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OPERATIONAL AUDIT AND RECOMENDATIONS ON NOP INCREASE


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The Challenge

Due to low level of the Owner’s share in the profit during a long period of time, C&W was asked to analyse the operational activity results, find weaknesses in the work of the management company and deliver recomendations on increasing of the Net Operating Income of the hotel. In addition, taking into account limited opportunities of the Owner to participate in the operator’s work, it was necessary to audit the management agreement and give an opinion regarding accordance of it’s conditions to the market for the possibility of further revising of the contract terms.


The Solution

Step 1. C&W Hospitality and Tourism Department has made a research on the general hotel market situation having illustrated its influence onto the current operational results of the given hotel and its medium term forecast.
Step 2. In the course of their study the department’s consultants have carried out a comprehensive analysis of the hotel functioning, including:

  • Detailed analysis of the revenues and expenditures of all the hotel departments, recommendations on the revenue level increase and costs decrease in connection with local market situation;
  • Analysis of the justifiability of budgeted capital and other large investments, providing recommendations on the budget expenditure optimisation including the replacement of suppliers and supplying markets;
  • Recommendations delivery for management agreement terms’ optimization on the basis of comparison (benchmark) with the other agreements that Operator has and also terms that other international operators negotiate;
  • A detailed analysis of the hotel business resources, i.e. large tour operators, and analysis of the hotel main market measures and their effectiveness;
  • Analysis of the hotel staff list and structure and recommendations on their personnel cost optimization, including justification of preferences, provided to the staff.

The Results

As the result of the held analysis it was the delivery of the list of problems the hotel had and recommendations on their solving, which will lead in the future to increase of the hotel net operating profit and the property value in the midterm perspective.