(P&L) Statement is the financial statement that hospitality managers need to understand
completely. It is the financial statement that they will use to measure the financial performance
of their departments and to monitor and improve the daily operations of their
departments. The P&L provides a way for managers to measure the financial performance
of their departments by comparing actual monthly operations to the budget established
for the month, to last year’s monthly performance, to the previous month’s performance,
and to the most recent forecast.
The P&L is the financial report that involves hotel managers in all four steps of the
Financial Management Cycle. First, the managers operate the departments that provide
the products and services to customers that produce the numbers—revenues, expenses,
and profits. Second, the managers ensure that the numbers that are submitted to accounting
are accurate and consistent so that the financial reports prepared by accounting are
accurate and useful. Third, hotel managers must be able to analyze and discuss the
numbers to determine how well hotel operations are meeting established goals and
budgets. This includes providing critiques and details of operations that can assist them
and accounting managers in determining the best or next course of action to take regarding
operating their departments. Fourth, hotel managers are the ones responsible for
applying the numbers back to operations by implementing changes for improvement or
corrections to solve problems.
The P&L also provides information that is connected to both the Balance Sheet (Assets
and Liabilities [or A&L] Statement) and the Statement of Cash Flow. Ahospitality manager
who understands these relationships will be able to use these financial statements more
effectively in operating their departments.
Hotel Consolidated P&L Statements
The Consolidated P&L for a hotel is a summary P&L that lists the department totals for
revenues, profits, and expenses. Only the department totals for revenues, profits, and
expenses are included in the Consolidated P&L. It is a true summary report showing the
important financial results for each department in the hotel.
Revenue and Profit Centers
Both of these names refer to operating departments that produce revenues (sales) and
profits. The terms revenue and sales are interchangeable. The terms revenue centers and
profit centers are also interchangeable. Specifically, these departments provide products
and services to the customers who pay for these services. Employees record the sales on
cash registers or point-of-sale (POS) computer systems. That is why these operating
departments are referred to as revenue centers. They receive and record revenues from
customers. Examples of revenue centers in full-service hotels are the rooms department,
restaurants, lounges, catering and banquets, the gift shop, and telephone departments.
Resorts include these same revenue centers, as well as golf, spas, tennis, and recreation
revenue centers. Exhibit 4.1 presents an example of revenue centers in a Consolidated P&L.
E X H I B I T 4 . 1
SAMPLE CONSOLIDATED P&L FOR A HOTEL
Consolidated P&L Statement
June 30, 2004
* Revenues are reported in thousands of dollars or (000).