What the Hotel Profit and Loss Statement Does Not Show You!

What the Hotel Profit and Loss Statement Does not Show You!

The Profit and Loss Statement below depicts the financial performance of Paradise Hotel, our Case Study Example.

Paradise Hotel Profit and Loss Statement

It is for the year ended 31st December 2019 compared to Last Year and Budget respectively.

Comparisons with:

previous period and
with budget

are common methods of analyzing and measuring hotel financial performance.

However, the statement lacks some key traits for facilitating effective financial performance analysis.

It does not show relationships between revenue and expenses beyond respective variances.
Statement does not show behavior of expenses vis-a-vis revenue.

The pain from these huge shortcomings is almost paralyzing.

Relationships between:

revenue,
expenses and
profitability

are the foundations of financial analysis.

Meaningful financial decisions cannot be taken based on what is existing in these statements.

Decision making requires a point of reference which is indicative of situations in the future.

Behavior of expenses are not reflected anywhere in a profit and loss statement.

All it shows is nature of expense.

The Hotel Profit and Loss Statement unfortunately cannot deliver here as it is historical.

So, use the profit and loss statement knowing clearly these shortcomings.

Want to know how these shortcomings can be overcome?

Click below for the full story.

Hotel Profit and Loss Statement Analysis

Tip Trailers - Learn Quickly!

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
financial performance
revenue management
leadership
productivity and so on

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About the author, Lakshmi Narasimhan Soundararajan

Lakshmi Narasimhan Soundararajan is the Founder of Ignite Insight LLC a New York City based consultancy, which specializes in Hotel Finance Training, Coaching and Consulting.

Right from the time he was in school, Lakshmi had a head for numbers. In fact, he says, numbers talk to him and tell him stories. At the same time, as he fashioned his career in the hospitality industry, he worked closely with colleagues who did not have a financial background. He saw them struggle with numbers and fear them.

Lakshmi made up his mind there and then to commit his career to hotel finance training by simplifying numbers for the benefit of his non-financial background colleagues. He founded Profits Masterclass first and then Financial Skills Academy with the philosophy of assisting managers and small business owners to Build Financial Skills, Knowledge and Ability in themselves.

His vision is for Financial Skills Academy to be the Ultimate Learning Hub for Hotel Finance Training.

Lakshmi 's all time favorite historical figure is Leonard Da Vinci and in particular Da Vinci's love for simplicity. When founding Financial Skills Academy, Lakshmi based the value proposition for his hotel finance courses on three foundational principles: SIMPLE. NON-TECHNICAL. USABLE.

Lakshmi can be contacted at +1 201-253 5000, nara.profitsmasterclass@gmail.com or at LinkedIn www.linkedin.com/in/slakshminarasimhan/