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  • Writer's pictureKostas Falangas

Essential Financial Management for Hotels

Updated: Apr 1, 2022

* By Kostas Falangas

The last 2 years have been catalytic in the context of reclassifications at all levels. The pandemic that still affects movement and our lives in general has a decisive role at least in the way of living and behavior. Businesses have suffered significant consequences and governments are using the means at their disposal to move to a normal economic flow with the smallest possible consequences worldwide. The hotel sector worldwide has suffered, at its global level, a strong blow and is trying to recover from the possible losses, especially in 2020. The hotel companies and their shareholders, in turn, are trying in all available ways to deal with all the consequences. Concerning the pandemic and the tourism crisis findings have been made so far in a very general manner.

The hotel sector is an important factor of business activity and part of the GDP in Greece (Total share in the total GDP at 20.8%: SETE). This sector has in its potential companies of all categories, sizes, locations, either family or larger companies that manage or rent hotels or franchises of local or international brands. Hotel businesses, mainly family-run, operate in a traditional way by controlling day-to-day operations, but do not pay attention to the long-term factor, the real return on the capital they have invested, and do not use an organized reporting system to manage the appropriate conclusions at the right time and adjust management actions accordingly.

Most companies view business control in terms of simple accounting (sales-expenses), not as a mere process of an efficient and flexible financial management system. It is also very expensive to hire a financial analyst to carry out these procedures, while an external financial analyst can provide this service with confidentiality and accuracy and discuss with the hotelier all necessary actions to be taken in the favor of the business.

The data exported daily, weekly, monthly, periodically and annually, are not adapted to a specific system of reports and statements (financial & management reporting) which includes the entire financial operation, allowing the entrepreneur to judge through the data accordingly, in order to take any corrective action or adjustments, actions that create the proper organization and operation.

In addition, companies do not view their cash flow data, inflows and outflows and do not properly plan cash flow actions to rightly calculate working capital needs and general cash needs. Additionally, companies rarely produce income or cash flow budgets (budgets & forecasts) for the year before each season, in order to compare each time with the realized data thus draw conclusions to optimize the financial situation.

Finally, there is little or no “financial” interest by the business owners in certain fields. Business hotel owners should investigate whether a new investment, construction, renovation, remodeling, change of market and customer pool, will have at least an approximate budgeted return on investment according to a realistic business plan. This business plan should be linked to a confirmed market research, and other important elements which shape the demand. The eventual investments should not be based on subvention tools provided by the state or European authorities, the clear calculations on the return on investment should in any ways take place.

Our company undertakes the organization of on-site or through distance, financial management reporting for the hotel business owner (drafting and procedures, financial statements and reports and ways of proper administration through the financial reporting system provided by the accounting department, warehouses (food & beverage, etc), the pms and generally trough the software programs, pms, etc).

It also undertakes the preparation of realistic and pragmatic business projects (business plans) for the approval of investments (construction, renovation, change of market, etc.) of hotel accommodation of any kind.

Finally, our company undertakes market research and marketing plans for any type of hotel accommodation, in the context of finding the right and optimal pricing of room sales, sales maximization methods (revenue management) considering all the parameters and changes that occur daily in the demand of the tourism market.

* Kostas Falangas is a financial, marketing & operational consultant for hotels. Contact details: Kondylaki 8, Rethymnon, Phones: (+30) 28310-22649 and (+30) 6973-210556, email:

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