The annual results of your hotel are stated in the operating review, will be created ''automatically'' by the accountant at the end of each year. You just have to analyse the results, you do not have to calculate them yourselves. Of course, when making decisions and incurring costs, you will make some assumptions and calculations predicting occupancy and profit. After each year ends, they will be ready for you via your secret Team File link.
[[Category:Hotel info]] __NOTOC__ __NOEDITSECTION__
The operating review consist of a number of crucial elements, whcih each have their own page:
''→ Go! [[:Category:Hotel info]]'' <br>
*The overview of the [[Operating review]]
{{Running competition}}<br><br>
*The [[Revenues]]
In this file we will explain more in depth the results you can see on the tab [[results]] in your [[Team file]].
*The [[Costs]]
*The [[Net profit]]
*The [[Key metrics]]
</div>
== The total of the Results ==__NOEDITSECTION__
At the end of each year, you will find in your Team File on the tab ''Results'' your operating review and more after 'release'. Your team (and your coach) are the only ones who can see these results. If a year has passed, you will see your results, as soon as they have been released by your coach. <br>
You do ''not'' have to calculate anything to create these results yourselves. You only take the decisions and the rest is automatically calculated for you. An extended [[algorithm]] calculates your occupancy rate depending on your decisions, your coach's evaluation (related to the quality of your explanations) and some other elements. Depending on your occupancy rate, you'll get more revenues from food & beverage and banqueting & other revenues as well. You will have to analyse the results, and use this to support your decisions! The history gives you information on how the hotel performs as you take over, you cannot influence this, of course. <br>
After each year they will be ready for you in your [[Team file]] tab results.
Your results presented there will be divided into the next parts:
* The price decisions
* The Operating review
** Revenues
** The Costs: divided into costs fixed, costs variable and costs of your team's [[decisions]]
** Net profit
* Some [[Key metrics]]
* [[Top Research|Market information from Top Research]] <br>
''Please take into account that your hotel has 364 days (not 365) and some figures are rounded; we never use decimals, neither should you.<br>''
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== Hotel price decisions ==
== Operating review ==
The operating review first shows the decisions you took for your hotel on prices, so your [[decisions]] 1 till 5.
An operational review is an in-depth look at the big picture, summarizing the financial effects of your management choices: costs, revenue and results.<br> The results in this overview will be made automatically depending on
* your evaluations by your coach (so the quality of your arguments)
* your competitors
* your decisions
The occupancy rate is the crucial element in all this. The total overview will be visible in your Team File after each year <br>
In the administration of Emerald Forest Hotel, as we use it, no [[VAT]] Value Added Tax is applicable. That is, not in the revenues, neither on the cost side. Furthermore, there is no record of the [[liquidity]], balance sheets (opening nor end of the year) nor an investment overview. We consider the revenues and the costs to be without any VAT, and all revenues and costs to be paid at the date they occurred; there is no debtors or creditors.
== Operating review ==__NOEDITSECTION__
== Net profit ==
Divided into revenues and costs.
Of course, the net profit per year is very interesting. The total costs will be deducted from the total revenues. If there is a bonus (something which turned out much better than expected) or a fine (e.g., tax), this is added or deducted from the profit leading to the net profit. <br>
== All Revenues ==__NOEDITSECTION__
Of course, the net profit per year is very interesting. The total costs will be deducted from the total revenues.
Revenues comprise the average (sales) prices your team had decided to chose, times the number of booked rooms (occupancy rate). You can influence the prices because you set them. The occupancy rate is defined by all of your decisions and your explanations through an algorithm. The appreciation your coach has for your performing as a team is influencing your occupancy rate heavily. The maximum occupancy rate would mean all 100 rooms occupied during all days, so 52 weeks x 100 rooms x 7 days = 36,400 room nights which is an illusion.
Upon taking over the net profit is: <br>
Check the situation for real via benchmarks and you will see that the margin in somewhere between 50% to 70% [[occupancy rate]].<br>
- Total revenue € 2,861,896 <br>
All food and beverages are considered to be caused by these guests: so the higher the occupancy rate, the more revenues you get from food and beverages.<br>
- Total cost € 2,430,595<br>
Banqueting and other revenues are a separated revenue unit in the hotel. The sales prices in the past varied from a minimum of € 25 to a maximum of € 30 per person. You decide on the price of banqueting, so you do have some control. On the [[Banqueting]] page, you can find some more info, pictures, and videos on banqueting. Other elements in this group are things like additional sales, renting out bikes, upgrades, cancellation fees etc. Altogether a bit more than 8% of the total revenues. On mouse-over the cells with the small black triangle, you will get additional information on the numbers.
