Report: Path to Profitability

Applies to: Account Administrators, Hotel Administrators, Corporate Managers

Covid-19, the worst pandemic in the 21st century, has resulted in major decreases to occupancy in most hotels. As the hospitality industry starts to recover, hotel occupancy levels can see wide variances from day to day. Friday and Saturday may be strong this week, but the weekdays may be very light. The trend could then shift unexpectedly the following week. 

These irregularities in day-to-day occupancy make it much more difficult to operate your hotel and to manage labor properly. You can’t simply copy the schedule from the previous week because it may not match the changing needs of your property.  

Hotel Effectiveness has designed a proprietary report—Path to Profitability—to help you make deliberate decisions in terms of staffing when you are in 25–50% occupancy. It is critical that you minimize the hotel labor to not only limit the losses on really light days but also maximize profits on days when you have higher occupancy.

No matter what phase you are currently in, we have specific tools to support your recovery during these challenging times.   

Profit Contribution

The unique operating metric in this report is called Revenue vs. Labor. It considers all of your revenues minus a “loaded” labor cost (including tax and benefits) on a daily basis. The remainder can be contributed to your Gross Operating Profit (GOP). If the Revenue vs. Labor is positive and improving week to week, you are managing your labor correctly on the upswing. If you are running negative with Revenue vs. Labor, there is no way that your hotel can help contribute to the GOP. This is why Revenue vs. Labor is a leading indicator of your GOP.

 

Zooming in on this daily data is highly important while your hotel begins its recovery. It helps show the dramatic impact that labor schedule changes can have on your Revenue vs. Labor from day to day. If you look at the numbers in the weekly summaries on top of the report, this impact is not as evident.

You can also have insight into the CPOR (cost per occupied room) and Labor Cost % of Revenue by clicking the down arrow next to Revenue vs. Labor to expand the data set.

Unfortunately, we cannot help you calculate a daily GOP because it involves other variable expenses that we don’t have data on. 

When to Use the Report?

The Path to Profitability report can be used in a few ways:

• Identify Profit and Loss Days: To understand which days you profited or lost due to your staffing levels, both historically and in the future.
• Use as A Schedule Sign-off Report: You can view this report before schedules are approved to make sure that the labor on days with negative profit contribution has been minimized. This could mean that you need to increase manager coverage or trim service levels if the business doesn’t support the labor cost.
• Cost of Schedule for Future Periods: If you enter a base staff schedule in future weeks, you can adjust the date range to see the weekly cost of the upcoming schedule.  

Other Key Metrics

Total Revenue includes all revenue streams that you report into Hotel Effectiveness (e.g., rooms revenue, F&B revenue, dry cleaning).

Total Labor represents all gross wages in your labor management reporting in Hotel Effectiveness. 

• This can include contract labor if you report it in Hotel Effectiveness. 
• Your management may have  excluded some payroll earning codes (e.g., vacation, paid time off) from your labor reporting. 
• Employer Taxes at 8% and Benefits at 12% are applied to gross wages. These industry averages are intended to estimate the full cost of labor.

How to Get the Report?

You can view the report in the Reports section or on your Home page.

 

A. Reports

1. Log in to Hotel Effectiveness.
2. Click on Reports in the left main menu.
3. Hover over Path to Profitability on the top menu.
4. Select Path to Profitability.
5. Select the hotel from the drop down menu if you manage multiple properties.
6. The report provides a 14-day view, beginning from a week before the current date and 6 days after. You can pick from the date range selector or shift the 14-day window in any direction forward or backward. We don’t offer a flexible date range at this time.

Pro Tip

By clicking on the down arrow, you can view the data that comprises the amounts seen on the Total lines. This also works with the department information seen under Labor Details, where you can see the employee and position worked for the wages applied.

B. Home page

You can also view the summary report of Path to Profitability on the Home page in the Hotel View tab. This summary report only shows the current week for the selected hotel, and there are no drill downs.

How to Subscribe to the Email Alert

You can sign up for the email alert of Path to Profitability for the current week. 

1. Sign in to Hotel Effectiveness.
2. Hover over your username in the upper right of the page.
3. Select My Email Alerts.
4. Locate Path to Profitability – Current Week, and click  Subscribe Now.
5. Select the hotel and click Subscribe Now for a single hotel or Subscribe to Selected for multiple hotels.

FAQs

I don’t see the Path to Profitability report in Hotel Effectiveness.

This report is only available to users who are given access to Reports (“Can Access Labor Reports”), the permission to view wages, and no department filters. This means that the report is mostly viewable to GMs, AGMs, controllers, and corporate teams with full access.  

Is there a view for hotel groups or multi hotel views of the Path to Profitability data?

All data is hotel specific. We do not have any hotel group or multi hotel views at this time.