Financial BenchmarkingFinancial Benchmarking
Your ResortYour Resort&&
U.S. Resort Industry U.S. Resort Industry OverviewOverview
Financial BenchmarkingFinancial Benchmarking
Your ResortYour Resort&&
U.S. Resort Industry U.S. Resort Industry OverviewOverview
Robert MandelbaumRobert [email protected]@pkfc.com
Mark WoodworthMark [email protected]@pkfc.com
Presented byPresented by
Presentation OutlinePresentation Outline
Industry OverviewIndustry Overview Benchmarking definedBenchmarking defined When did benchmarking start?When did benchmarking start? How to benchmark!How to benchmark! Why use benchmark$Why use benchmark$ Resort financial benchmarkingResort financial benchmarking Uniform System of AccountsUniform System of Accounts Methods of financial comparisonMethods of financial comparison Case studyCase study HRG’s Benchmarker®HRG’s Benchmarker®
U.S. ResortsU.S. ResortsAnnual Change In Total RevenueAnnual Change In Total Revenue
7.1%8.9%
5.2%
8.6%
2.5%
5.0%3.1%
-3.5%
-8.4%
6.5%
-12%
-8%
-4%
0%
4%
8%
12%
1995 1996 1997 1998 1999 2000 2001 2002 2003EST
2004PROJ
Resorts All Hotels
Source: PKF/HRG Trends in the Hotel Industry
U.S. ResortsU.S. ResortsChange In Total Revenue By Change In Total Revenue By
RegionRegion
RegionRegion 20012001 20022002 2003 2003 PreliminaryPreliminary
NortheastNortheast -5.4%-5.4% -6.2%-6.2% -5.8%-5.8%
North CentralNorth Central -1.7%-1.7% 3.6%3.6% -2.8%-2.8%
SoutheastSoutheast -7.6%-7.6% -5.6%-5.6% -1.3%-1.3%
South CentralSouth Central -9.2%-9.2% 3.4%3.4% 0.3%0.3%
Mountain/Mountain/PacificPacific
-9.3%-9.3% -3.3%-3.3% 0.0%0.0%
Source: PKF/HRG Trends in the Hotel Industry
U.S. ResortsU.S. ResortsAnnual Change In Rooms Annual Change In Rooms
RevPARRevPAR
-12%
-8%
-4%
0%
4%
8%
12%
1995 1996 1997 1998 1999 2000 2001 2002 2003EST
2004PROJ
Occupancy ADR All Hotels RevPAR
Source: PKF/HRG Trends in the Hotel Industry
8.1%6.2%
7.7%4.0%
2.5%
8.0%
-8.0%
-4.1%
2.2%3.2%
U.S. ResortsU.S. ResortsAnnual Change InAnnual Change In
Total Revenue And ExpensesTotal Revenue And Expenses
7.1%8.6%8.9%
2.5%
5.2%5.0%3.1%
-3.5%
-8.4%
6.5%
3.1%2.8%
-1.1%
-6.0%
6.7%5.5%4.3%
6.5%4.8%4.3%
-12%
-8%
-4%
0%
4%
8%
12%
1995 1996 1997 1998 1999 2000 2001 2002 2003EST
2004PROJ
Revenues Expenses C.P.I.
Source: PKF/HRG Trends in the Hotel Industry
U.S. ResortsU.S. ResortsAnnual Change In Net Income*Annual Change In Net Income*
17.0% 15.9%
4.4%
13.8%
1.6%
6.9%
3.2%
-10.5%
-14.7%
12.2%
-24%
-18%
-12%
-6%
0%
6%
12%
18%
24%
1995 1996 1997 1998 1999 2000 2001 2002 2003EST
2004PROJ
Resorts All Hotels
Note:* - Before capital reserve, rent, debt service, income taxes, amortization, and depreciation
Source: PKF/HRG Trends in the Hotel Industry
Comparative OperatingComparative OperatingPerformancePerformance
Other Property TypesOther Property TypesFull Limited
2003 Estimates Resorts Service Service ConventionTotal RevPAR $66,257 $36,435 $14,739 $58,417% Rooms Revenue 56.3% 65.5% 96.4% 61.0%% F&B Revenue 33.1% 28.7% N/A 32.2%% Other Operated Revenue 8.8% 3.0% 1.7% 3.0%Total Payroll and Related Costs 33.7% 33.9% 25.5% 32.6%% Operated Dept. Income 54.9% 58.0% 72.1% 58.3%Income Before Fixed Charges 31.2% 30.9% 42.5% 36.8%N.O.I.* % Revenue 23.6% 23.3% 32.5% 27.8%N.O.I.* $ PAR $15,623 $8,502 $4,790 $16,217
% - Percent of total revenue* - Before capital reserve, rent, debt service, and income taxes.
