Nilesh GWhat Makes a Hotel Profitable?
January 14th 2009 22:40
Multiple Measurements
As far as I knkow there are many ways to measure profitability for the purposes of analyzing property-to-property performance. IN Comparisons of total profits, profits-per-available room,in fact, return-on-investment can all be employed in an effort to determine best performers. Each method carries with it certain advantages and disadvantages.so for that you have to do some analysis and For this analysis, we should have compared the profitability of different hotels on a contribution margin basis. Best performers were defined as those hotels in the top 10 percent of their property category in terms of achieved profit margin.its all dependable. Profits were measured after management fees, real estate taxes, and insurance, but before capital reserve, rent, interest, depreciation, amortization, and income taxes.
Like the other methods, measuring performance by comparing profit margins has its drawbacks, the first of which is the age-old argument that, “you can’t take percentages to the bank.” However, the ability of management to drop as many dollars to the bottom-line as possible is clearly a meaningful measure of performance.
As far as I knkow there are many ways to measure profitability for the purposes of analyzing property-to-property performance. IN Comparisons of total profits, profits-per-available room,in fact, return-on-investment can all be employed in an effort to determine best performers. Each method carries with it certain advantages and disadvantages.so for that you have to do some analysis and For this analysis, we should have compared the profitability of different hotels on a contribution margin basis. Best performers were defined as those hotels in the top 10 percent of their property category in terms of achieved profit margin.its all dependable. Profits were measured after management fees, real estate taxes, and insurance, but before capital reserve, rent, interest, depreciation, amortization, and income taxes.
Like the other methods, measuring performance by comparing profit margins has its drawbacks, the first of which is the age-old argument that, “you can’t take percentages to the bank.” However, the ability of management to drop as many dollars to the bottom-line as possible is clearly a meaningful measure of performance.
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