Ultimate Guide on Hotel Profit and Loss Basics

Why do you think learning the basics of a Profit and Loss Statement is so key?

So much so that it will impact your very career and ability to succeed.

Am I being too dramatic?

No, I am not.

Let me explain why.

Every manager is striving to contribute to the performance of the hotel.

To generate higher revenue and profit consistently for the owners.

To achieve this goal, you must know what contributes to higher revenue and profit.

And that you do through the Hotel Profit Loss Statement.

The financial statement known as The Performance Statement.

Now do you realize why the Profit and Loss Statement is key?

However, it is even more important to get to grips with the basics of the Profit and Loss Statement.

So that you can leverage it for better revenue and profit performance.

I will lay out a set of learning maps to do just that in this post.

This Blog Post will cover:

The Power of Learning Maps

Your first question must be: What are learning maps?

Hang on, I am getting there.

Take a look at the infographic below on The Ultimate Guide on Hotel Profit and Loss Statement Basics.

Learning Maps provide the basics of any concept.

It is like reading the GPS for a trip.

If you wish to reach your destination without any snags, you will set up your destination in your GPS device.

Similarly, a learning map takes you through essentials of any concept.

The basics you must know.

There are six learning maps for understanding the basics of a Hotel Profit and Loss Statement:

• Performance Learning Map
• Revenue Learning Map
• Expenses Learning Map
• Profit Learning Map
• Variance Learning Map
• How to Read a P&L Learning Map

The Ultimate Guide on Hotel Profit and Loss Basics acquaints you with each of the learning maps listed above.

The sixth learning map is like reaching the destination using GPS on your trip.

It will teach you how to read the financial statement.

Without knowing about the learning maps, you will find it difficult to read the profit and loss statement.

You will refer to the Ultimate Guide for all the details of each of the learning maps.

And action steps you can take to apply the learning immediately.

Let us now look briefly at each learning map.

Performance Learning Map Basics

Are you a Front Office Manager?

Or a Food & Beverage Manager?

Or perhaps a Revenue Manager?

In all of these cases, you are what is known as a middle manager in the hospitality industry pursuing a career.

You are an important part of the management team of the hotel.

It is part of your major responsibilities to contribute to the performance of the hotel.

And that is this Performance Learning Map.

The biggest mistake beginners make is to jump into the hotel Profit and Loss Statement straightaway.

And attempt to analyze revenue, expenses and profit.

Without being completely clear about concepts that are the foundation to performance analysis.

It is critical to plan out your analysis of the hotel profit and loss statement.

Answer questions like:

• What factors you must consider before beginning to read the financial statement?
• Which are elements surrounding the statement that will make your analysis most effective.

So on and so forth.

Get the full scoop on hotel performance in the Ultimate Guide.

Revenue Learning Map Basics

Did you know that there is something more important and comes even before hotel revenue itself.

Everybody talks about the revenue.

However, rarely anybody talks about the source which is generating that revenue.

Would you be able to locate the source of revenue generation in the hotel Profit and Loss Statement?

Let me clarify what that source is.

That source is the hotel asset which produces the revenue.

Are you clear about the role of assets in revenue generation?

Get the full scoop on hotel revenue and sources in the Ultimate Guide.

Expenses Learning Map Basics

Have you ever directly related hotel expenses to profitability?

More specifically using hotel expenses to boost profit.

Revenue does not happen by itself.

It has to be triggered.

That is achieved by incurring expenses.

But expenses can be of various kinds.

• Operating
• Non-Operating
• Direct
• Indirect
• Fixed
• Variable

and so on.

Get the full scoop on hotel expenses in the Ultimate Guide.

Profit Learning Map Basics

Did you know that you cannot influence hotel profit directly?

What I meant is that you can only influence hotel profit indirectly.

More specifically, through influencing revenue and expenses.

How efficient has your hotel business been?

Would you know how to assess that?

In other words:

• what is the Top Line (revenue) and
• what is the cost of doing business (expenses) for a hotel.

While generating revenue is a critical first step, the ultimate purpose of a business including a hotel is something else.

Owners and stakeholders pour millions into their hotel investment so that they get back something in return.

That something in return, is often called by various names, not the least of which is Return on Investment.

So, what is this Return on Investment that is so coveted?

Well, it goes by various names and different flavors.

However, the simplest name is what is known as Profit.

Get the full scoop on hotel profit in the Ultimate Guide.

Variance Learning Map Basics

If you are a hotel manager of a property, performance and variance analysis are among your top priorities.

It is what your bosses are demanding from you.

Variances are the difference between:

• what you targeted (budget / forecast) and
• what you achieved (actuals)

The hotel profit and loss statement variances are indicative of the business results of a month.

Note the word “indicative” here.

They certainly are not absolute numbers that can be relied upon entirely.

Why not?

Get the full scoop on hotel variances in the Ultimate Guide.

How to Read a P&L Learning Map Basics

We have arrived at the last of the learning maps.

You could say that this is the eventual destination (remember the GPS metaphor?).

The ability to read a hotel profit and loss statement correctly.

Are You focusing on the wrong parts of a P&L?

The Profit and Loss Statement is one of the critical P&L Reports that managements use month after month.

It is a report that lays out the business results of the past month.

Reading it correctly is critical.

Have you hear of the term Key Performance Indicators?

Or KPIs as they are commonly called.

They play a big part in reading a P&L.

They tell you where and what to look for in a P&L.

Get the full scoop on hotel KPIs, how to read a P&L and more in the Ultimate Guide.

So there you are.

The six learning maps for hotel profit and loss statement basics.

Are you looking for an all in one resource to understand basics of a hotel profit and loss statement?

The Ultimate Guide on Hotel Profit and Loss Basics is your go to resource.

And it is FREE!

Just Sign Up below and Download the guide now.