Maximize flow through at your hotel with some less-than-obvious tips.
The job of owner representatives and asset managers is to maximize value. Since hotel value is largely determined by cash flow, their focus is on bringing the most to the bottom line as possible.
The term “flow through” is used to determine what percentage of incremental revenue results in incremental profit. Flow through can be calculated based on actual results relative to budget, actual results relative to last year or budget projections relative to last year.
The standard goal for flow through is typically 50%, however, it will vary depending on what is driving the revenue increase. For example, if a revenue increase is rate driven, one would expect the flow through to be higher given there are few additional variable expenses that would need to be added to generate the additional revenue.
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