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Lot to be said for old saying: “You’ll never cost save yourself to prosperity.”

Smart hotels and companies are looking to grow value-added business. What’s a value added business? Most obvious in recent years has been the addition of spas and spa services at many hotels.

15 years ago Accounting and Finance represented 2.5% of the average business budget. Today that’s down to 1%. Why? The Department is viewed as a cost center instead of a profit center. Departments that help generate revenue and profits get rewarded.

Finance in our industry has spent most of it’s life looking backward, evaluating results. This economy requires Controllers and Directors of Finance who can look forward and help their companies.

What do you feel your role as Controller or Director of Finance is in identifying new value-added propositions for your hotel/company?

-Helping identify new sources of revenue?
-Adding value to existing sources of revenue to improve margins?
-Helping identify how to increase revenues from select market segments by adding value?
-Identifying how to use out-sourcing to reduce product and labor costs?

I’d like to hear from you. What are you and your hotel/company doing in the above four areas? Other areas?

View revenue generation as a marathon race instead of sprint. Companies need revenue every month, not just next month or next quarter. Financial institutions are forcing businesses to spend most of their time concentrating on short-term revenues.

Is this happening at your property? Your company? What are you, as Controller or Director of Finance doing? How are you helping drive revenue? What are you doing to help the property/company assure revenue and ADR for the long term?

Recently talked to one company that prepare annual budgets and projections, but their real emphasis is on rolling the whole process over every quarter. That means they don’t have to start over every year.

Likewise, they establish a desired ADR, annual occupancy, and ROI for each property, for each of the next three years as well as a target 7 years out.

Each Department is aware of their role in generating revenues and ROI. Expense Departments are encouraged to identify ways they can contribute to revenues.

Some of their hotels have Both Revenue/Yield Management and Sales Departments. Their Select Service hotels only have Sales. Each time a hotel is asked for rate concessions the hotel can immediately see how the requested rate impacts revenue immediately and long term. This way the hotels can evaluate how best to negotiate and structure the business for a win-win, now and longer term.

This enables the property Controllers and Corporate Finance Department to assist GM’s and Corporate Management in advising owners and financial institutions on the proper revenue generation both short term and long term.

I know many of your hotels and companies are doing similar things.

To aid all of us, we’d like to hear what’s working for you. What challenges are you dealing with? Let’s get some dialogue going to make all of our jobs easier.

Tom Ferree, CEO, Ferree & Associates