So you want to make more money? Improving Profit in every situation

Change mix of business (attract higher rated demand) Complete Profit Management Rule of Three Increase Revenue Change Focus Reduce Expenses Change Habits Change mix of business Know your details Increase Revenue Reduce Expenses Change mix of business (attract higher rated demand)

Hotel Managers = Reactive Guest Expectations Market Dynamics Rate Placement Competitive Position Staffing & Amenities Room Sales Service Level & Expenses

Hotel Managers = Reactive

Cause and Effect

Service Level & Expenses Cause and Effect Market Dynamics Competitive Position Rate Placement Guest Expectations Staffing & Amenities Room Sales Service Level & Expenses It’s rarely one thing, and even if it is, everything in the cycle will still be affected. Profit Loss

Service Levels and Expenses 10 Standards at profit-driven hotels Income Statement based on 11th edition of USALI Accurate tracking of market segments STR Data Extended Uses Cost of Turnover Cost: Per Occupied Room / Per Guest / Par Available Room / % Rev GOPPAR Flex and Flow Details not Averages Forecasting Labor Metrics

Standard Hotel Statement 11th Edition of Unified System of Accounting Compare results Allows for analysis Standard format Detail points to additional profit Helps you to make smart cuts Clarifies how to maximize profit Market Dynamics Competitive Position Rate Placement Guest Expectations Staffing & Amenities Rooms Sales Service Level & Expenses Sample

Market Segmentation Tracking Know what happened and why Why people come to your area What is important to them in a hotel Where do you spend capital Develop specific plans to improve Know why business levels are changing Market Dynamics Competitive Position Rate Placement Guest Expectations Staffing & Amenities Room Sales Service Level & Expenses Sample

Service Level & Expenses STR Data extended uses What else your STR Report can tell you STR Day by Day STR Market Segment How do indexes trend What relationship is there between segmentation and indexes Where can you improve Where are you vulnerable to competition Market Dynamics Competitive Position Rate Placement Guest Expectations Staffing & Amenities Room Sales Service Level & Expenses Sample

Cost of Turnover Cost to Cover - # of days you are short an employee and someone is covering for them, or you are not doing their job. Advertising – Newspaper or website fees to advertise openings. Background Check – Cost of criminal background checks, drug test, etc. Training – Cost of your (someone else) time to train an employee, taking away from other work. Ramp Up – Cost of time that a new employee can not work a full shift or completely alone. Back

Service Level & Expenses Cost of Turnover Turnover erodes profit in multiple ways Market Dynamics Competitive Position Rate Placement Guest Expectations Staffing & Amenities Room Sales Service Level & Expenses Training Time Lower efficiency Hard Cost Possible decline in guest experience and satisfaction Sample

Cost: POR / Per Guest / PAR/ % Sales Unless volume is constant, you need metrics Compare cost to history Compare cost to other hotels Deliver consistent guest experience Best indicator of where to raise / lower cost Create more accurate budgets and forecasts Market Dynamics Competitive Position Rate Placement Guest Expectations Staffing & Amenities Rooms Sales Service Level & Expenses

Service Level & Expenses GOPPAR Gross Operating Profit Per Available Room Shows underlying value of property Used to evaluate management efficiency Indicates profit and cash flow potential Shows changes in mix of business Shows changes in travel habits “Pocket Price” of various segments and booking channels Market Dynamics Competitive Position Rate Placement Guest Expectations Staffing & Amenities Rooms Sales Service Level & Expenses

Service Level & Expenses Flex and Flow How well are you dealing with market change High flex might indicate that you are cutting back too much Low flex could mean you are not cutting enough A lower flow means that you are not maximizing profits in a period where revenue is higher than you expected Market Dynamics Competitive Position Rate Placement Guest Expectations Staffing & Amenities Rooms Sales Service Level & Expenses Flex = how well you reduce spending when business declines Flow = how well you maximize profit when business is increasing

Details vs Averages Additional Profit hides in the details Averages are used for comparison Expense cuts are based on details Accurate plans are done in detail Managing by average lowers profit Knowing trends by Day, Segment, and Season will increase profit Market Dynamics Competitive Position Rate Placement Guest Expectations Staffing & Amenities Room Sales Service Level & Expenses Beware of the person who can't be bothered by details. Sample Sample

Details vs Averages Is close enough, close enough?

Service Level & Expenses Forecast Be Proactive not Reactive Know when to adjust Revenue Management settings Identify problems in advance Change spending to improve profit Plan to maximize profit in high revenue periods Know upcoming cash flow needs Market Dynamics Competitive Position Rate Placement Guest Expectations Staffing & Amenities Room Sales Service Level & Expenses Sample Sample Sample

Labor Metrics

Service Level & Expenses Labor Metrics The single largest expense deserves attention Keep a close eye on payroll Too little and you lose revenue Too much and you lose profit Compare to other properties, goals, and history to keep balance The better you manage details the more money you make Market Dynamics Competitive Position Rate Placement Guest Expectations Staffing & Amenities Room Sales Service Level & Expenses Sample

Thank You for Attending For more information about this presentation, or to find out how CIA can help you with theses issues for as little as $400 a year. Visit us at www.ciasoft.com or email sales@ciasoft.com