- No fine or bonus € 0,0<br>
- Net profit € 431,301<br><br>
The operating review shows the profit in any individual year and the total of net profit (all years added up). Again, in the example a number of predictions for future additional costs have been made. More on this on the [[Net profit]] page.
</DIV><br>
[[Image:results_revenues_2018_new.jpg|thumb|600px|center| <center>''Revenues overview after four years.''</center>]]
[[Image:results_profit_2023_01.jpg|thumb|600px|center| <center>''Net profit as you take over in grey 'year 1' column, plus examples in the following years; year 4 is not completed.<br> We will focus on year 0 now.</center>]]
The above situation is just an example of the revenues as they will be shown in the complete operating review. So this example shows the history (column B, preparations - history) which is the same for all teams as they start. After each year the next column (so the next year) will be available and filled out automatically. In this example, this is just year 1 in column C. In the example all years have been filled out.
Underneath you'll find an overview which gives some more insights into the revenue structure, as far as information is available in the Bergman's administration. This all reflects the year before you take over, this will be your starting position.
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== Analysis ==
So the net profit upon taking over, in the example above, seems to be 15.07% of the revenue, with 84.93% being costs. This seems to be a good and interesting result, but it is up to you to put this in (a real) perspective of the industry. Because management did not make enough [[investments]] over the recent years, depreciation costs have been rather low. There is no problem with liquidity at all. <br>
Furthermore, the [[Bergman family|Bergmans]] did not really consider themselves to be staff, so there have been hardly any wages for them in the staff costs, which distorts the numbers. Their income mainly originated from the net profit which they, partly, took out of the company, being the entrepreneurs.
<table border=1 cellpadding=8>
== More numbers ==
<tr><th> Revenues History</th></tr>
Check [https://setupmyhotel.com/train-my-hotel-staff/front-office-training/187-fixed-cost-and-variable-cost-in-hotels.html basic set-up of costs groups] in hotels to have some reference on the numbers. <br>
Of course, any situation is different, any time frame (think of the [[Covid]] period), the ownership, the state (quality) of the premises etc. The file, though, might give some ideas from a calculation perspective.
<tr><td> Banqueting and other revenues </td><td> Banqueting and other revenues </td><td> € 236,642</td><td> 8.25%</td><td> 8.25%</td></tr>
The situation below is just an example of the costs as they will be shown in the final operating review after four years. So this example shows the situations as you take over (history colored gray) which is the same for all hotels as you take over. After each year the next column (so the next year) will be available and filled out automatically.
When your assignment is managing one of the new establishments, these will be the benchmarks you start with, and you refer to. So, you will start in your new venue, as a point of reference, with all the same set-up of costs and decisions as in the past. At the time you take your own decisions, you can roll out your new ideas, and concepts in full.
<br><br>
[[Image:results_costs_2018_02.jpg|thumb|600px|center| <center>''Costs as shown after all of the years.''</center>]]
''→ Go! Following the Introduction to the Hotel? Step 10/10 is the page [[Staff|Staff page, click here.]]''
<hr></div><br>
Underneath you'll find an overview which gives further insights into the cost structure as far as information is available in the Bergman's administration. This all reflects the situation as you take over, this will be your starting position. <br>
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<table border=1 cellpadding=8>
<tr><th> '''Costs'''</th></tr>
<tr><td> '''Costs: fixed'''</td><td> Depreciation costs of existing assets </td><td> € 525,187</td><td> 34.64%</td></tr>
<tr><td> '''Total team decisions costs'''</td><td></td><td> '''€ 0''' </td><td> '''100%'''</td><td> '''00.00%'''</td></tr>
<tr><td></td><td></td><td></td></tr>
<tr><td> '''Total all costs'''</td><td></td><td> '''€ 2,430,595''' </td><td> </td><td> '''100%'''</td></tr>
</table><br>
The different costs groups are all mentioned in the operating review table above.
