How to measure your hotel's profitability after a holiday
After the holiday, it is essential to evaluate the effectiveness of the strategy adopted by your hotel.
For this reason, it is essential to measure the profitability of party days in order to determine whether all the staff’s effort and investment has paid off.
To analyze your hotel’s profitability during this period, you need to draw up a financial statement showing all the costs involved. With this report, you will be able to calculate your hotel’s profitability and determine whether the investment was worthwhile.
How do you calculate costs?
The first step in assessing your hotel’s profitability is to calculate the costs involved. You need to record all direct expenses related to the period, such as additional food and beverage costs, rate reductions, possible improvements, decoration materials, hiring extra staff, exclusive experiences and others.
In addition, you need to take into account general costs, such as staff costs during the long holiday, software, infrastructure, utilities and operational costs, as well as taxes related to the holiday.
Recording all these expenses is crucial to getting a complete picture of your hotel’s profitability.
Then you have to calculate the profitability
With the costs and revenue calculated, it’s time to determine your hotel’s profitability over the holiday period.
To do this, you should use the following formula:
Profitability = (Total revenue – Total costs) / Total costs.
This formula will allow you to assess the success of the investment strategy adopted by your hotel. If the result is positive, indicating satisfactory profitability, it means that the efforts and investments in attractions and differentials have been worthwhile.
On the other hand, if the result is negative, you need to re-evaluate your strategy for future holidays.
Let’s consider an example: suppose your hotel has generated total revenue of $ 150,000 and has invested $ 55,000 in total costs.
Applying the formula, we get: Profitability = ($ 150,000 – $ 55,000) / $ 55,000 = 1.72%. This result can be considered positive, indicating that the investment was profitable.
Now, imagine a new hypothetical scenario in which your hotel has generated total revenue of only $ 50,000 and has invested $ 35,000 in total costs.
Applying the same formula, we have: Profitability = ($ 50,000 – $ 35,000) / $ 35,000 = 0.42%.
This result can be considered negative, indicating that it is necessary to review the investment strategy for the coming holidays.
It is therefore essential to calculate your hotel’s profitability during the holiday period in order to assess performance and make more informed decisions for the future.
Always have the information at hand
A best practice after calculating your hotel’s profitability during the holiday season is to draw up a detailed report containing information on costs, revenues and other data relevant to the analysis.
This report can be used as an indicator of company performance and will be extremely important for improving your business strategies, as well as for guiding decision-making in future holidays.