A simple guide to hotel financial statements

A simple guide to hotel financial statements

As a hotel operator, staying on top of your finances is essential to the long-term profitability of your business. With the right financial information at your fingertips, you can make sound decisions for your hotel, fine-tune your business strategies, deal with any red flags before they become bigger problems and drive sustainable growth.

There are various types of hotel financial statements, and each one is designed to provide insights into a specific aspect of your business.

This guide walks through everything you need to know about financial statements for hotels: what they include, why they’re important, common types of financial statements and what key insights they can provide.

What do financial statements include?

Financial statements include information about the financial activities of your hotel. The exact information included differs depending on the statement, as we’ll cover in more detail below.

Generally speaking, though, financial statements cover information about the incomings and outgoings of your business. This can give you a clear picture of your past, current and predicted future performance.

Why are financial statements important?

Financial statements are a critical component of running a profitable and sustainable hotel. They can tell you things like:

  • Whether you’re making enough hotel revenue
  • Whether that revenue is translating into hotel profits
  • How much you’re spending on operational expenses and overheads
  • Whether you have enough cash on hand to pay the bills

Financial statements can help with:

  • Operations: Financial statements can be used to review the efficiency of your hotel operations and make necessary adjustments to processes, staffing, etc.
  • Investments: You use financial statements to figure out if you have the appropriate funds and financial standing to invest in new areas for your hotel.
  • Credit and loans: Lenders will ask for financial statements to determine if your hotel is financially stable enough to receive a loan.
  • Marketing & pricing: Analysing financial statements can indicate whether your hotel’s marketing and pricing strategies are bringing in enough revenue, and whether you need to adjust your approach.