Operating review

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All results

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:

• The overview of the Operating review
• The Revenues
• The Costs
• The Net profit
• The Key metrics

Operating review

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.

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