* [[Fixed costs|Costs: fixed]]
You cannot influence these costs at all. These are costs which will be created no matter what the occupancy rate is. Over the years there can be small fluctuations, but the amounts will stay almost the same.<br>
- Depreciation costs of existing assets: depreciations of all the assets especially the building, fixtures and fittings.<br>
- Fixed staff costs: staff needed to run the hotel and which have to be paid even if there are no guests at all. <br>
- Costs of premises: costs of maintenance, repairs on small adaptions to the building and the parking lots.<br>
- Insurance & interest costs: costs for insurance for staff, building a liability and costs for mortgage and other loans. <br>
* [[Variable costs|Costs: variable]]
The variable costs will depend on the actual number of guests in the hotel so will only be filled out (automatically) after each year is finished. So there is a ratio between occupancy rate and all of these costs. You cannot influence this, but it will be influenced by the occupancy rate you have created with your way of managing. <br>
- Variable staff costs: the more guest you have the more work here will be to be done and the more staff is needed. So additional costs. <br>
- Laundry costs: the more guest the more towels, bed linen etc. needed.<br>
- Cleaning costs: rooms need to be cleaned more often because of more guests and to be cleaned better.<br>
- F&B purchase costs: more guest means more breakfasts etc. for guest and more f&b for additional staff so the purchase costs go up.<br>
* [[Costs team decisions|Costs: team decisions]]
All of your [[decisions]] numbers 6 -10 lead directly to costs which can be seen directly on the costs side. They are directly connected to the choices you make in your [[decisions]] each year. The effect of all costs will only last one year. As you can see in the past there were no costs made regarding these decisions. Of course, this was good for the profit but it will come back like a boomerang! So Christina urges you to use this costs group team decisions in an efficient way, though she knows this will probably lower the profit! <br>
Spending the maximum on all possible costs looks like a bad idea! You have to earn back all these costs, so you will have to make clear choices and keep the profit in mind! So the numbers mentioned are ''not'' a gift, nor a budget: it just gives you an indication of the (maximum) possibilities without getting in serious financial trouble. So, if you would decide to spend to the maximum on all options you could have in extra costs (per year):
* Decisions 6 marketing costs maximum € 200,000
* Decisions 7 staff development maximum € 100,000
* Decisions 8 depreciation costs maximum € 225,000 year 1 up to € 900,000 in year 4 as depreciation. Depending on your new investments.
* Decisions 9 market research package maximum € 50,000
* Decisions 10 other costs maximum € 100,000 <br><br>
The maximum grand total on additional (!) costs in the first year is a maximum of € 675,000. Keep in mind that the profit as you take over (history) was € 486,307! The total costs was € 2,430,595. ''Creating'' all these additional costs of your team decisions, will raise the total costs by more than 29%! You probably will make a loss, as the additional costs exceed the profit you made in the past. So think of how these additional costs will generate new revenues. Or compensate the costs by higher prices or a higher occupancy rate.
* Net profit
Of course, the net profit per year is very interesting. The total costs will be deducted from the total revenues. If there is a bonus or a fine this is added or deducted from the profit leading to the net profit.
[[Image:results_profit_2018_03.jpg|thumb|600px|center| <center>''Net profit as you take over in gray''</center>]]
In this example on taking over: <br>
- Total revenues were € 2,866,902<br>
- Total costs € 2,430,595<br>
- Net profit € 436,307<br><br>
There is no VAT or other taxes in the city. There is no reserve and as there is no liquidity in the game, there is no need for spending them. The balance sheets just show the individual profit of each year in the operating review and the total of the net profit over the years. No worries about [[liquidity]]: you can invest and pay, though you cannot see the proper balance sheets. <br>
A fine and/or a bonus, if applicable, will directly influence your net profit. In this case, in year 1 there is a bonus, in this case, € 125,000 so this is added to the profit. But there is a fine as well of € 25,000.<br>
== Key metrics ==
Some key metrics and ratios on the operations of your hotel in this section. <br>
Net profit once again showed here, but now linked to the total net profit. So adding up the profit of all years passed. <br>
The number of guests gives you an indication which numbers ''pass through'' your hotel in a year. <br>
Your hotel is ranked on net profit as well as on creativity. Both rankings are within your city.
