What Hotel Department Heads Should Include in Financial Comments

If you run a hotel department, financial commentary is probably the least welcome task in your month. It arrives at the busiest point, it is written in a language that belongs to someone else, and the request usually amounts to "please explain your variances" with a deadline attached.

It is worth doing well anyway, and not for the reason finance usually gives. Good commentary is how a department head gets heard. The comment you write is what an owner reads. It is what informs whether your vacancy gets filled, whether your contract gets retendered, and whether a genuinely good month is recognized as one. A department that writes "timing" every month is a department that nobody upstairs understands.

This article is written for the person doing the writing rather than the person asking for it. Examples use invented figures for a fictional property, the Harbor View Hotel.

Who actually reads this

Understanding the audience changes what you write. Your comment typically travels further than you think, to at least three sets of eyes.

The financial controller reads it to check that the numbers behave as expected and to work out whether the forecast needs to change. They need cause and persistence.

The general manager reads it to see whether anything needs a decision. They need the implication and the action.

The owner or asset manager reads it, often without ever having set foot in your department, sometimes months later when a trend has become a question. They need it to make sense without context, without jargon and without them having to ask a follow-up.

None of these people can see what you saw. They have the number already. What they do not have, and cannot get anywhere else, is what happened in the building.

The four things every comment needs

Whatever the department and whatever the line, a comment that contains these four things will be a good one.

1. The event. What actually happened, described as something that occurred rather than as a movement in a figure.
2. The cause. Why it happened. Not the first answer, the one behind it.
3. Whether it repeats. One-off, continuing for a known period, or permanent.
4. What is being done. Only where the cause is controllable, with who and by when.

Three sentences covering these four points beats a paragraph covering none of them. Length is not the measure; nobody has ever complained that a comment answered their questions too quickly.

Say the event, not the number

Here is the single most common problem with departmental commentary, and it is easy to fix once you can see it.

That sentence contains no information. It restates a figure the reader is already looking at. Compare:

Same variance, entirely different value. The second version tells the controller how to forecast it, tells the general manager there is nothing to decide yet, and tells the owner that the department noticed and responded. It took about ninety seconds to write.

A useful test before you send anything: cover the numbers with your hand. If what is left still tells the reader what happened, the comment is doing its job. If what is left is empty, you have described the report rather than the month.

Rooms division

What finance cannot see, and you can:

• Vacancies and cover. Which positions are open, how long they have been open, how the hours were covered and when the replacement starts. This single fact explains most rooms payroll variances and is almost never included.
• Length-of-stay mix. A month weighted toward one-night stays generates more linen, more check-ins and more cleaning hours for the same occupancy.
• Rooms out of order. How many, for how long, and why.
• Group behavior. Late arrivals, early departures, attrition against contracted block, unusual servicing requirements.
• Productivity. Hours per occupied room against your standard, with the reason for any gap.
• Training and turnover. New starters are slower for their first weeks, which shows up in hours before it shows up anywhere else.

Express labor against volume wherever you can. "Payroll was over by $6,400" invites a question. "Hours per occupied room ran at 0.48 against our 0.45 standard, entirely from covering two vacancies" answers it.

Food and beverage

• Covers against average check. Say which one moved. A revenue shortfall from fewer covers is a marketing and demand question; the same shortfall from a lower average check is a menu, pricing or upselling question.
• Outlet against banquet. Always separate them. Banquet moves in blocks and one event can create the whole variance.
• Event detail. Which events moved, canceled or were added, and whether they are rebooked. A rescheduled event is timing; a canceled one is not.
• Cost percentage causes. Supplier increases, menu changes, waste, spoilage, theft, a shift in the mix between outlets, or an inventory count adjustment. These have completely different implications.
• Menu and pricing changes, with the date they took effect.
• Equipment problems that affected service, capacity or stock.

When a cost percentage moves, name the cause. "Food cost was high" is a fact the report already stated. "The protein supplier applied a 6% increase from 1 June" is the reason, and it is the difference between a variance that gets forecast correctly and one that surprises everybody again next month.

Spa, retail and leisure

• Treatment or transaction volume against average value, separated.
• Therapist availability. Utilization, absence, vacancies and training time, since capacity constraints look identical to demand problems in the revenue line.
• Capture rate. What proportion of in-house guests used the facility. This is often the number that actually explains the month, and it is invisible to finance.
• Retail attachment and any stock availability problems.
• Local or membership business separated from hotel guest business, because they move for different reasons.

Engineering and maintenance

Maintenance commentary carries a responsibility the other departments do not have: it is where deferred spending becomes visible, and it is the department best placed to say what a saving actually cost.

• Planned against reactive. A month spent on breakdowns is a different month from one spent on preventative work, even at the same cost.
• What was deferred, and the consequence. An underspend caused by postponing work is not a saving, and saying so plainly is the most valuable thing this department writes.
• Major repairs, with the cause and whether recurrence is likely.
• Utilities. Separate rate changes from consumption changes. Weather, occupancy and equipment faults all move consumption, and only one of them is under anyone's control.
• Contract changes, including anything renegotiated or newly tendered.
• Equipment nearing end of life, flagged early. Commentary is a legitimate place to put a capital request on the record.

Sales and marketing

• Campaign timing and cost, and whether spend moved between months rather than changed in total.
• Channel mix, since a shift toward higher-commission channels raises cost without any decision having been made.
• Commission rates and any changes to agreements.
• Pipeline events: accounts gained or lost, contracts renewed, group business confirmed for later periods.
• Lead indicators. Enquiry volume, conversion and booking pace say more about next quarter than this month's revenue does.

This department has the most legitimate reason to write forward-looking commentary. Use it. A comment that says a major account has confirmed for the autumn is more valuable than three sentences about last month's advertising spend.

Phrases to retire

Each of these is a placeholder where an explanation should be. They are not wrong, exactly; they are simply where most people stop.

• "Timing." Fine as a category, useless alone. Add the period the offset lands in and the amount.
• "Due to lower volume." Volume of what, and why was it lower?
• "As expected." If it was expected, it should have been in the budget. Say who expected it and why it was not.
• "We are monitoring the situation." Monitoring is not an action. What will you do, and when?
• "Operational requirements." This says nothing at all.
• "Unfavourable variance." The report already knows the sign. Explain the cause.
• "Will be corrected next month." By whom, doing what?
• "No explanation available." Better: "The cause is still being investigated and I will confirm by the fifteenth." That is a real answer with a date on it.

Making it faster

The people who write good commentary quickly are not better writers. They have simply stopped starting from a blank page at the end of the month.

Keep a running note. A single file or notebook page where you write down anything that will affect the numbers, on the day it happens. The equipment failure, the canceled group, the supplier letter, the week you ran short-staffed. At month end you are editing notes rather than reconstructing four weeks from memory. This one habit does more than everything else combined.

Look at your numbers before finance asks. If you review your figures in the first days of the close, you are explaining something you already understand rather than being confronted with it.

Reuse your structure. Event, cause, repeats or not, action. The same four slots every time, so writing becomes filling rather than composing.

Keep the recurring facts on hand. Your labor standard, your cost per occupied room, your capture rate, your contract dates. Comments improve immediately when the writer has the comparison in front of them.

Write it once, properly. A thin comment comes back as a question, and answering that question costs more than writing the full version would have. The fastest route through the month end is a comment nobody has to follow up.

This article describes general practice. It is not accounting, tax, audit or legal advice, and it does not replace your own professional judgment or your company's procedures. Every example uses invented figures for a fictional property. Read the disclaimer.