Hospitality Facilities Management Homework 1 Property Opera

Hospitality Facilities Management Homework #1 Property Operating Maintenance & Energy Cost

Calculate the total annual revenue (sales and income) of the budget property for this year 2019 both actual (Y-T-D) and this year’s “Forecast” and “Last Year” Revenue. Assume an annual achieved occupancy rate of 70%, and determine the “Total Engineering (POMEC) costs per occupied room”. Determine the “Electricity Cost per occupied room”. Calculate the “electricity cost” as a percentage of total energy cost. Find the gross “Energy Cost” and “POM Cost” per available room. Calculate specific costs per available room for electricity, payroll, fuel, maintenance, water/sewer. Express payroll costs in cents per dollar of POM/R&M expenses. Determine how much sales and income each dollar spent on POM/R&M payroll & related expenses generates. Compare and contrast energy costs and other expenses against last year and forecasted costs.

Paper For Above instruction

The hospitality industry operates within a complex financial framework, requiring precise management of revenue streams and operating costs to ensure profitability and sustainability. The property outlined—a hotel or resort with substantial amenities—serves as an exemplar for analyzing operational metrics fundamental to hospitality facilities management (HFM). This paper aims to determine key financial metrics for a hypothetical property based on specified assumptions and data, including revenue calculations, per-room costs, and cost comparisons over different time periods.

Revenue Analysis

Estimating the annual revenue of a hospitality property involves understanding its room occupancy, average daily rate (ADR), and total available rooms. Assuming a 70% occupancy rate across 400 rooms results in an effective occupied room count of 280 rooms per day (400 rooms × 0.70). If the actual year-to-date revenue for 2019 is provided, it can be extrapolated accordingly; similarly, forecasted and last year's revenues can be compared to gauge performance and trends.

For instance, if the actual revenue Y-T-D is, say, $10 million, then the forecasted and last year's revenues might be approximately $11 million and $9 million, respectively, based on historical data and projected occupancy and ADR. These figures highlight revenue growth or decline, informing management decisions on marketing, pricing, and service adjustments.

Cost Calculations per Occupied Room

The calculation of engineering maintenance costs per occupied room (POMEC) is crucial for understanding operational efficiency. If total POMEC is, for example, $2 million annually, dividing this by the total number of occupied rooms (280 per day over the year) gives the per-occupied-room cost. This figure helps recognize the cost efficiency and pinpoint areas for cost containment.

Similarly, the electricity cost per occupied room involves dividing total electricity expenses by the number of occupied rooms annually. If total electricity expenditure is estimated at $1 million, dividing this by the total occupied room nights provides the cost per occupied room. Such metrics are essential for energy management and cost reduction strategies.

Energy Cost as a Percentage of Total Energy Expense

The proportion of electricity relative to total energy costs indicates energy consumption focus areas. For example, if the electricity cost is $1 million and the total energy cost is $1.2 million, then electricity accounts for approximately 83.3%. Managing this percentage involves investments in energy-efficient systems and operational adjustments.

Gross Energy and POM Costs per Available Room

To evaluate overall costs, dividing total energy and POM expenses by the total available rooms (400) yields the per-room costs. If total energy costs are $1.2 million, then per available room energy expense is $3,000. Similar calculations for POM costs inform budget planning and resource allocation.

Per-Available Room Cost Breakdown

Specific per-room costs involve detailed calculations. Suppose electricity expenses are $1 million, payroll costs (such as for maintenance staff) are $500,000, fuel costs are $200,000, maintenance expenses (excluding labor) are $300,000, and water/sewer expenses are $150,000. Dividing each by 400 rooms yields the respective per-room costs, essential for cost control and pricing strategies.

Payroll Cost Analysis

Expressing payroll expenses in cents per dollar of POM/R&M expenditures involves dividing total payroll by total POM/R&M costs. For example, if total payroll expenses are $600,000 and total POM/R&M costs are $2 million, then staff payroll accounts for 30 cents per dollar of POM/R&M expenses. This metric helps assess labor cost efficiency relative to overall maintenance expenses.

Return on Operations Investment

Determining how many dollars in sales and income are generated per dollar spent on payroll and related expenses offers insight into operational efficiency. If for every dollar spent on payroll, the property earns $10 in sales, it indicates effective resource utilization and operational productivity.

Cost Comparisons and Performance Trends

By comparing energy costs from year to year, such as an increase of 5% or a decrease of 3%, management can evaluate the effectiveness of energy conservation measures or emerging inefficiencies. Similarly, analyzing total other expenses—covering miscellaneous operating costs—against forecasted values assists in financial planning, identifying cost-saving opportunities, and maintaining profitability.

Conclusion

Efficient management of revenue and costs is critical in hospitality facilities operations. Detailed expense analysis per occupied and available room enables managerial staff to optimize operational efficiency, control costs, and improve profitability. Continuous comparison of key metrics over multiple periods guides strategic decision-making and sustainability initiatives, ensuring the property remains financially robust amid market fluctuations.

References

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