There is ranking on creativity, this is linked to what you have done in all of the years related to creativity and evaluated by your coach. You can have any position depending on the number of hotels in your city. <br>
== Top Research ==
If your hotel has decided to pay for market information provided by Top Research, it will show here.
== Analysing ==
So the net profit on taking over seems to be 15.21% of the revenues, a good and interesting result. <br>
But, the management did not make enough [[investments]] over the recent years, so the depreciation costs have been kind of low. There is no problem with liquidity at all. <br>
Furthermore, the [[Bergman family|Bergmans]] did not really consider themselves to be staff, so there are hardly any wages for them in the staff costs. Their income mainly originated from the net profit which they, partly, took out of the company, being the entrepreneurs.
== Calculate yourself? == __NOEDITSECTION__
If you want to make calculations yourself, you can, in the top menu download the Team File as Excel file. Store this one on your pc and you can do some calculations in this version (which now, of course, has no longer links to the real one and new changes in the online one).
<hr>
''→ GO! [[#top|Top of this page]]''
<center><small>''Emerald Forest Hotel'' offering an <font color="green">'''emerald''' </font color="green">hotel experience!
| Run your own hotel in this management simulation.</small></center>
The annual results of your hotel are stated in the operating review, will be created automatically by the accountant at the end of each year. You just have to analyse the results, you do not have to calculate them yourselves. Of course, when making decisions and incurring costs, you will make some assumptions and calculations predicting occupancy and profit. After each year ends, they will be ready for you via your secret Team File link.
The operating review consist of a number of crucial elements, whcih each have their own page:
An operational review is an in-depth look at the big picture, summarizing the financial effects of your management choices: costs, revenue and results. The results in this overview will be made automatically depending on
your evaluations by your coach (so the quality of your arguments)
your competitors
your decisions
The occupancy rate is the crucial element in all this. The total overview will be visible in your Team File after each year
In the administration of Emerald Forest Hotel, as we use it, no VAT Value Added Tax is applicable. That is, not in the revenues, neither on the cost side. Furthermore, there is no record of the liquidity, balance sheets (opening nor end of the year) nor an investment overview. We consider the revenues and the costs to be without any VAT, and all revenues and costs to be paid at the date they occurred; there is no debtors or creditors.
Net profit
Of course, the net profit per year is very interesting. The total costs will be deducted from the total revenues. If there is a bonus (something which turned out much better than expected) or a fine (e.g., tax), this is added or deducted from the profit leading to the net profit.
Of course, the net profit per year is very interesting. The total costs will be deducted from the total revenues.
Upon taking over the net profit is:
- Total revenue € 2,861,896
- Total cost € 2,430,595
- No fine or bonus € 0,0
- Net profit € 431,301
The operating review shows the profit in any individual year and the total of net profit (all years added up). Again, in the example a number of predictions for future additional costs have been made. More on this on the Net profit page.
Net profit as you take over in grey 'year 1' column, plus examples in the following years; year 4 is not completed. We will focus on year 0 now.
Analysis
So the net profit upon taking over, in the example above, seems to be 15.07% of the revenue, with 84.93% being costs. This seems to be a good and interesting result, but it is up to you to put this in (a real) perspective of the industry. Because management did not make enough investments over the recent years, depreciation costs have been rather low. There is no problem with liquidity at all.
Furthermore, the Bergmans did not really consider themselves to be staff, so there have been hardly any wages for them in the staff costs, which distorts the numbers. Their income mainly originated from the net profit which they, partly, took out of the company, being the entrepreneurs.
More numbers
Check basic set-up of costs groups in hotels to have some reference on the numbers.
Of course, any situation is different, any time frame (think of the Covid period), the ownership, the state (quality) of the premises etc. The file, though, might give some ideas from a calculation perspective.
Past
When your assignment is managing one of the new establishments, these will be the benchmarks you start with, and you refer to. So, you will start in your new venue, as a point of reference, with all the same set-up of costs and decisions as in the past. At the time you take your own decisions, you can roll out your new ideas, and concepts in full.
→ Go! Following the Introduction to the Hotel? Step 10/10 is the page Staff page, click here.
→ GO! Top of this page . . . Emerald Forest Hotel offer an emerald hotel experience! Run your own hotel in this management simulation . . .
