Is Hotel Balance Sheet Really Important? Let’s Find Out!

In general context, a balance sheet is an accounting report. But, do you know its importance for your hotel? Many doesn’t and neglect it!

If you’re one among them, then you would probably making a biggest mistake.

Why the balance sheet is important?

The data you see on the balance sheet provides a crystal clear idea of your business’s financial state in the given time period.

The successful hotelier not only keeps an eye on his P & L, but also understands the importance of balance sheet as it’s a key to monitor hotel’s financial health.

Balance sheet of hotel industry, in fact helps in effective financial management letting you verify your assets, liabilities, and owners’, stakeholders’ equity or capital at a specific time.

Internally, hotel balance sheet guides you in taking management decisions. Whereas externally, it helps in reporting the business’s financial status to your investors, lenders or other stakeholders.

Interested to dive deep into the subject? Want to understand how balance sheets make a difference in your decision making? Then this article is crafted for you. Take a look!

STATS & FACTS

Did you know the fact that, the majority of new business firms get failed within their first 18 months of operation?

Only 50% of all them make it to the 5-year mark, and just 33% survive successful to their 10th year anniversary.

Surprisingly, this failure rate hasn’t changed from the past 20 years.

Experts say it’s due to neglecting financial statements!

So, diligently you have to track your hotel or hotel chain finances through hotel balance sheets and income statements. That’s how you can identify any possible potential issues before they turn into big time failures.

How’s the Hotel Balance Sheet structured?

Based on your chart of accounts, the balance sheet is to be structured and it’s only defined when hotel activities are begun.

Every balance sheet of hotel industry commonly consists of 3 accounting categories as followed:

ASSETS:

An asset is something that your hotel owns and it can be converted into value of cash. It’s basically divided into three categories – Short Term, Long Term and Fixed Assets.

Hotel Asset includes Cash, Accounts Receivables, F & B Inventory, Property, Equipment or even more.

In a hotel balance sheet, the total assets value actually represents an important position in the equation as it indicates your hotel’s holdings and contribution to overall value.

LIABILITIES:

In short, a liability is something that your hotel owes and it represents the money you borrowed to support your hotel activities.

So it basically falls under Accounts Payable and General Debt.

In a hotel balance sheet, the total liabilities that you owe to your lender, bank, or supplier include related to credit card, tax, loan, mortgage and other miscellaneous.

In relation to your assets, the liabilities provides an idea of your business stability, as well as illustrates whether your accounts are overdue.

EQUITY:

Equity is nothing but owners’ or shareholders’ net assets. To be more precise Equity = Assets – Liabilities!

The items that make up this value in a balance sheet include retained earnings, capital contributions, owners’ distribution and net income.

Any other remaining value in your hotel assets can be attributed to equity.

How to create a Hotel Balance Sheet?

It may seem intimidating to create a Hotel Balance Sheet manually, especially for those who are unfamiliar with accounting practices.

And, it’s a must thing that on a monthly basis, the balance sheet has to be prepared. So, there’s no space for error!

Thankfully, hospitality accounting software and balance sheet professional services by Nimble Property makes it easy.

It enables a snapshot of your hotel’s financial position. Within no time you can generate balance sheets day wise, week wise, month wise or even year wise, as per your convenience.

Based on the time intervals you give, the balance sheet will be displayed on the dashboard illustrating your hotel’s assets, liabilities and equity.

With Nimble Property, you can view your balance sheet at any point of time for your desired time intervals.

No longer will you need to waste time and painstakingly work on a spreadsheet.

Stay on top of your financial information – Make better decisions!!!


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