Tag Archives: tourism

Higher Prices Aren’t Scaring Away Summer Travelers

By: Kate Rogers Published May 08, 2014 FOXBusiness

Americans are welcoming summer vacation this year with open arms after a rough winter, but their gateway is going to cost more than in the past.

New data from travel site Orbitz finds 88% of Americans plan to take a summer vacation this year, up 11% year-over-year. Marita Hudson Thomas, Orbitz public relations director, says the numbers reinforce signs of a recovering economy.

“We had a horrible winter—one of the worst in history. People want to get to summer and the heat and warmth- they are running from the terrible winter.”

Summer travel costs are up this year, according to Orbitz, with airfare up 6% and hotel prices up by 12% across the reports’ top destinations.

But travelers say they are willing to spend more this year to vacation, with 51% saying they’d shell out $2,000 or more for their vacation this summer, versus 44% last year.

Travelers on a budget plan to use their travel rewards to pay for hotels and airfare and are willing to buy food and eat in their hotel rooms to save some cash.

More Americans are traveling to cities this year, Orbitz finds, and while hotel prices are up, travelers can find rooms for under $200 in half of the top 10 destinations. Most travelers plan to hit the road in June and July (71%).

This year, Cancun edged out Orlando as the top destination, which has consistently been in the top spot, Hudson Thomas says.

“It’s still a great family destination with Disneyworld” she says of Orlando. “Cancun is our only international destination this year.

The biggest crowds can be found on the Friday before Memorial Day and the biggest travel day will be Thursday, July 3, the report says.

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Service Got You Down?

Service photoI’d hate to be in the shoes of a millionaire who wanders into this establishment with “only” a $100,000-limit Visa card and a wallet full of $50 bills.

“NO ICE CREAM FOR YOU!”

The following words of wisdom are strictly for those of us who elect – of our own free will – to go into the service business.  If you ever feel like posting something as uninviting as these signs at your primary guest interface, please do one or more of the following instead:

  1. Take a beach vacation.  (Maybe some “chill time” will knock some sanity back into you.)
  2. Go home and kick your pet.  Or go to a gym and kick a heavy bag.  Please, just kick something other than your guest.
  3. Visit a church on Sunday morning (God loves people more than anything;  perhaps you’ll learn from His example.)
  4. Find a different occupation.  (I hear they’re hiring 5,000 new IRS agents…)

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Recovering Economy Lifts Business Travel

A July 15, 2013 article in The New York Times says that travelers in the United States will spend about $273.3 billion on the road in 2013.  That’s a 4.3 percent increase over last year, and a reflection of stronger growth in domestic travel as the national economy stabilizes.

Of the estimated $273.3 billion, about $117.1 billion will be spent on group travel — meetings and conventions, conferences, incentive trips and the like. And $33.1 billion will be spent in the United States on international travel.  The information comes from a report that trade group Global Business Travel Association has released preceding its annual convention, which will be held early August in San Diego.

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Springwood Team Honored by Multiple Hotel Brands

Three-quarters of all of Springwood Hospitality’s teams have recently been honored with some of the highest awards their brands can bestow!

Springwood’s Homewood Suites by Hilton® York was named Hilton’s #1 Most Improved Extended-Stay Property in the world for 2012 at the annual Homewood Suites by Hilton® annual conference, which was held this month in Orlando, FL.  This property took yet another first-place honor at the conference when Sales Director Melissa Leonard was honored with the Director of Sales of the Year award for the entire Homewood Suites by Hilton® chain.

Springwood’s Homewood Suites by Hilton® York team was also recognized at the conference with the Connie Award (named for founder Conrad Hilton), for ranking in the top ten per cent of all Homewood Suites by Hilton® properties worldwide on a variety of performance measurements.

The staff at Springwood’s Country Inn & Suites, Hershey at the Park was recognized with the President’s Award at the Carlson-Rezidor annual conference in Miami earlier this month. This the highest honor awarded by Carlson-Rezidor Hotels among all of its hotel brands.  The award represents overall performance, on a variety of performance measurements, in the top 10% of all Carlson-Rezidor hotels worldwide.  The Carlson-Rezidor family of brands includes Country Inns & Suites and Radisson, among others.  This year marks the second year in a row that this property has been honored with the Carlson-Rezidor President’s Award at the conference.

The staff at Springwood’s Comfort Inn & Suites, York has earned Choice Hotels’ Gold Award for achieving overall performance in the top 10% of all Comfort Inn and Comfort Suites properties worldwide.  This award will be presented at the upcoming Choice Hotels annual conference.  This marks the second year in a row that the team has earned Choice Hotels’ Gold Award for its performance.

The only Springwood hotel not to take home top honors this year will be the Holiday Inn Express & Suites, York, because that hotel was undergoing a $2 million renovation/upgrade in the fourth quarter of 2012.  The construction took the property out of the running for the brand’s top awards.  The renovations and upgrades will be complete with construction of the new pool in April.

