There are plenty of roles within the hotel and extended stay accommodation industry that don’t require skills in strategic planning or financial data analysis. Those in individual contributor roles within a hotel (such as porter, front desk agent, or housekeeper) likely never even have eyes on a financial report for the hotel. However, such reports are critical for those in management positions with the capacity to make data-driven decisions around them. Departmental leaders likely focus solely on the aspects of these reports that impact their function, but hotel GMs and others on the core leadership team within an accommodation need expertise in understanding financial reports and using them to effectively lead their team towards consistent growth.

Profit & Loss Statements

Commonly referred to as a P&L or a hotel income statement, a profit and loss statement provides valuable insight into a hotel’s overall financial health over a given period. As its name suggests, a P&L statement outlines all of a hotel’s capital flows – both coming in (in the form of revenue) and going out (as expenses).

One of the most useful aspects of a P&L statement is the ability to compare periods against one another. Doing so can provide valuable insight into opportunities to adjust expenses or ramp up marketing and sales efforts. A P&L doesn’t provide a full picture of the financial health of a hotel, but it’s incredibly valuable, especially in partnership with the hotel’s balance sheet.

Balance Sheet

While a profit and loss statement provides insight into a hotel’s financial performance over a given period, a balance provides an overall picture of the hotel’s current assets and liabilities. The term assets refers to anything (or amount of money) a hotel owns in full. Some common examples of assets on a hotel balance sheet might include property (if owned, not leased), furniture and fixtures, inventory (supplies, food/beverages), and hotel-owned vehicles, in addition to cash/money in the bank. On the other side of a balance sheet resides liabilities, which include anything (or any money) a hotel owes. Common liabilities for hotels include loans, back-owed utilities, and payable employee wages or taxes (state, federal, local).

From a balance sheet, a hotel and its leadership can determine the overall value of what the organization owns (assets) and subtract the total of what they owe (liabilities) to arrive at net equity, or the fair market value or net worth of the business. Analyzing current and past balance sheets is helpful for hotel leaders making key financial decisions, including adjusting their investment strategy, selling or purchasing any assets, or creating contingency plans to ensure healthy cash flow for the hotel long-term.

Cash Flow Statement

Balance sheets are helpful when creating a picture of a hotel’s assets and liabilities at a certain point in time. However, hotel leadership must also keep a close eye on cash flow – or how much cash is coming in and out of the business. Cash, or money on hand, is necessary to cover current utility bills and current needs in terms of products for daily operations. Proper cash flow management is critical for hotel managers to ensure no disruptions to these operations due to the inability to pay bills or buy necessary goods. A cash flow statement for a specific period shows the beginning and ending cash balances as well as all incoming and outgoing “flows.” Money coming in most often comes primarily from room bookings, where money flowing out goes to expenses like wages and taxes.

Overspending is a risk in any industry, so keeping an eye (or multiple eyes) on the business’s cash flow statement keeps the risk of this low as it clearly warns leaders of cash flow issues. Even packed hotels with lots of revenue coming in daily can run into cash flow issues if this statement is not reviewed on an ongoing basis – both on an organizational and departmental level.

Cash flow statements don’t just warn of overspending. They can also alert leadership of excess cash on hand. While this might seem like a good thing to let be, keeping far more cash on hand than needed to cover expenses means that potentially not enough cash is being invested back into the business to foster growth. Excess cash might be better used to upgrade facilities, bring on additional staff, or adjust the business’ marketing strategy to drive more business.

Hotel Leadership Positions within the Extended Stay Industry

Some hospitality professionals learn both the importance of the reports mentioned above and how to interpret and use the information within them through management certification courses or other educational programs. However, many successful hotel GMs gain similar expertise within the workforce during their time in other supporting roles in hotels.  

Looking to gain that experience and knowledge on your path to a management position? Already armed with expertise in financial management and reporting and ready for a challenging yet rewarding management position? Answering yes to either option is reason enough to check out the current hotel job opportunities within the Westmont Hospitality Group. From part-time, entry-level positions to salaried roles in departmental leadership or hotel management – there are opportunities for nearly all interests and experience levels. Plus, our extensive training, ongoing professional development, and large growth potential are just a few of the reasons why we’ve remained the employer of choice within the extended stay hotel industry – come join us!