CMI Sri Lanka webinar on ‘Finance for the now normal’ of hotel sector

CMI Sri Lanka conducted a webinar titled, ‘Finance for the now normal’ on 12 January 2021. It was conducted by hotel expert N. Nagendra – FIH, Consultant with KPMG and the Moderator was Chaminda De Silva, MBA and GM of Orel corp.

The areas covered were:

Working as a team

Nirmalan explained that when the department heads of Rooms, Finance, Sales, F&B, Human Resource, Kitchen, Engineering and House Keeping work together, each one of them has ideas to reduce cost when the top line does not materialise. (If the DOF is a friend of the housekeeper she will advise him that she has already drawn sufficient amenities for the rooms and does not need to draw anything new from the stores for this month. This will result in reduced amenity cost for the month under the rooms department.)

Higher for attitude

When you let people go during COVID please do not rehire in departments such as Administration, Finance, HR and Security. All administration staff should be multiskilled and well-paid. Administration should be lean and mean. Always hire for attitude and not only qualifications.  

Hold hands and maintain room rates (average room rate and rev par)

He also reiterated the strength of hoteliers working together to maintain a decent average rate. That is average room rate (room only at a minimum of $ 100 (Rs. 19,000) for a four-star hotel); the weakness in Sri Lanka is that the hotel owners under cut each other and the net room rate at times is only Rs. 4,000 when you remove two breakfast, two dinners, tax and service charge.

It is not the numbers who come to Sri Lanka but the average they spend per night. Ideally, we should attract guests who spend minimum $ 200 per night all inclusive. And promote indirect employment by taking a Kangaroo cab and a tuk tuk.

Unless you charge a decent room rate the rooms profit which should be 80% plus is now 20% only. 

When you don’t charge a decent average room rate the beneficiary is the guest and the big tour operator.

Cost of labour

Ideally the ratio between rooms and the manning should be 1.5 (1.5 staff to a room).

When a waiter is paid a basic wage of 13,500 to 16,000 but he actually cost the company approx. 27,000. On cost on the basic is (12% EPF, 3% ETF, meals cost, gratuity, holiday pay, bonus accrual).

Labour being expensive we must always have well-paid, few happy staff multiskilled with great attitude 

His summation was we have to live with COVID, take due care, look after your staff which is the key, and look at new innovative ideas to boost sales (outside catering, etc.).