Financial Management Case Study

An owner managed 30 bedroom 4 star City Property had no up to the minute financial information. The Financial function was being managed on a part-time basis with auditors producing annual accounts. There were no management accounts being produced for property or Key Performance Indicator (KPI) information. No budget was set for the year ahead. In essence Financial Management was achieved by monitoring the bank balance

We recommended that a full time qualified/part-qualified accountant be employed in the property to manage the financial aspects of the business, and that quarterly management accounts be prepared for the owners, with daily and weekly KPI reports being prepared also. We also recommended that a full budget be prepared for the year ahead covering all aspects of the business.

We prepared a comprehensive person profile together with clear roles and responsibilities and a transparent job description for the position of Hotel Accountant. We assisted in the recruitment and training of the person employed.

We built all-inclusive spread sheets to report and analyse the hotel’s KPI performance against its benchmark on a daily, weekly and monthly basis. Historic information was gathered and detailed budgets were compiled for the year ahead, to include trading and capital development. Senior management were given measurable targets off this budget. Spread sheets were also  built to allow for the timely production of quarterly management budget comparison and a  deadline calendar was set and agreed for the publishing of KPI information and management accounts.

As a result of our involvement, meaningful up to the minute information was extracted from the IT systems in place at the property, which allowed for a close monitoring of the performance. Senior management now are aware of what is expected of them and performance/productivity has increased. The owners of the business now know the facts and figures of what is happening on a day to day basis in the property and there was a much more positive feeling around. KPI reports including Occupancy %, ADR, RevPar, Labour % and Food and Bev GP % are circulated to relevant persons on a weekly basis. Quarterly management accounts are signed off by the owner and annual budgets are set. In addition forecasting is made easier thus reducing the overall costs in the property and increasing profitability.
Finally the owners were able to see financially how the business was performing and embarked on a €1m refurbishment programme.

If you need help setting up the Financial Function in your property then contact us.