Source: PKF/HRG Trends in the Hotel Industry
Comparative OperatingComparative OperatingPerformancePerformance
Comparable Full-Service HotelsComparable Full-Service HotelsFull
Resorts ServiceAverage Number of Rooms 374 367Occupancy 66.3% 66.9%ADR $154.25 $146.75Total RevPAR $66,257 $55,957% Rooms Revenue 56.3% 63.1%% F&B Revenue 33.1% 31.1%% Other Operated Revenue 8.8% 2.3%Total Payroll and Related Costs 33.7% 35.6%% Operated Dept. Income 54.9% 59.0%Income Before Fixed Charges 31.2% 32.4%N.O.I.* % Revenue 23.6% 25.2%N.O.I.* $ PAR $15,623 $14,049
% - Percent of total revenue* - Before capital reserve, rent, debt service, and income taxes.
Source: PKF/HRG Trends in the Hotel Industry
DefinitionDefinition
“ “bench-mark-ing” bench-mark-ing” Noun Noun (1976): the study of a (1976): the study of a competitor’s product … in competitor’s product … in order to improve the order to improve the performance of one’s own performance of one’s own companycompany
Merriam-Webster’s Collegiate DictionaryMerriam-Webster’s Collegiate Dictionary
When & Who StartedWhen & Who StartedHotel Benchmarking?Hotel Benchmarking?
Harris Kerr & Foster [PKF Consulting]Harris Kerr & Foster [PKF Consulting] Laventhol & HorwathLaventhol & Horwath
Smith Travel Research Smith Travel Research The Hospitality Research Group [HRG]The Hospitality Research Group [HRG]
BenchmarkerBenchmarker®®
The The COMPCOMP Set Set
CompetitiveCompetitive
- Sub Market - Sub Market GeographyGeography
- Top Line- Top Line
- Market Share- Market Share
ComparableComparable / Criteria / Criteria- Also Geography- Also Geography- Occ – ADR – RevPAR- Occ – ADR – RevPAR- Mix of Revenues- Mix of Revenues- Bottom Line - Bottom Line ComparisonComparison * Segment* Segment
* Size* Size * Location* Location
vs.vs.
How To Benchmark!How To Benchmark!
Subject / Pro Forma
'A' 'B' 'C' 'D'
197,000$ vs. 170,000$ 192,000$ 176,000$ 184,000$
+ 9.1% 722,000$ / 4 = 180,500$
Property COMP Set
• Loan ApplicationLoan Application• Insurance – lossInsurance – loss• Tax - reductionTax - reduction• Measure managementMeasure management• BudgetingBudgeting
Why Use Why Use Benchmarking?Benchmarking?
Applying Financial Applying Financial BenchmarkingBenchmarking
To The Hotel IndustryTo The Hotel Industry
Uniform System of AccountsUniform System of Accountsfor the Lodging Industryfor the Lodging Industry
99thth Edition – Current Edition – Current1010thth Edition – Edition – Release in 2004Release in 2004
For Use in 2005For Use in 2005
Common LanguageCommon Language
Operating DepartmentsOperating Departments– Rooms, Food, Beverage, Minor Operated, Rooms, Food, Beverage, Minor Operated,
Rental and Other IncomeRental and Other Income Undistributed DepartmentsUndistributed Departments
– A&G, Marketing, P.O.M., UtilitiesA&G, Marketing, P.O.M., Utilities Fixed ChargesFixed Charges
– Management Fees, Property Taxes, InsuranceManagement Fees, Property Taxes, Insurance
Uniform System of AccountsUniform System of Accounts
Total DollarsTotal Dollars Percent of Department RevenuePercent of Department Revenue Percent of Total RevenuePercent of Total Revenue Dollars Per Available RoomDollars Per Available Room Dollars Per Occupied RoomDollars Per Occupied Room
Methods of Financial Methods of Financial ComparisonComparison
Comparable PropertyComparable PropertySelection CriteriaSelection Criteria
Subject HotelSubject HotelComparable Comparable
CriteriaCriteria
Property Property TypeType
ResortResort ResortResort
GeographyGeography FloridaFlorida SoutheastSoutheast
AffiliationAffiliation Chain Chain AffiliatedAffiliated
Chain Chain AffiliatedAffiliated
RoomsRooms 252252 200 - 300200 - 300
OccupancyOccupancy 67.6%67.6% 60% - 70%60% - 70%
A.D.R.A.D.R. $294.60$294.60 $275 - $325$275 - $325
Comparable PropertyComparable PropertySelection CriteriaSelection Criteria
Subject Subject HotelHotel
ComparablComparable Criteriae Criteria
RecreationRecreation TennisTennis
No GolfNo GolfTennisTennis
No GolfNo Golf
Other Operated Other Operated Dept.Dept.
% Of Total Revenue% Of Total Revenue
6.8%6.8% 5% - 15%5% - 15%
The Hospitality Research GroupThe Hospitality Research Groupof PKF Consultingof PKF Consulting
BenchmarkerBenchmarker®®
……of Hotel Profitsof Hotel Profits
BenchmarkerBenchmarker®®
Customer selects Customer selects propertiesproperties
Choice of 7 Choice of 7 segmentssegments
All U.S. citiesAll U.S. cities 24 hour delivery24 hour delivery $175 on up$175 on up Excel XLS formatExcel XLS format
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