Net profit
What is net profit?
The net profit consists of the revenues which are made in the four revenue groups:
- Rooms rental
- Food and beverage
- Banqueting
- Other revenues
Minus the total of the costs.All this is visible in the Operating review.
We only speak of net profit, not of margin, profit or other concepts. We do not look at any corporate tax at all.
There is a special group fines and bonuses which influences the result directly as well.
What remains is the net profit. More info on the page Operating review. As you take over this profit is good, in fact too good. This is caused by the fact that the management who ran the hotel really did as few spendings as possible during the last few years. This has driven up the net profit, but now there is real arrears in maintenance and the visitors are getting dissatisfied with the fact that the hotel is outdated.
No taxes
In the data we have of the hotel, there is no information on taxes or VAT (value added tax).
You also do not have to worry about liquidity: it is all about the net profit sot here is no profit before or after tax. The regulation on taxes and VAT differs from country to country: of course, in the end, the Emerald Forest Hotel will need to met the legal requirements. Though for now we need to work with the data and numbers available.
More on profit
As you take over your hotel should probably make more costs (decisions 6 till 10) than have been made in the past to keep the company healthy and valuable to customers.
Compensating for the extra costs or benefiting from them can only be done in a few ways:
- More revenues by choosing higher prices, so a higher profit per sold product;
- More revenues by achieving a higher occupancy-rate, so more sales.
- Make fewer costs per room as you have a higher occupancy rate;
- Make costs hoping that -by making them- other costs are brought down (for instance, in using ICT, less staff is needed);
All the fixed costs can not be influenced at all. The variable costs will automatically be calculated related to your occupancy rate.
There are also pages on the revenues per room: RevPOR and RevPAR.
To get a basic idea of what the average profit is per room or per occupied room, we use a ratio called Revenue per room.
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