As the Regional Operations Analyst in the mid-90s in the West, my boss and I reviewed the financial performance of all of our hotels pretty much on a quarterly basis. The reviews consisted of a trip to the hotel, a tour of any capital projects, and a sit down with the core executive team to review the financials.
We quickly developed a reputation for being somewhat thorough - always digging - and a little confrontational. One such review uncovered a little screw up that caused the GM a ton of embarrassment. It was one of those deals where the victim buried himself with his own BS. The zingers on this one continued for years and people still recall it some 20 years later.
One of the hallmarks of our hotel company's brand at the time was the existence of the Pac-ManTM china. The china was used predominantly in banquets and room service. The china was nicknamed Pac-Man because it had little black symbols that resembled the figures in the Pac-Man video game. It was also completely indestructible and ugly as can be.
Most hotels were in the process of replacing the ugly pac man china and the hotel we were visiting and doing our latest review on had just switched out the banquet china.
Doing a P&L review with the boss is fun. At least fun for him and me. He asks the questions and the team answers. If he likes the answer, we move on. If he does not like the answer, we dig. When we dig, we often find the dirt.
One thing that everyone knows in the hotel business is just how expensive china can be. Usually a hotel picks a pattern and it does not change for years. The hotel adds to the quantity annually to replace the breakage. As I mentioned earlier this hotel had just replaced the banquet china. In fact, we reviewed the selected pattern a few months earlier and the hotel was given the approval by the boss for replacement china. Which was a big deal—probably like $35K.
The earlier review of the replacement china finished with a verbal approval by the boss, meaning send him the paperwork. He also issued a cautionary comment to the GM, "Make damn sure the dinner plates are the same size." To which the GM replied, "Of course, we know." It was almost to the point of the GM belittling his boss because of his mothering statement.
The GM was a relatively young GM, this was only his second hotel. He had the reputation of being a "screamer and shouter" when things got tense with his team. He also had the reputation of being just a little arrogant.
In our review, we were making the usual finds: slipping productivity here, a slightly higher cost of sales there, some question on expenses here, and then...BANG! We find it. F&B other expense: $40K for the month. This must be a mistake. How could anyone spend that much on miscellaneous? It is usually $1,000 or so because it contains chef's hats and wooden spoons costs.
The boss asks, "So what's the story with this one?" Silence ensued. "I guess no one knows?"
The boss glanced across the table at the controller, who looked sheepishly at the food and beverage manager, who in turn looked directly at the GM and said, "I wasn't here then." My boss looked at the GM and said, "Out with it, what's going on?"
The GM cleared his throat and said, "It's the new plate covers." There is now a deafening silence and the air is quickly sucked from the room.
"New plate covers, why the hell would you need new plate covers?"
The GM looked around the room for a friend, but there was no one. The GM then said," The new banquet dinner plates are the wrong size."
The boss looked at him and smiled, "Why the hell would they be the wrong size? Send them back then."
The GM grinned a silly smile and said, "Apparently we forgot to measure the sample and the spec we were sent was somehow wrong." Apparently and somehow are not words you want to use when you are running a hotel.
The boss looked at him and said, "You must be kidding me, didn't you check the sample when it came back, to see if your plate covers fit?" Silence.
Well, suffice to say the boss had a field day with the situation. As it turns out metal plate covers are more expensive than the new china. Like the carpenter says, measure twice and cut once.
The P&L review is like an interview with a panel of inmates. Sooner or later the truth comes out. When it is the GM that is left holding the bag and he or she has not come clean before, it is very telling and damaging. Bravado has an extremely short shelf life and it will blow up in your face.
Be the first to tell the bad news and the last one to tout your victories. Let someone else take the credit for those.
I learned a lot about leadership from these meetings and a lot about our business.
Watching the boss in action was better than two degrees from Cornell.
If you would like a copy of any of the following send me an email at firstname.lastname@example.org
- Hotel Financial Policy Manual – Inventory of “Sections”
- Hotel Financial Coach “Services Sheet”
- F&B Productivity Spreadsheet
- Rooms Productivity Spreadsheet
- Financial Leadership Recipe F TAR W
- Flow Thru Cheat Sheet
Visit my website today for a copy of my FREE guidebook The Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotel
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