Many hospitality managers are quite at ease with the customer service side of our business, but are less comfortable diving into the financial side of things. Yet to be a successful hotelier, you must know how to control your department or property’s finances responsibly and effectively.
eHotelier interviewed Cathy Burgess, the author of Essential Financial Techniques for Hospitality Managers: a practical approach, a user friendly and hands-on introduction to finance and accounting in the hospitality industry. (The 256-page book is available to purchase through the eHotelier: click here).
What prompted you to write this book?
My previous industry experience, plus ongoing involvement in the industry, has continued to demonstrate how essential financial skills are for all managers. It’s one of the most important skills cited by recruiters, and yet there aren’t many books that help them understand the basics from a practical, operational perspective. Most student textbooks are about accounting, and many aspiring managers find it difficult to make the links between this and ‘real life’. I wanted to fill that gap, so that junior managers would know What and Why and How.
In the book, you say ‘small actions can have a big effect on bottom line’ – what should all managers be aware of so they don’t make major mistakes?
We can often think that the little things we do don’t make much difference to the world, but when multiplied out many times they can have a huge effect. In our daily lives recycling paper, plastics and glass, for instance, has had a major impact on saving some of the world’s resources.
The same is true of hospitality. Making small savings, whether energy, food or labour, can add up to a high value when multiplied by many customers or activities. You could try this for yourself: look at the potential financial impact of a 5% reduction on some costs, perhaps over a month, and then see how you might achieve this – without impacting on the quality of customer service, of course.
Is there any one essential part of managing revenue know-how that ALL managers need to be on top of, before they hand the figures over to the accountant?
They don’t ‘hand the figures over to the accountant’! Departmental managers should always ‘own’ their results: they should be responsible for all aspects of revenues and costs. Responsibility doesn’t stop at the point the guest arrives, as you can still encourage effective upselling, guest payment and then repeat business. It’s often quoted that it costs us eight times more to generate a new customer than a repeat one, so getting things right is worthwhile.
What about managing costs?
You need to know where these all come from too, and what you can control, and what is more difficult. Effective cost management means understanding what elements are important to the customer experience and to staff achievement, and developing a culture of careful management for everyone.
If you had one piece of advice for all managers, what would it be?
Everyone needs to understand the business – not just their own part of it but how all the different aspects link together. Your actions can have an impact on other areas, and their actions can affect you, so you need to understand all this and be able to take effective, informed decisions. Please talk to other managers and staff so you understand what impacts on customer satisfaction. Happy customers equals profits!
About Cathy Burgess
Cathy Burgess (MPhil, CdipAF, FBHA, FIH) spent many years in operational and financial management positions in the hospitality industry, principally with Thistle Hotels and Marriott Corporation. She is a senior lecturer in accounting in the Oxford School of Hospitality Management at Oxford Brookes University. She teaches financial management to undergraduate and postgraduate students both in the University and via on-line and distance learning. She gained her PhD for her research in the area of hospitality financial management.
Cathy has been a Council member of BAHA (British Association of Hospitality Accountants) for many years, and is part of their Education Committee that oversees their professional development programmes. Burgess maintains close links with industry through research and as a Director of HoSPA (Hospitality Professionals Association) and also as a member of their Education Committee. She is on the Editorial Board of the Service Industries Journal, and has been an External Examiner for both the University of Brighton and HoSPA.
Recent publications include:
Burgess, C (2012) Multiple stakeholders and middle managers: the role of the hotel financial controller. Service Industries Journal. 32:1, pp 151-170
Burgess, C (2013). Factors influencing middle managers’ ability to contribute to corporate entrepreneurship. International Journal of Hospitality Management. 32(2013) 193-201
Burgess, C. (2014) Essential Financial Techniques for Hospitality Managers – a practical approach. 2nd edn. Oxford: Goodfellow Publishers. ISBN 978-1-906884-16-1
Burgess, C (2015) Hotel Middle Managers and Corporate Entrepreneurship. In: Altinay, L. and Brookes, M. (eds.) Entrepreneurship in Hospitality and Tourism, Goodfellow Publishers, ISBN: 978-1-910158-27-2
(The second edition of her book, Essential Financial Techniques for Hospitality Managers: a practical approach, is available for purchase through the eHotelier: click here).