Springwood Hospitality is an entrepreneurial, hotel development and management company where the “Caring, Competent, Committed” company culture helps it achieve a high level of success.   Springwood will open its new Fairfield Inn & Suites by Marriott®, Hershey Chocolate Avenue on April 4th.  It will also soon begin construction on a new Hampton Inn & Suites on Queen Street @ I-83 in York, PA; and it is working on the development of a new luxury, extended-stay hotel on Buckeystown Pike in Frederick, MD.  Both of those hotels are expected to open for guests in 2014.

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U.S. hotel revenue gains expected in 2013

Reprinted from an article by Danny King today in Travel Weekly:

Steady growth in U.S. hotel demand won’t be tapering off soon, according to reports released Monday by PricewaterhouseCoopers (PwC) and Smith Travel Research (STR).

Growth will keep a steady pace through next year predominantly on room-rate increases, according to PWC.

Revenue per available room for 2013 will rise 5.6% in 2013 on a 4.8% increase in room rates, PwC said. Occupancy will hit 61.7%, which would mark four straight years of occupancy increases from a 54.6% rate in 2009.

As for 2012, PwC maintained its forecast for 6.5% RevPAR growth. U.S. RevPAR increased 8.2% last year.

Such forecasts were echoed, albeit cautiously, by hotel leaders speaking at the New York University International Hospitality Industry Investment Conference in New York on Monday morning.

“Performance still looks really good, but we’re worried about Europe, and we’re increasingly worried about domestic politics,” said Marriott International CEO Arne Sorenson on a conference panel. “Let’s hope that, like last year, business continues to perform strong.”

Dave Hogg – “Good news!”

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Maximizing House Profit using Flex/Flow Calculations Part 5: Final Considerations.

This is the last post in the series and I wanted to discuss some items that should be considered when reviewing flex/flow numbers.  Each period is unique and should be evaluated that way.  It is impossible to discuss all of the different issues that can skew flex/flow numbers from month to month, but I am going to discuss a couple situations below that will be helpful in analyzing flex/flow calculations. 

How did we get the extra revenues?

This is one of the most critical situations to consider when reviewing flex/flow numbers.  As discussed in part one, there are a lot of expenses that are budgeted and measured based on per occupied room (POR).  However, flex/flow measures the dollars from the revenue variance to the house profit variance.  So what would happen if the property exceeded revenues for the month but sold fewer rooms than budgeted?  Well if you consider that your POR costs should have been lower due to fewer rooms sold, the additional revenue had to come from either ADR or another revenue department, so your flow through percentage should actually be higher than your goal.  The opposite is also true if you exceeded revenues by selling more rooms than budgeted while the ADR was less.  The rooms sold will cause the POR costs to increase but the lack of ADR will hurt the flow through percentage because you got less revenue per room sold.  The same should be considered when you fall short of revenues as well.  There are numerous scenarios on this, but the point is that you should consider how you got the revenue variance to determine if the goal should have made and if the goal should have been higher.

Approach the small variances with caution.

This was purposely shown in example #2 for parts 3 and 4 of this series.  You will see that the smaller the revenue variances, the more likely you are to get an outrageous number in the flex/flow calculation.   If I told you that your property just flowed -500% for the month and nothing else; what would your reaction be?  I am guessing it wouldn’t be “great job and keep up the good work” but should it be?  What if upon further review of the statement you found that the revenues were over $200 and every other line item equaled budget, but you had a $1,000 extraordinary expense and that alone caused the house profit to be under $1,000 and the flow through to be -500%.  I think you would agree that this is not as bad as the initial -500% flow number would lead you to believe.  In my experience working with flex flow numbers, my general rule is the smaller the revenue variance the less effective the calculation.  Therefore it should not be taken literally without some further investigation.

In closing, I hope this series gave you another tool to manage your property.  As stated in part #1, the goal with flex/flow calculations is to measure the efficiency between additional revenues and bottom line profit.  Thanks for reading the series and stay tuned for posts in the future that will range widely on operational hotel topics.  If I can assist in any way, feel free to contact me directly at jshelton@springwood.net

Hospitably Yours,

Justin

Flex/Flow Calculations Poll #1

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Flex/Flow Calculations Poll #2


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Maximizing House Profit using Flex/Flow Calculations Part 3: How to calculate Flow performance.

At this point, it is fair to say that you know the difference between Flex and Flow and you have an idea where your goal should be for each.  If not, please review Part 1 and 2 of this series.  With that knowledge and understanding under our belt we are ready to discuss the calculations.  First, I am going to give you the formulas and then I am going to play out 3 different flow scenarios with some brief explanations of each.

Let’s start with everyone’s favorite (or at least it should be)…Flow.

To calculate what your house profit target (HPT) should be based on your flow goal is really simple.  Multiply the revenue variance (RV) by the goal percentage (GOAL%) to get the house profit target (HPT).

