Ultimate Guide on Hotel Financial Terms for Beginners
Are You on Top of Hotel Financial Terms as a Manager?
Or are you missing the forest for the trees?
What do I mean by that?
As a new (beginner) hotel manager, you are busy (hopefully) with the operation.
Because of that, often, you have not paid attention to an important factor.
You are not quite sure what some hotel financial terms actually mean.
Don’t make that mistake (that many end up making!).
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Learning the ropes or basics is critical.
It is the foundation for being a successful hotel manager.
But I have got your back.
In this Ultimate Guide on Hotel Financial Terms, you will learn all that you need to know.
It will make you a business savvy hotel professional.
And a successful one too.
You would want that right.
Let’s jump right in.
This Blog Post will cover
What are Hotel Financial Terms?
Hotel Financial Terms are definitions of important elements of a hotel operation and performance.
They can take the form of:
- Key Performance Indicators [KPIs]
- Financial Ratios
- Calculations
- Analysis
and more.
Let us briefly see what these definitions are with examples.
Hotel Financial Terms - Defined
- The most common form of hotel financial terms are key performance indicators or KPIs.
- KPIs show important measures on hotel performance.
- For example, occupancy %, average daily rate, RevPAR and so on.
- Financial Ratios compare one KPI with another.
- For example a Debt Equity Ratio compares debt (borrowings) with equity (owner contribution).
- Calculations show how a particular KPI is arrived at.
- For example, Occupied Rooms / Rooms Available x 100 calculates hotel occupancy %.
- Analysis can take form of a series of calculations to arrive at an important measure.
- For example, Break Even Analysis uses revenue, expenses in a particular way to arrive at a break even point.
Why Should You Know Hotel Financial Terms?
Your first question will be: Why should I know hotel financial terms?
Fair enough.
Let me make a strong case for that.
I will use the example of occupancy of a hotel.
As a hotel manager, you manage the operation.
You deal with occupancies on a daily basis.
This is to increase occupancy every day as much as possible.
You may know that occupied rooms divided by rooms available multiplied by 100 gives Occupancy %.
However, do you know the difference between Paid Occupancy Rate and Total Occupancy Rate?
Why is it important to understand this difference?
Do You Know what are Lean, Standard and Peak Month Occupancies?
Knowing hotel financial terms will allow you to:
- manage your operation and
- in this case, optimize occupancies more efficiently.
25 Hotel Financial Terms for Beginners Series
Here is a list of 25 Hotel Financial Terms that Beginner Managers Must Know.
- Occupancy Rate
- Average Daily Rate
- RevPAR
- Market Segments
- Hotel Room Revenue
- Market Share
- Average Length of Stay
- Guest Repeat Ratio
- Restaurant Seats Available
- Food & Beverage Covers Served
- Average Food & Beverage Check
- Meal Period Analysis
- Year on Year Growth
- Fixed & Variable Expenses
- Undistributed Operating Expenses
- Management Fees
- Gross Operating Profit
- Depreciation
- Net Income
- Balance Sheet
- Assets - Fixed & Current
- Liabilities - Long Term & Current
- Owner Equity
- Cash Flow Vs Cash Balances
- Financial Ratios
What You Will Learn in These Hotel Financial Terms
In each of the 25 chapters, you will learn how to use these hotel financial terms.
You will learn about:
- What is the Hotel Financial Term?
- Why Should You Know?
- Where will You find it in the Hotel Financial Statement
- Covid-19 Example and Lessons to learn
- Formula / Calculation for the Hotel Financial Term
- What are Related Hotel Financial Terms
- FAQs on Hotel Financial Terms and Related Concepts
Your Guide to Professional Success
So, there you go.
25 Hotel Financial Terms which will make you a business savvy hotelier.
Click link below for each of the hotel financial terms as chapters of this Ultimate Guide.
Chapters for 25 Hotel Financial Terms
Chapter 1 - Hotel Occupancy Rate
Chapter 2 - Average Daily Rate
Chapter 3 - Revenue per Available Room
Chapter 4 - Market Segments
Chapter 5 - Hotel Room Revenue
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Ultimate Guide on Hotel Financial Terms - Other Chapters
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