How one hotel executive found his purpose, inspired his team and produced results.
By David Lund
This article is about creating leadership inside the financial discipline of a hotel. It’s also about discovering one’s purpose and a new and exciting way to drive better financial results in a hotel. If you own or manage a hotel, this is for you.
I would like to start by sharing a personal story of which I am actually ashamed.
Ten years ago, I was the director of finance for a 1,300-room hotel in downtown Toronto. I previously had held similar positions in several smaller hotels, but this hotel was proving to be particularly difficult to manage financially. As the director of finance, it goes without saying that my day job is to make sure the books are clean and everything is accounted for: assets, liabilities, etc. Where the real work lies and what I get paid for at the end of the day is driving business intelligence and creating a system that produces superior, forward-looking business information. Budgets, forecasts and commentaries; these are the key instruments that the management team, the brand and the owner need from me to make informed decisions on the business.
Well frankly, not much of this forward-looking intelligence was being produced, and my financial statements were a mess. Forecasts and commentaries were incomplete and inaccurate, and budget season was a nightmare. My challenge was getting the 50+ department managers to give me meaningful and accurate information. I can’t sit in my office and dream up what’s going to happen next month in the laundry, kitchen or any department. If a hotel is to function properly, each cost and revenue center needs to have its own business plan for labor, expenses and, if applicable, revenues. In this hotel, that was not happening. The previous director told me, “Good luck with getting any help on the forecasts or commentaries.” He had been doing it “in camera,” which is to say without any other managers’ input.
I would speak about the need for departmental submissions for the forecast at every weekly meeting. I sent the department managers schedules with deadlines to follow. I sent simple spreadsheets to use for forecasting. I met one-on-one with managers to show them what was needed. I sent reminders for deadlines, upcoming deadlines, accrual submissions, etc. Nothing worked. I was constantly hounding people, and the information I got back was either incomplete, inaccurate, late or not at all. I was failing the class. I was producing month-end statements that were inaccurate, forecasts that were way off and commentaries that lacked any real meaning. The owners were on me, the brand was shaking its head and my GM was not impressed. I was a miserable failure, and I was not having any fun.
Well along comes Ian, our hotel’s new general manager. Shortly after he arrived and got settled, he sat down with me to review and catch up on what was going on financially inside the hotel. I told him about my challenges with the department managers and getting accurate information from them. He listened intently, and then he said something that I will never forget: “David, I have an idea. What if you created a financial workshop for the department managers and assistants; we could call it ‘Hotel Finances for Dummies.’” I said, “Seriously Ian, I don’t have time for that. Have you seen my desk? I’m already here 11–12 hours a day, and on top of that I’m not a teacher.” Well, Ian was like a dog with a bone. The conversation continued into the next week, and he summed things up for me at a subsequent meeting. He said, “It’s the right thing to do, and I’m going to make it your personal goal on the yearly bonus. Creating and delivering this workshop is now your personal goal.”
During the following weeks, I somewhat begrudgingly assembled materials for a financial leadership workshop. The basic framework was an exploration of the four different business types, several accounting principles, the key hotel financial statements, how to read a financial statement, hotel financial acronyms and three group exercises. It’s amazing what you could find even 10 years ago on the internet. I approached the day of the first workshop with much trepidation. The human resources director handpicked the workshop participants, and 45 people were asked to attend.
The big day arrived, and I delivered the content I had created. The workshop started at 9:30, and we had two short breaks and lunch and wrapped up at 4 p.m. To my complete astonishment, I had a line of leaders waiting to speak with me at the end of the day, to thank me and to share their insights from the day. Over the next few days, the hotel was a buzz about me and my workshop. What a wonderful feeling. I was the hotel accounting celebrity. I knew from that day that I was on to something big.
I learned four powerful lessons that day that day would change my life.
- I make a difference. Prior to the workshop, the leaders had no idea what I did with their information; for all I knew they thought I was just getting them to jump through hoops to satisfy me. Once they made the connection and saw that their information went to the owners and corporate, they could see that they made a difference. That means they now make an impact!
- The illusion disappeared. Collect-ively, we looked at each area of the hotel through the lens of the profit and loss statement, and everyone had an opportunity to share what was going on in their department with the group. Everyone could see that this financial piece was not so difficult. It’s actually pretty straightforward, and departmentally the challenges were very similar and manageable.
- Instant ROI. What emerged quickly as a result of that day was a group of 40+ leaders who now were much more engaged in managing the finances of their departments. What an impact on the hotel’s profit picture. And on top of it all, I began receiving timely and accurate forecasts, commentaries and accruals. No more hounding. The financial mood in the hotel went from sour to magical. Leaders would seek me out to show off their latest savings and profit improvement ideas. I had an army working with me. What an amazing feeling.
- Leadership: Look inward, not outward. This was the most important lesson for me. There are a number of books about a concept called servant leadership. Serve your people first. Serve them, help them and they will follow you. Before this, I had it all backwards. I thought I was the director of finance and that meant the leaders would do what I asked of them. Well, it does not work that way, at least not very well. It only took me 20 years to see this. Having an outward view to my leadership rather than and inward one was a game-changer.
I delivered the workshop again later that year, and we had to limit the attendance due to the overwhelming demand. The following year my hotel submitted the workshop to the company’s annual international innovation contest, and we won. I say ‘we’ because the first three listed lessons I learned really came from the other leaders on our team.
What is your brand delivering? What’s going on inside your hotel with financial leadership? It’s a simple question for your GM or financial leader. How many people directly contribute to creating the forecast? ■
For the past 10 years, I have delivered my workshop to hundreds of leaders inside my hotels and regional hotels. The same magic always happened. Leaders love to learn, and they want to get ahead in life. Financial leadership training has always delivered three results:
- Leaders experience their power to have real impact inside the financial arena. They leave the day committed to do more because they see that they really do make a difference. They are truly part of the financial success of the business.
- Your managers immediately see their career and personal growth opportunities. They cannot get this without your help. Thus realizing a substantial portion of their full leadership potential.
- When leaders are financially engaged, the return is immediate and lasting. Managers can save you hundreds of thousands of dollars in your hotels.
David Lund, CHAE, “The Financial Hotel Coach,” is an international hospitality financial leadership expert who has held positions as a regional financial controller, corporate director and hotel manager with an international brand for 30 years. Lund authored an award-winning workshop and two books on hospitality financial leadership, and coaches hospitality executives and delivers his financial leadership training throughout the world. To learn more, visit www.hotelcoachdavid.com.