- Complete Forecasts—get the managers and leaders of this hotel to complete their monthly departmental financial forecasts.
- Track their results throughout the month.
- Adjust their spending on labor and supplies according to business volumes.
- Review their month-end statements for accuracy, and finally,
- Write their departmental monthly hotel management commentary.
Get the core management team to do this each month, while improving these forecasts and the hotel’s financial results.
Part 3 of 3
The new GM attended the last two months workshops. I must say that I was a little concerned that he might cancel the whole deal. No reason to think this way other than my own imagination. We completed workshop five and he participated. Throughout the morning I was not sure how he was feeling or what he was thinking. He stood up in front of the group with the talking spoon in hand at the end of the session. He said he had been skeptical about the project given all he had heard and he was not sure at all what was going on. (After all, this is Southern California and the Left Coast.)
What he said next was incredible. He said he was totally surprised by the content and the outcome of the workshop.
“I had no idea what this was all about,” he said, “I saw how much it cost and I want to tell all of you I was skeptical that the former GM was smoking the curtains, but I completely see the value and, David, I want to thank you for leading us with this project.”
He continued, “To me, nothing is more important than each one of you making your own contribution to our success and I see how this program is exactly what we need to help all of us do that with the finances.”
We finished all six months and here are some takeaways. First off, on our second to the last workshop, I had to stop short on our individual check-ins. People were just taking too long to tell their team all the wonderful things they created, learned and put in place in their department. At the right is the last check-in.
I spoke a few times with the President and he reported great things back to me about what he was hearing and seeing from the property. He told me the forecasts coming out of the hotel were now the best and he attributed it to the project. He also reminded me that in the beginning, they were the worst.
In months five and six the hotel missed their top line by more than $200K. In both months the retention (negative flow) was more than 75 percent. This was attributed to the team’s ability to react to the revenue picture—in the month for the month.
The director of finance reported to me that the hotel’s performance in these months was much better because of departmental cooperation and communication with serious savings in expenses and payroll when the revenues did not materialize as planned.
Making claims about numbers and profitability is impossible. There are just too many factors to consider. However, in a hotel, you know if the team has its act together with their finances or not. When we completed the project, it was clearly a different hotel with a strong foothold in its financial leadership culture.
The housekeeper was a tough nut to crack. He had created an amazing scheduling tool that really helped him control his room attendant labor. Right down to the hours per room occupied every day. On the schedule and the actual monthly results. The problem was he did not want to share his little secret and he certainly was not willing to tell the DoF what his monthly labor forecast was. He had his own financial reporting and he did not believe the hotel financials. He was also pretty sure he would be asked to cut even more. With a little coaching we got him to tell the world what he had created and now it is a tool that other departments use: Hours per room occupied.
The chef told me he was very proud of himself. I asked why. He said, “Before the project, I was a good chef who knew how to cook and lead his team. Now, I’m a chef that knows how to run my department like a real business. I now understand what it means to be a real chef.” One that can wrap his arms around the financials too. I asked him what was so tough. He smiled and said nothing was tough, he just thought it was.
The front office manager was another star in the show. He caught on quickly and was one the first to get his forecasts complete and very accurate. He worked with what I call the back of the house coordinator with what he had created. She, in turn, worked tirelessly to get people’s checkbooks and purchase orders lined up.
She also worked closely with accounts payable to ensure checkbooks were up to date. He supported her and the system they created for the rooms side was adopted for maintenance, guest services, and housekeeping. These little “bonuses” were not part of the plan, but they were welcomed. I always find a surprise or three like him and her. Leaders want to learn and contribute and sometimes they just need the right invitation.
The spa manager was amazing. After the first month, he returned to show me what he created to forecast his payroll. The last I heard it was being rolled out to the other hotels in the company with spas. He used a function in Excel that I had never heard of. It looks at historical data and your latest drivers and it predicts the labor you need! Who knew? This process and his forecasts helped the department to a plus-20 percent contribution margin.—in a hotel spa that had been open less than one year! That is amazing.
The restaurant managers were another story. Full of positive intentions but their operation was just too—I’m searching for the right words here—OK, screwed up. In the six months that I was there, we had three different restaurant managers. There is still hope!
The conference services and catering manager was a challenge. A challenge because of the business volumes and the structure relative to the sales department, but in the end, she came through. This position is the toughest to get on board. They want to but they are too busy. This department is critical to the efficient operation of so much of the FB operation. The MO here was like housekeeping. They had their own system and what was reported in the financials was of little importance. We broke through this barrier, albeit much later in the project than I would have liked.
The DoF’s contribution to the project was significant. He was willing to take the time to work with the other managers as long as the other managers stepped up. It is an interesting dance to watch. Who is helping who? Who thinks they are more important? These are all behaviors that emerge when you are working to draw department managers into the financial game. If the DoF cannot make time for the leaders and do it in a way that is genuine and safe—game over. This DoF made the difference and the results were not 100 percent but the hotel went from zero participation to well north of 66 percent in six months. It is impossible to put a financial return on investment this way but I know the DoF is very happy with the results of the project.
The original GM who left after month four was a steady hand throughout the project. He also was frustrated with the turnover, as we all were. He was very quick to point out the positives and the results his team was making via the comments from corporate and feedback from the DoF and department managers. We commiserated more than once over a couple of key players and how to get them to step up.
I would ask, “Do you sit down in your 1-1s with these managers and remind them that the numbers are just as important as the guests and the colleagues?”
He would smile and say yes, but, “That’s also why we have you here, David.”
The triangulated fire was effective and I know if we had to do it all over again, knowing what we learned, we would have got a couple of more.
The new GM was the one who inherited the hotel that missed the top line forecast on his first two months. He was very quick to point out that the retention was impressive. He also wants to circle back and start over with the new managers. To train them and get them on board. I reminded him that I’m available to help and he also has a core team that can do the same.
From my perspective, the project was a big success. When I started there was zero participation in any monthly process other than the revenue manager’s forecast. When we wrapped up the hotel had a solid process in place to produce monthly departmental forecasts, leaders that now had a new passion for tracking the financial results in the month for the month, managers that wanted to find adjustments to schedules and expenses when revenues did not materialize, a team that eagerly reviewed their month-end statements and GLs for accuracy, and team members who write their commentaries.
These are the hotel financial muscles we found and exercised. You can do the same at your hotel. It is not difficult.
It does require vision, commitment, and persistence— but after all, that’s the hotel business!
If you would like a copy of any of the following send me an email at [email protected]
- EFTE and Productivity Exercise
- Hotel Financial Policy Manual – Inventory of “Sections”
- Hotel Financial Coach “Services Sheet”
- FB Productivity Spreadsheet
- Rooms Productivity Spreadsheet
- Financial Leadership Recipe F TAR W
- Hotel Financial Coach – “Speaking Sheet”
- Flow Thru Cheat Sheet – Enhanced
The Hotel Financial Coach