The next day we spoke on the phone
I explained how my program worked and that we would schedule weekly calls for one hour and my program was 10 hours long. I then offered her a sample call where I would coach her for free. We scheduled the call for the following day. For the free call I sent her a sample “deck” which is a PowerPoint presentation that had a few of my coaching topics included. During the call we reviewed two business principles: how to read a P&L and the definition of an asset and a liability, then some random acronyms.
The sample call lasted about 40 minutes. She was thrilled. With this she wanted more and agreed to purchase my 10-hour program.
Ana, which she liked to be called, was a keen student. I told her I had more than 250 slides to cover with her and I also encouraged her to send me her hotel statements, STR reports, daily reports and owners’ commentaries—because all of these are great content to review and coach on. Very quickly she got the concepts and the different meanings of the various reports and tools. Our calls and the coaching were going very well and her progress was great.
I think it was on call #6 that we stumbled across the upcoming budget review that was scheduled for her hotel and in turn she sent me the latest year-end forecast and the next year’s budget.
This is where things got interesting
I explained to her that I was concerned after looking at the documents, specifically about the current forecast and next year’s budget because the year-end forecast was going backwards compared to where her hotel was year-to-date. This completely caught her by surprise, and I remember her saying that the budget had already been sent to the owners and a meeting was scheduled the following week to review the document internally before it would be presented to ownership.
I was super curious about this news and she explained that she was not really involved and the GM, DOS and DOF were the ones reviewing and presenting. I asked her if she wanted to review it with me. She was excited about this idea and we dove into the reports. I explained that what I saw was super alarming. The YTD September GOP was ahead of the YTD budget by $400K, nice job. But the year-end GOP was only ahead by $200K. So that meant that in the last three months of the year the hotel was going to miss its budgeted GOP by $200K. I smell smoke and I see mirrors.
I took her through the two reports and asked her what was so bad about the last quarter. Nothing she said, that she knew of. So, (I’ll repeat myself for effect) I smell a bit of “smoke and mirrors” happening here. Let’s look at the RevPAR, I suggested.
“What is the YTD September RevPAR variance to budget?” I asked.
“We are over budget in RevPAR YTD by $6,” she told me.
“Look at the year-end forecast and tell me what the RevPAR variance is.” She replied that it was $3.
“You are losing $3 in the last 3 months and this does not look good or make any sense,” I said.
It was just before Halloween and I was super curious.
“What’s the forecasted RevPAR for October?” She found it quickly and said it was $160.
“What’s the month-to-date actual RevPAR for October?” Lots of jumping around between reports but she found it and reported it was $179 as of the 25th of the month.
Last rate question – “What’s the budgeted RevPAR for October?” – $171, she reported.
Bingo, I said. She laughed and told me she thought that was odd, but the story does not end there.
“What’s the GOP forecast compared to budget?” Down to budget by $75K, she reported. Ok, so I asked her, “With the RevPAR up-to-budget and forecast where do you think the GOP will end up?”
She paused and clearly stated, “It better be higher than the forecast and it should be higher than budget given the fact that we are going to be ahead on the RevPAR.”
We did the same exercise for November and December and we found the same disparaging forecast. We also looked at the pace and it didn’t support the pessimistic projections.
So, one of two things were happening here. Either the rooms on the books and the pickup has completely gone through the roof since the October forecast was put together or someone was being particularly cautious about the projected results.
Why? you might ask. Well, it should be obvious. Under promise and over deliver.
If I can present a year-end forecast that takes me down in profit from where we are YTD, then I can present next year’s budget and show a respectable growth.
Get next year’s budget approved based on this projection and if no one looks too closely we now have a budget for next year that’s not such a stretch.
In all the budgets I have reviewed over the years I can easily say that half included this classic move to some degree or another. Don’t just look for it in RevPAR either. It shows up all over the place.
Now, back to our heroine in this story
She took her newfound discovery and discussed it with her GM who was very surprised and thankful. A potentially embarrassing forecast and budget got revised and the following week she was part of the team that presented it. The regional people and ownership were impressed and a few weeks later…she got the nod and her first GM role in that smaller hotel.
Time to pack your bags!
If you are tired of being confused and a little afraid of what you don’t know about your hotel numbers, you don’t have to be. The pivot you need is someone to help you see what’s right in front of you. If you do this, then you’re heading for bigger and better things in your hotel career. Just like Ana.