Pinnacle
Advisory
Group

Management Reporting by: Anne Blythe

Presented by: Anne Blythe

What’s next? The 2010 Budget is finalized and the 2009 books are closed. Now management reporting becomes the focus of both owners and operators. The ultimate purpose of management reporting is to provide the end user with an overall picture of the performance of the hotel in key areas which include finance, operations, and sales and marketing. The type of hotel, which varies based on service level, market orientation, location and chain affiliation, to name a few, will dictate the type of specific reports required for review. None the less, despite the attributes of the hotel, the end result remains the same. The reports should provide an overview of historic performance, indication of future performance and how performance will be achieved.

The following points outline the key areas and reports found in a “typical” management reporting package provided by a management company to an owner and/or asset manager.

• Executive Summary which provides highlights of the performance of the hotel for the reporting period and an overview of future performance, including key vulnerabilities. Examples of information that could be include in this summary are:
  • Summary of key operating statistics, occupancy, average rate, total revenue, GOP and NOI, to name a few.
  • Statistical comparison of the hotel to the STR competitive set
  • Guest satisfaction highlights
  • Booking summary
  • Capital projects summary

• Finance
  • Income Statement for the period and YTD with a comparison to budget and previous year. This statement should provide detail for each department, including market segmentation (occupied rooms and average rate by segment).
  • Balance Sheet for the current period, compared to last year end.
  • Cash Flow for the current period.
  • Capital Projects summary of expenditures for the period; as well as, estimated cost and timing for the balance of the forecast period. Depending upon the scope of the project (i.e. major renovation versus a kitchen upgrade), a long range plan may be included.
  • Forecast updated with the current period actual results. The forecast reports should follow the same reporting system as actual results and include an income statement, balance sheet and cash flow. The income statement should include the detail for each department, while the balance sheet can be provided at a summary level to provide the information necessary for the cash flow.

• Operations
  • Human Resources summary of issues affecting the hotel.
    • Changes in staffing/turnover
    • Union status
    • Employee satisfaction
  • Guest Satisfaction Survey

• Sales & Marketing
  • STR Monthly Trend report for the current period. This report should be based on the competitive set presented in the annual Operating/Marketing Plan. If there are changes in hotel included in the competitive set, these changes should be explained.
  • Hotelligence report
  • Summary of Market Conditions
    • Hotel Changes– additions, brand changes; adjustments in rate strategy
    • Demand Generators – additions/deletions; change in workforce
  • Primary Web Site Performance Metrics
  • Primary Reservations System Performance Metrics
  • Advance Sales Report (Booking Pace/Backlog)

This summary is illustrative of the main areas of reporting and the general topics. However, the topics will vary depending upon the specific hotel, the market, as well as any issues facing the hotel. Important factors to consider when preparing the package are:

• Who is the audience? Do they have an in-depth knowledge of the hotel industry? The answers to these questions will determine the level of explanation required for each section, as well as types of reports to include.
• What is the reporting period? Typically the “actual” reporting period is monthly, but quarterly is another option. In terms of the forecast, is it updated with actual results on a monthly basis to provide an annual estimate? Or is it rolling, moving ahead each month, without regard for a calendar year end?
• What is the delivery method? In today’s data driven world, this package should be delivered electronically. The financial reports should be available within one system. It is likely that many of the sales and marketing reports come from different systems, but they should be put into electronic format for delivery.

Conclusion
Management reporting is a critical component of the success of any hotel. The development of a standard reporting package, with agreement from all parties involved has to be the starting point and should focus on delivering a consistent report on a timely basis. However, it is should be understood that the reporting package is a working document and that reports may be added/deleted/changed depending upon changes to the hotel and/or market. The overarching idea behind the package is to provide ownership with an overview and forecast of hotel performance.

Anne Blythe is a Senior Consultant with Pinnacle Advisory Group, who specializes in market and financial analyses, appraisals, and development planning. She has worked on countless projects both existing and proposed throughout the US. She has worked with Pinnacle Advisory Group since 1999.