Know The Simple Secret to Reading a Profit and Loss Statement Easily?

One question every hotel manager must be having to deal with is:

How do we read and interpret a hotel profit and loss statement for best results?

This is critical for not just the success of the hotel but also the performance of the manager.

Unfortunately, 90% of managers get this wrong.

Why is this?

Read on for the Silo Story to discover the true secret of reading a profit and loss statement.

And it is simpler than you thought.

Let's go!

Profit and Loss Basics

One of the critical skill sets required of hotel managers is the ability to read financial statements.

It is also the skill set which is often found wanting in hotel managers.

This affects their performance and successes a great deal.

This is probably their biggest frustration.

The financial statement that is most familiar to hotel managers is the Profit and Loss Statement.

They get it each month.

And they have to read it, understand it and take decisions based on their analysis.

Decisions that often will mean hundreds of thousands of dollars being at stake.

It is a tough responsibility.

Let me go back to that metaphor of the Silo that I used earlier.

The Silo Story

The Secret to reading financial statements and the Profit and Loss Statement in particular has something to do that Silo!

You are giving me that disbelieving look again.

I will shortly clear the air on that.

The trouble is that hotel managers treat even their Profit and Loss Statements like Silos.

What, you are confused!

Hang on, I am almost there.

There are important elements of a Profit and Loss Statement that a hotel manager has to deal with regularly.

What elements you ask?

I am coming to that.

Elements like revenue, expense and profit.

It is important thus to understand that these elements of a hotel Profit and Loss Statement are not Silos.

Or they are not independent.

They are not unconnected.

What are they like if they are not like Silos, you ask impatiently?

Silo Vs Pipeline

They are actually like a pipeline.

You know those cylindrical objects that carry water, oil etc.

Their most unique quality is: they are interconnected.

One leads to another and then on to another and so on.

Well, elements of the Profit and Loss Statement are also like that pipeline.

They are connected.

And therein lies the secret of reading a Profit and Loss Statement.

Don’t miss watching the video.

I promise it will be eye opening.

The Full Monty

Want to read the full post on the true secret of reading a profit and loss statement?

Click for full post on Profit and Loss Basics - Are You Making These Key Mistakes?

Tip Trailers - Learn Quickly!

Tip Trailers - Learn Quickly is a series that will bring basic concepts and tips to assist a beginner hotel manager.

You will get byte sized concepts explained to you in simple, non-technical language.

The philosophy behind Tip Trailers is to:

• quickly and
• briefly explain
• a fundamental concept
• often supported by visual elements like a :
  • video,
  • infographic,
  • screenshot,
  • slideshow and so on.

You will end up learning quickly!

The fundamental concept may be about hotel:

• financial statements
• evaluating financial performance
• revenue management
• leadership 
• productivity and so on

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