Hospitality Financial Management

Real–world advice for quick retention of the most importantbusiness concepts and skills of hospitality finance

Hospitality Financial Management provides astraightforward, practical approach to help the hospitality managereffectively analyze hospitality industry management reports andfinancial statements; prepare accurate business forecasts,strategic pricing models, and effective cost–control systems;manage working capital; develop and finance growth strategies;perform investment analysis; prepare investment packages; negotiateand structure business deals; and ultimately increase shareholdervalue and personal wealth.

This comprehensive how–to book includes:

Feature Stories brief histories of famous hospitalityleaders highlighting how they have used financial management skillsto attain success for their companies and significant financialrewards for themselves Learning Outcomes a summary of key topics covered in eachchapter Finance in Action scenarios that apply the concepts,skills, and techniques presented in the chapter to real–worldsituations. A step–by–step solution is provided for each problem towalk the reader through the necessary financial calculations The Real Deal boxed inserts that emphasize the relevanceof the book by linking financial concepts to fun facts associatedwith situations students either have or will encounter in theireveryday lives Concept Checks case studies that reinforce the materialspresented and enable students to practice their analytic andproblem–solving skills

Hospitality Financial Management is the perfect book forundergraduate and graduate hospitality management students,hospitality industry managers, and owners of small hospitalitybusinesses.

Preface ix

Acknowledgments xi

1 Finance and the Hospitality Industry 1

Introduction 5

2 Financial Reporting 15

Financial Reporting 17

3 Analyzing Financial Statements 53

Analysis of Financial Statements 56

4 Managing Working Capital and Controlling Cash 91

Managing Working Capital and Controlling Cash 94

5 Growing the Business 112

The Need for Growth 115

Growth Strategies 120

6 Financing Growth 134

The Need for Capital 138

Hotel Financing Trends and Schemes 158

7 The Time Value of Money 177

Concept of Time Value of Money 179

8 Investment Analysis 221

Investment Analysis 223

9 Hospitality Industry Applications of Time Value of Money Concepts and Skills 247

Time Value of Money Applications 250

10 The Investment Package 286

The Need for an Investment Package 289

11 Crafting and Negotiating the Deal 315

The New Business Venture 318

Negotiating Loans with Lenders 325

Negotiating the Equity Investment 331

Negotiating Skills 333

12 Tying It All Together 345

Introduction 348

Hospitality Industry Financial Challenges 348

Financial Reporting 349

Analysis of Financial Statements and Management Reports 350

Managing Working Capital 351

Growing the Business 352

Financing Growth 356

Investment Analysis 357

The Investment Package 360

Crafting and Negotiating the Deal 362

Index 365

Agnes DeFranco is a Professor of Finance and Accounting atthe Conrad N. Hilton College of Hotel and Restaurant Management atthe University of Houston. Her research areas are hospitalityfinance, cost control, accounting, and cultural and diversityissues. She has been recognized with the Dean′s Award forExcellence in Applied Research. She is also the 2006 2007President of the Hospitality Financial and TechnologyProfessionals, an international professional association formed in1952 with over 4,600 members worldwide.

Thomas Lattin is a CPA who has earned partner status withthree international hospitality accounting/consulting firms andserved as president of a national hotel management company as wellas president of a publicly traded hotel real estate investmenttrust. He is currently the Sir Rocco Forte Executive in Residenceat the Conrad N. Hilton College at the University of Houston andManaging Director of Lattin & Associates, a managementconsulting firm.