How FP&A Helps Hospitality Leaders Make Better Daily Decisions

Why Hospitality Needs Timely Finance

We are talking about the hospitality industry again this week. Hospitality leaders need timely financial information they can connect to staffing, purchasing, pricing, capacity, and guest service. FP&A and accounting contribute most when they help managers understand the choices, act confidently, and measure the results. This topic is so relevant right now. The National Restaurant Association identifies uneven traffic, persistent cost pressure, and increased emphasis on technology and workforce development as operating priorities. The American Hotel and Lodging Association's July Consumer Research also points to travelers seeking greater value and adjusting how they spend. Please enjoy the episode. Welcome to the Finance Leader Podcast, where leadership is bigger than the numbers. I am your host, Stephen McLain. This is the podcast for developing leaders in finance and accounting. Please consider following me on Twitter, Facebook, Instagram, and LinkedIn. My usernames and the links are in this episode's show notes. You can also follow Finance Leader Academy on LinkedIn. Thank you. This is episode number one fifty nine, and I will be talking about how operational hospitality leaders can make better decisions with help from finance. And I will highlight the following topics. Number one, start with the operational decisions. Number two, build a scorecard that connects finance, operations, and the guest experience. And three, how FP&A turns financial results into better operating choices.

What FP&A Is Really For

I have a critical question to begin with. Now what is the purpose of your FP&A team? Now they have many functions and responsibilities, but what about the everyday purpose? Well, it's to help understand business performance, anticipate future results, and make informed decisions that support the organization strategy. FP&A connects financial information with what is happening across the business so leaders can allocate resources, improve profitability, and manage uncertainty. Last week I shared episode number 158, how the future hospitality FP&A team forecasts demand and protects margins. A hotel room empty tonight is not lost demand on a spreadsheet, it's literally gone forever. That one reality makes hospitality one of the clearest places where FP&A has to operate in real time, not on last month's variance deck. So please listen if you have not already, enjoy. Again, the purpose of FP&A is to connect strategy, financial performance, and operational decisions, helping leaders understand what is happening, anticipate what comes next, and decide where to act.

Breaking The Stovepipe Culture

What I often find is that teams across the organization operate in a stovepipe in relation to everyone else. And that's our critical error. Why do we work alone so much when we can solve the big problems through better collaboration? There is often much resistance to that. Let's go a little deeper. I find so many people prefer to get a project and then do their work in their own sphere, never bothering anyone else, never asking the critical questions, and always seeming annoyed when someone does ask them a question. Now at the organizational level, we need to see more collaborative work between strategic leaders, operations, and the FPA plus the accounting team. I will always advocate for a strategically focused accounting team. Now listen to episode number 146, Strategic Accounting, not just reporting, for more info on that topic. We start with operational decisions because those decisions determine how the business earns revenue, uses resources, and delivers the guest experience. A financial report shows the outcome of those choices. FP&A creates value by helping operational leaders understand which choices to make next. Now, for example, housekeeping costs are above budget, describes a result. How should we schedule housekeeping for next weekend's expected departures and arrivals? Now that identifies a decision. That question gives FP&A a clear purpose. Determine the workload, compare staffing options, estimate the financial effect, and identify service risks. Operations explains how the work happens. Accounting establishes dependable cost and results, and FP&A connects those inputs to the likely consequences of each option. Are your senior leaders, operating teams, and finance professionals working toward the same priorities? McLean Solutions helps organizations strategically align senior leadership, operational leaders, FP&A, and accounting through shared goals, clearer communication, and financial insights that support action. We help connect strategy to daily decisions, strengthen collaboration, and establish meaningful measures of success. Visit FinanceLeaderAcademy.com to explore how we can help your organization turn financial insight into better business performance. Now I've always questioned why team members go to their desks and then never speak to each other all day. Your neighbor probably has the very missing piece to your forecast, but somehow we have created an atmosphere where you can't bother anyone