RV  x  GOAL%  =  HPT

The next thing I recommend is determine if the property met the house profit target.  This gives you the first indication on whether you made the flow % or not.  This is calculated by subtracting the house profit target (HPT) from the house profit variance (HPV) to get the house profit goal variance (HPGV).  Positive numbers for the house profit goal variance are great and negative numbers are never good.

HPV  –  HPT  =  HPGV

To calculate your actual flow, just divide your house profit variance (HPV) by your revenue variance (RV) and that equals the flow percentage (FLOW%).  This gives you your actual flow through percentage.

HPV ÷ RV = FLOW%

Now let look at some examples of how this process works.  I am using a flow goal of 70% in the calculations below.

Example #1:  This is a basic flow calculation.

Actual Revenue Budgeted Revenue Revenue Variance
$300,000 $280,000 $20,000
     
Actual House Profit Budgeted House Profit House Profit Variance
$150,000 $140,000 $10,000

Step #1 is to determine the house profit target.  We should multiply the revenue variance by the flow goal.  In this example, that would be $20,000 x 70% which equals $14,000.  $14,000 is our house profit target.

Step #2 is to determine if the property met the house profit target.  We just subtract the house profit target from the actual house profit variance.  For this situation it would be $10,000 – $14,000 = ($4,000).  In essence we are $4,000 short of our target.

Step #3 is to determine our actual flow percentage.  We just divide the house profit variance by the revenue variance to get the number.  For this scenario it would be $10,000 ÷ $20,000 = 50% Flow.  The 50% flow is less than our goal, but we already had that indication from step #2.

Step #4 is always to analyze the financial statement to find efficiencies and inefficiencies.  In this case it would be to analyze your financial statement, paying particular attention to variable expenses to determine if the property could have saved the $4,000.  There could be a fixed cost overage or something unexpected that caused this as well, but the goal is to focus more on what can be controlled.

Example #2:  This is a flow calculation with a huge flow percentage.  The best of the best sometime question themselves when they get some of these numbers.  The question usually sounds something like this, “it that even possible?” and the short answer is yes.

Actual Revenue Budgeted Revenue Revenue Variance
$280,200 $280,000 $200
     
Actual House Profit Budgeted House Profit House Profit Variance
$150,000 $140,000 $10,000

Step #1 is $200 x 70% giving us a house profit target of $140.

Step #2 is $10,000 – $140 giving us a house profit goal variance of $9,860.  At this point you know the property far exceeded the flow percentage goal, but by how much?  Let’s see…

Step #3 is $10,000 ÷ $200 giving you a flow percentage of 5000%.  I know what you’re thinking, “Is that even possible?”  It is calculated just like example #1 using difference numbers and it is correct and therefore possible.

Step #4 would investigate the cause for the huge house profit goal variance with so little additional revenue.  This is obviously an extreme case, but you are probably looking for a large item that was budgeted but wasn’t used.  Maybe an electric bill or franchise bill was missed.  It is import to know why there is such a huge shortage because chances are pretty good that the expense has hit in a previous month or will be hitting at a later date which will give you a financial statement equally as bad.

Example #3:  This is a really bad financial statement showing a negative flow percentage.

Actual Revenue Budgeted Revenue Revenue Variance
$285,000 $280,000 $5,000
     
Actual House Profit Budgeted House Profit House Profit Variance
$136,000 $140,000 ($4,000)

Step #1 is $5,000 x 70% giving us a house profit target of $3,500.

Step #2 is the same as it has been in previous scenarios, house profit variance minus house profit target.  Some of my mathematically challenged colleagues look at the numbers and in their head come up with ($500) because the difference between $4,000 and $3,500 is $500 but that would not be correct.  Our equation is ($4,000) – $3,500. Not to get too far into math class, but because the $4,000 in this case is negative and you are subtracting a positive number you actually get ($7,500) as the house profit goal variance.  Example #2 was really good, now this one is really bad.

Step #3 is to find out your true flow percentage and given what we know from Step #2 it isn’t going to be pretty.  (4,000) ÷ 5000 gives us a flow of -80%.  That is negative 80% flow through because you spent $7,500 more than your goal.

Step #4 is always to find inefficiencies or efficiencies in the financial statement.  Although the property missed house profit by $4,000, the house profit goal variance was negative $7,500 and we should be looking for that amount of expense variances because of the additional revenues generated.  This is the opposite situation from Example #2 because you are looking for double posted bills and things of that nature.  Don’t forget to focus on the variable expenses even if you find a double posted bill or something of that nature.

As you can imagine there are literally trillions of flow situations that can happen, but the formulas are the same no matter the numbers.  I would encourage you to grab a financial statement or two or ten and run these formulas to see how you did.  Are there some inefficiencies that can be improved to meet the goal set in Part 2?

In Part 4 we are going to discuss the scenarios where you fell short of budgeted revenues.  The flex formula is a little different and gets more complicated, but like flow the formulas do not change only the numbers going into it.

Hospitably Yours,

Justin

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