Costs Management Team Decisions

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Structure of the costs groups

In your operating review at the tab results there are three major groups of costs. On mouse-over the firsts cells with the small black triangle, you will get additional information on the numbers.

Example of all data on costs throughout the years.

As you can see in this example above shows the operating review of a demo Management Team after four years: this is how it looks in your Team File. The year 0 is your starting position, (these data are available), the other four years are just an impressions on how things might develop:
More info on costs:

• the fixed costs have stayed the same during all four years, the fixed depreciation costs are one of them.
• the variable costs depend on the occupancy rate like laundry: the more rooms occupied the more laundry.
• the Costs Management Team Decisions, will depend on the Year 1-2-3-4 decisions made by the new Management Team.

Overview of total of the costs of Management Team Decisions

Let's check the costs related to the decisions you took for the hotel. At the moment you take over they are none: in the picture the grey area. In the table underneath the green numbers.

Costs
Costs: fixed	Depreciation costs of existing assets	€ 525,187	34.64%
	Fixed staff costs	€ 550,271	36.29%
	Costs of premises	€ 390,473	25.75%
	Insurance & interest costs	€ 50,012	03.29%
Total fixed costs		€ 1,515,943	100%	62.36%
Costs: variable	Variable staff costs	€ 355,170	38.95%
	Laundry costs	€ 118,390	12.94%
	Cleaning costs	€ 236,780	25.88%
	F&B purchase costs	€ 204,312	22.33%
Total variable costs		€ 914,652	100%	37.63%
Costs: team decisions	Marketing costs	€ 0	00.00%
	Extra staff development costs	€ 0	00.00%
	Extra depreciations costs	€ 0	00.00%
	Market research costs	€ 0	00.00%
	Other costs	€ 0	00.00%
Total team decisions costs		€ 0	100%	00.00%
Total all costs		€ 2,430,595	€ 2,430,595	100%

As you take over the hotel, there are no expenditures on this cost group. So all expenditures in this part will come extra next to the existing ones. So these are the only costs the new Management Team can influence directly.

Explanations on this

All of the new decisions, Year 1-2-3-4 (numbers 6 -10) in this group, will lead directly to costs. They are directly connected to the situation the family Bergman explained: they have been neglected. 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 the family urges the new management to use these costs group 'Team decisions' in an efficient way. The screenshots just show a few years as an example during some testing with the accountant. The history is the only valid, last year's result.
Most important, neglected elements in the situation on Emerald Forest Hotel:

• Marketing costs
• Staff development
• Depreciation costs of the new investments
• Market research costs
• Other costs

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, this might give some ideas from a calculative perspective.

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Emerald Forest Hotel offering an emerald hotel experience! | Run your own hotel in this management simulation.