Financial techniques for hospitality managers
Many hospitality managers are quite at ease with customer service, but are less comfortable diving into the financial side of things. Yet to be a successful hotelier, you must know how to control your department or property’s finances responsibly and effectively.
Essential financial skills are essential for all managers. They are the most important skills cited by recruiters, and yet there aren’t many books that help them understand the basics from a practical, operational perspective. Most student textbooks are about accounting and many aspiring managers find it difficult to make the links between this and ‘real life’. Junior managers should know ‘What and Why and How’.
All managers should be aware of this so they don’t make major mistakes.
Making small savings, whether energy, food or labor, can add up to a high value when multiplied by many customers or activities. Look at the potential financial impact of a five percent reduction on some costs, perhaps over a month, and then see how you might achieve this, without impacting the quality of customer service, of course.
All managers need to be on top of this, before they hand the figures over to the accountant.
They don’t simply ‘hand the figures over to the accountant’! Departmental managers should always ‘own’ their results: they should be responsible for all aspects of revenues and costs.
Responsibility doesn’t stop at the point the guest arrives; as you can still encourage effective upselling, guest payment and then repeat business. It’s often quoted that it costs us eight times more to generate a new customer than a repeat one, so getting things right is worthwhile.
What about managing costs? You need to know where these all come from, and what you can control and what is more difficult. Effective cost management means understanding what elements are important to the customer experience and to staff achievement, and also developing a culture of careful management for everyone.
Everyone needs to understand the business – not just their own part of it but how all the different aspects link together. Your actions can have an impact on other areas, and their actions can affect you, so you need to understand all this to be able to take effective, informed decisions. Please talk to other managers and staff so you understand what impacts on customer satisfaction. Happy customers equal good profits.