data from this report helps those who are interested to understand what’s working well and where there needs to be improvement. It also provides insight into how consumers spend their money when it comes to travel, which can help you better market your hotel as a result of knowing what they’re looking for.?
Smith Travel Report is a survey that provides insights into traveller behaviours and preferences. The report can be used to help generate ideas on how to improve hotel operations. It also supplies information for hotels to use when preparing marketing campaigns, such as the most popular reasons why travellers stay in hotels.
The Smith travel report for hotels is an annual survey of US leisure travellers conducted by the American Hotel & Lodging Association (AH&LA), so it’s important for hospitality professionals to know what this research reveals about their customer base and market segments in order best serve them.?
STR’s research report offers a wealth of information about the hospitality industry. The report includes data on hotel construction, occupancy rates, and revenue per available room. This is an invaluable tool for any hotelier who wants to stay up-to-date with the latest trends in the industry.
STR for hotels is compiled by STR Global Ltd., which is one of the leading providers of market intelligence on travel and tourism globally. Their clients include government agencies, financial institutions, investment banks, airlines, hotels and other travel companies all over the world.?
The STR Report is an indispensable tool if you’re looking to attract new guests or keep current ones coming back.
STR Report is a global benchmarking study focused on the hotel industry. The report has been published annually since 1978 and provides readers with an assessment of the performance of hotels around the world. The US data for STR’s 2018 Hotel Benchmarking Study will be released soon and we want to share some key findings from last year’s study, as well as what you can do now to prepare for this year’s release.?
STR Report assesses hoteliers in four categories: rate competitiveness, cost control, revenue per available room (RevPAR), and return on investment (ROI). In 2017, RevPAR increased by 4% globally compared to 2016 levels while both average daily rates (ADR) and occupancy decreased by 1%.
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