Update
As written previously and in numerous occasions, I had last week my third Pre-Opening Budget (POB) review together with the budget for Purchasing the HOE and IT.
What is a POB?
POB is where you identify all expenses incurred while you are in the pre-opening stage:
Expenses covered by the POB are, but not limited to:
- Salaries and Benefits (S&B) from the first hiring, usually GM to the opening date
Marketing expenses including, to name a few, Opening ceremony, Road show, Familiarization trip. - Advertising,
- Trial run for operations to include, pre-stay in the new guest rooms, Food and Beverage venues being tested
Mass recruitment, training costs, brand training, hiring, accommodations for national expats, relocation costs, English classes, First aid certifications, Orientation, posters, opening t-shirts - Pre-opening Offices costs
- Allowances for Team building for each departments
- Allowances for transportation
While reviewing your POB, aside from sound Advertising and Marketing, ensure that the area of Training is well covered as this is one critical step in opening successfully.
What is an HOE Budget?
HOE our Hotel Operating Equipment is equipment you need to open your property. It includes but is not limited to:
- Minimum Hotel cars required to cover guests transportation needs to Airport, train station, city location
- Bath Towels for Gym and Spa (different than your rooms linen)
- Guest room Linens
- Guest room supply
- Chinaware
- Flatware
- Glassware
- F&B Linen
- Bar accessories and utensils
- Banquet chairs and tables
- Banquet tabletop presentation and cocktail tables
- Kitchen utensils for all the venues
- Housekeeping Equipment and trolleys
- Uniforms
- Staff lockers
While selecting HOE, it is important to finalize your Food & Beverage venue concepts and hours of operation as well as define if you will have Outside Catering in the first year.
As example, in the pre-opening agreement, my property calls for 1 All Day Dining, 1 Specialty venue and 1 Chinese restaurant. As such I have reviewed the floor plans, check the seating capacity, "shop around" for trends in similar type of hotels. I also added, as space was available and unidentified, an extra "Bakery" venue where I can sell cakes, breads and ready to go snacks. I can now confirm Quantity while keeping style, originality and creativity open to my key F&B people, namely the F&B and Executive Chef as well as I. I mention creativity and originality as, every Executive Chef and Pastry Chef have their own style and have a need to express their love of the "Culinary art" in using different type of shapes and colors.
What is an IT Budget?
IT, or Information Technology, covers all the systems needed for the proper operation of the property. Most of the time, these systems and programs are described as "mandatory" by the company. They are often included into the Management contract to avoid any confusion.
IT systems and programs include but are not limited to:
- Revenue Management
- Sales & marketing
- Accounting
- Food & beverage
- Front Office
- Reservation
- Catering
- Back of the House
- Payroll
- Purchasing
- Servers, computers, laptops, printers etc…
In China, it is important to clearly explain the role of the IT systems and programs as most often Owners have little knowledge about them. Same goes for HOE and POB as some of the costs will need further clarifications.
As in any places in the world, when you have to get approval for funds that belongs to Owners, good preparation, comprehensive justifications and patience will bring you a long way.
In addition, always present in 2 languages. Local one first followed by English.
Yoland Perras
General Manager
Sheraton Wuhan Hankou Hotel
