What’s Your Inn’s Win-Loss Record?
Years ago, I watched a colleague give a presentation about why it was important for an association’s membership to have a financial benchmarking study. He said, “Think of it like major league baseball. If your win-loss record is 75-67, you wouldn’t know of that’s good or bad, unless you knew how the other teams in your division were doing.” That made good sense. If you look at your inn’s financial performance in isolation, you can make your own judgment about the results. You can determine if you spent more or less on various items than intended, if you earned what you had hoped, etc. But by looking at the numbers in a context of hundreds of other inns, you can glean a good bit more about your own operations.
By doing a comparative analysis using PAII’s recently released “Industry Study on Operations and Finance, 2007-2008,” you can see if your revenue and expenses are above or below inns of similar size. For example, you can look at your net income compared to like inns. If you happen to notice that your marketing spending is the one line item that is a good bit lower than average, and your net income is commensurately lower, you could draw a correlation. Might your financial results improve if you invest a little more in marketing? The study won’t tell you for sure, but you will be a more knowledgeable innkeeper, who can in-turn make well-informed decisions about the management of your business. No one should operate an inn – or any other business for that matter – without good information. The study is chock-full of data about guest amenities, average daily rate, revenue per available room, food and beverage, human resources and much more.
On a macro level, this kind of study impacts your business in a positive way. Insurance companies and lending institutions base their decisions on risk factors associated with a business. If an industry or business does not have good data, these service providers tend to think of that industry or business as risky. The result is usually higher interest rates or premiums. With good, solid information, an entire industry can be seen as a solid investment or risk. PAII has the ability to present the innkeeping industry in a very positive light with the good information in the Industry Study. Think of the macro effect next time you are asked to participate in these kinds of research projects, because they come around to help you in the end in ways you might not have realized.
The Industry Study is one of PAII’s greatest assets – and so too should it be yours. To those of you who provided data for the study – thank you! To the sponsors who generously supported the project, we couldn’t have done it without you – thank you! As you prepare for your next fiscal year (and I know many of you are already thinking about it), be sure to use the Industry Study. Go to www.paii.org to get your copy today.
We hope you enjoy our second edition of Innkeeping Quarterly. Drop me a line and let PAII know what you think: email@example.com
President & CEO