Start With The Operational Decision

else. I don't understand that at all. I recommend that you build in more collaboration across all your teams so you share pertinent information quicker, and then the results will be amazing. Now let's talk about how operational hospitality leaders can make better decisions with the help from finance. Number one, start with the operational decisions. Start with the decision an operational leader needs to make, then identify the activities driving the result, agree on the assumptions, and use financial analysis to compare the options. That is how FP&A becomes part of running the business. We need to connect the decision to operational drivers. FP&A should first work with the manager who owns the decision to establish the objective. What are we trying to improve? Profitability, room readiness, service speed, or another outcome, and then the available choices. What can the manager actually change and by when? And then we look at the constraints. What staffing, skill, capacity, quality, or safety requirements must the solution meet? And then we look at the success measures. How will we know where the decision worked? And then the next step is to connect the decision to the activities that create revenue and cost. In a hotel, occupancy is useful, but housekeeping workload also depends on departures, stayover service, room types, and cleaning standards. Two days with the same occupancy can require very different staffing. Also use tools that answer the operating question. The most useful tool depends on the decision. A controlled spreadsheet can support a focused scheduling analysis. A recurring analysis across many properties may benefit from connected planning software and dashboards. Use tools that answer the operating question means FP&A should select its data and analytical approach based on a decision a manager needs to make. If a hotel manager needs to schedule housekeeping for a busy weekend, FP&A can combine reservation and departure forecasts with cleaning times, wage rates, and scheduling data to compare staffing options in a spreadsheet model. If the question is whether a promotion will improve profitability, the analysis should examine expected additional bookings, discounts, commissions, and the cost of serving those guests. In each case, FP&A works with operations to validate assumptions, tests how results change under different conditions, and explain the financial and service trade-offs. The value of the tool comes from making the choices clearer and helping the manager take action with agreed measures to determine whether that action delivers the expected benefit. Now make the assumptions explicit. Every forecast and decision model contains assumptions. FP&A should make them visible and test them with operations rather than allowing them to remain hidden inside spreadsheet formulas. That last distinction matters. Saving task time does not automatically reduce expense. If the same employees work the same page shifts, the immediate benefit may be additional capacity or improved service. FP&A should explain that benefit accurately. For each material assumption, record its source, owner, and when it was updated. Use a reasonable range when uncertainty

Make Assumptions Visible And Testable

is high.

Build A Scorecard That Links Guests

Number two, build a scorecard that connects finance, operations, and the guest experience. Building a small scorecard that connects money, operations, and guest experience helps hospitality leaders understand both their results and the activities producing those results. Financial measures such as revenue and operating profit show how the business is performing, but they rarely explain the full story on their own. A hotel may maintain strong occupancy while earning less from each booking, or a restaurant may reduce labor expense while creating longer waits that discourage repeat visits. Bringing financial, operational, and guest measures together helps FPA and operational leaders evaluate whether an apparent improvement is strengthening the business. The scorecard should begin with the decisions managers can influence. For a hotel focused on housekeeping, a useful set of measures might include labor cost per occupied room, cleaning hours by service type, overtime, the percentage of rooms ready by check-in, and cleaning related complaints. These measures connect the expense to the workload and the quality of the outcome. FP&A helps select a manageable number of measures that answer a clear question. Are we using our resources effectively while delivering the experience we promise? Each measure should have an agreed definition, a reliable source, an owner, and a reporting frequency that matches the decision. An important FPA contribution is ensuring that comparisons reflect the operating conditions. Labor cost per occupied room could rise because wages increased, because more guests checked out and required a full departure clean, or because scheduling became less efficient. Those explanations call for different responses. FP&A can account for workload, room mix, and wage changes to help managers distinguish a necessary increase in resources from an avoidable cost. Targets should reflect those operating realities and agreed service standards, with thresholds that prompt investigation when performance moves outside an acceptable range. The scorecard should also combine measures that signal upcoming pressure with measures that confirm what has already happened. Booking pace, expected departures, staffing gaps, and rooms unavailable for sale can alert managers to an emerging problem. Overtime expense, operating contribution, late room readiness, and guest complaints help establish the outcome. Now FP&A connects these measures through forecasts and scenario analysis, giving operations time to adjust schedules or resolve capacity constraints before the financial and service consequences become more serious. For the scorecard to support decisions, it needs a regular conversation around it. In a weekly review, FP&A and operations should identify material changes, explain likely causes, agree on a response, and assign an owner and review date. Accounting helps ensure the financial measures are complete and consistently defined, while operational managers provide context that the data may miss. After a change is implemented, the team reviews the same measures to determine whether it worked, taking changes in demand and guest mix into account. Used this way, the scorecard becomes a practical management tool that connects financial performance with daily execution and the guest experience.

Turning Results Into Better Choices

three, how FP&A turns financial results into better operating choices. FP&A turns financial results into better operating choices by explaining what produced those results and helping managers decide how to respond. A report may show that revenue increased while operating profits declined, but that information alone does not tell a hospitality leader what to change. FP&A connects the financial outcome to factors such as booking channels, pricing, staffing patterns, purchasing, and guest demand. Working with operations, the team identifies which factors managers can influence and evaluates actions that could improve performance while protecting the guest experience. The first step is to understand the causes behind a change in performance. For example, a hotel's room revenue may increase because it sold more rooms, charged higher rates, or attracted a different mix of business. Each explanation has different implications for profitability. Now more bookings through high commission channels may increase revenue while leaving less contribution per stay. FPA can separate the effects of volume, price, and mix, then examine the associated operating costs. Accounting helps confirm that the underlying results are complete and recorded consistently, while operations and revenue management explain the business conditions behind the numbers. FP&A also helps managers judge costs against the workload actually delivered. A restaurant's labor expense being above budget does not automatically indicate poor cost control if the team served substantially more guests than expected. Using a flexible budget, FP&A estimates what costs should have been at the actual activity level, recognizing that some costs vary with demand while others remain fixed or increase in steps. The team can then investigate wage changes over time, staffing levels, and productivity. This gives operations a more useful basis for action than a simple comparison with the original budget. Once the causes are understood, FP&A helps translate them into practical choices. If housekeeping over time is rising, the team might evaluate changing shift start times, adding coverage during peak checkout periods, or addressing delays in linen availability. Operations determines whether these alternatives are workable, and FP&A estimates their costs, benefits, and potential trade-offs. The analysis should distinguish expenses that will actually change from costs that will remain regardless of the decision. Because operating choices affect future results, FP&A must make uncertainty visible. A staffing plan depends on assumptions about bookings, cancellations, departures, cleaning times, and employee availability. Rather than present one forecast as a certainty, FP&A can test a reasonable range of conditions and show when a different response should be needed. For example, the team could identify the departure volume at which scheduled housekeeping coverage becomes inefficient and agree on a contingency with the manager. This turns forecasting into preparation for specific operating decisions. The analysis becomes useful when FP&A communicates a clear recommendation. An operational leader needs to understand what changed, why it matters, which options are available, and the expected consequences of acting. Instead of saying labor costs are unfavorable, FP&A might explain more departure cleans and a gap in midday coverage are driving overtime, shifting coverage toward the checkout peak could reduce overtime while maintaining room readiness. The recommendation should identify the assumptions that still need validation. The manager responsible for implementation and the measures the team will use to evaluate success. Now finally, FP&A closes the loop by reviewing whether the decision delivered its expected benefit. A scheduling pilot should be assessed through labor expense, overtime, room readiness, and cleaning quality while accounting for changes in workload. If results fall short, FP&A and operations should determine whether the assumptions were inaccurate, implementation was incomplete, or conditions changed. This ongoing partnership helps the organization learn from its decisions. FP&A contributes financial discipline and analysis, operations contributes practical knowledge and execution, and together they develop better choices about how to use resources and serve guests.

Action Steps And How To Subscribe

Now for action today, ask your FP&A team to meet with an operational leader and ask, what decision do you need to make this week and what information would help you make it confidently? Help them develop a brief analysis that compares the availability options, explains the key assumptions, and considers both the financial impact and the guest experience. Agree on an action, an owner, and a date to review the results. This creates a practical opportunity for FP&A to connect its analysis directly to an operating decision. Please subscribe to the podcast on the platform you are currently listening to and also subscribe to my weekly email. When you subscribe to the email, you will receive a free guide about developing your finance leadership. It's filled with many tips and strategies to grow your leadership. Thank you. Today I talked about how operational hospitality leaders can make better decisions with the help from finance. And I highlighted the following points. Number one, start with the operational decisions. Number two, build a scorecard that connects finance, operations, and the guest experience. And three, how FP&A turns financial results into better operating choices. Next episode, I will talk about how to improve communication between operations and finance. I hope you enjoyed the Finance Leader Podcast. If this episode helped you today, please share with a colleague and leave a review. Please check out FinanceLeader Academy.com for more resources and for ways that I can help you and your team. And now go lead your team and I'll see you next time. Thank you.