Josiah: Our guest today, David Lund, is widely known across the industry as the hotel financial coach. And as you may recall from our past episodes with him, he does a really good job of taking what he learned as a hotel operations leader and using it to help hospitality professionals understand the financial side of our business. The last time he was on this show, we talked about his new book, The Prosperous Hotelier. That conversation is linked in the show notes. And what I love about that book and so much of what David teaches is that it’s timeless. At the same time, if you’re an owner or an operator in hospitality today, you’ll know that we have some unique challenges in this environment. So I wanted to bring David back on the show to talk about not just how to survive this moment, but how to thrive as we head into the fall and prepare for 2026. As you’ll hear in this episode, there’s a lot that can be done now, and so much of it comes down to the power of being proactive. So without further ado, let’s get into it.
[intro]David: The last thing we want to be doing is ripping things apart because we have to. We want to be proactive and we want to be doing what I call operational reviews all the time, especially when times are good, because that’s when we can see our way much clearer through the maze. Whereas if we’re doing a cost containment review in the middle of a crisis, we’re going to rush through it. We’re going to make mistakes. We’re going to chew off probably more than we should. And the customers are going to come back. COVID proved that hands down. We thought the world was coming to an end. Well, guess what? It’s not coming to an end. It’s going to continue. People are going to want to come back to hotels and they’re going to want to come back in droves probably.
What we’re heading into now is different because it’s political and the whole world is changing. Nobody likes it, yet it’s still happening. So a lot of us think that something’s just going to snap and correct us back to where things were. I don’t think that’s going to happen for quite a while. I think we’re in for a rough ride. I’m working with a client next month. We’re doing a workshop with all their GMs on exactly this – how to prepare, what to do. And there’s a lot we can do to prepare. I was just working on some material for that workshop, but really, I kind of break it down into three buckets. It’s concepts, it’s actions, and then it’s best practices.
Under concepts, go to my blog, there’s all kinds of things people need to understand when it comes to managing expenses and payroll and getting the most out of your revenues. But here’s a couple of examples. Number one is that if you’re not using a rolling forecast and I use the comparison to playing baseball, right now we’re in the eighth inning of 12 innings, right? We’re in August. And if right now I’m behind in my revenues by, let’s say, half a million bucks, and I’m behind in GOP by a quarter of a million dollars, and I have five months in front of me, September, October, November, December, that’s four months, to make it back, what can I do? And if you’re not doing that right now, that’s the number one opportunity you have is stop, look at what’s happened year to date. Where can we find a quarter of a million dollars in additional revenues or savings to the end of the year? Because I want to make GOP budget. And if I don’t, then that’s a black mark on me and my team. And we’re so close and I can use my rolling forecast to show me the last eight months, how we’ve performed on every single line of data of revenue, payroll and expense and cost of goods. That’s more than enough information to steer me in the right direction as to how, in the next four months, I can save our way back to making budget.
And I’ve seen it happen so many times where we’ve been successful by digging in and reviewing the numbers and doing the kind of due diligence we need to. But I’ve also talked to so many hoteliers who are in the same position. I say, well, what are you doing? And they look at me like I’ve got three heads. And I said, you’re the GM, your job is to lead the team around the finances. And they kind of look at me again like, no, that’s accounting’s job. No, no, it’s your job because all the department managers, they report to you. They don’t report to the controller or the director of finance. So if you’re not in the trenches with your department heads every day, around their payroll and their expenses and how they’re maximizing their resources, they’re not going to get the right message from you as the number one leader in the hotel. And that’s the key takeaway. Be prepared, be proactive, and the number one financial person in the hotel is the GM.
Josiah: Yeah. And I think to that point David, I think one other thing that came up in our last conversation I’ve been thinking about is this notion of the personal accountability, it needs to be in your conversations, but also make it a priority on the schedule. I think you talked about in your leadership meetings for the GM, and you can apply this to whatever context you’re in, but make it a part of the agenda where everyone’s learning, everyone’s looking at the same numbers. It sounds simple, but it’s not a priority until it’s getting time on the agendas of the most important meetings, right?
David: Yeah. Well, a lot of people think that the numbers are after the fact. They also think that if we just get our revenues, the numbers will look after themselves. Some of those things are kind of true, but at the same time, the numbers never look after themselves. Same in your own personal life, right? If you don’t manage your own expenses, you’re going to be overdrafted. You’re going to be maxed on your credit cards. You’re going to be pulling your hair out. And I think we’ve all been there personally growing up and becoming more mature and responsible, where we went through a period of our lives where our finances were out of control. I certainly can admit to it. But I also know that I got it back on track. And how good does that feel? And I always tell people it’s the same in your department. If you’re running a department, you go to the department head meeting every week and you’re worried about being asked about your numbers, that’s not a good feeling. That creates anxiety. So get on top of it. It’s not rocket science. It just takes a little bit of hard work on your part.
And being in an environment where the numbers are just as important as the guests and the colleagues, that’s golden. And I’ve had the pleasure and the benefit of working in environments where GMs have that attitude. And I can think of one lady in particular, every weekday, we would have a morning meeting in her office, and there’d be 20 or 30 people in this big hotel. And we would talk about all the stuff that goes on inside of the hotel, the VIPs, and the groups, and the events, and the guest complaints, and the security report, and the sick call-ins, and housekeeping, and the training, and everything. But we also had a great big part of the agenda every day to talk about the numbers. And the first thing she wanted to hear about, what was the pickup yesterday? Are we going to make our revenues at the end of the month? What’s the shortfall? What’s the surplus? Catering, how are we doing? Restaurants, how are we doing?
And when we started out with her leadership, a lot of people were like, usually we get together in the morning meeting, we just talk about operations. We don’t talk about finances because finances are at the end of the month, right? Well, no, it’s not at the end of the month. It’s actually every day. And we were able to really hone in on a lot of things that were going on because after the discussion around the pickup, she would say, okay, well, housekeeper, what’s your productivity month to date? What’s your hours per room occupied? Are you on track? Actually, yes, I’m ahead of schedule. We’re going to have a great month. We did this, this and this, and it worked out really well. Great. How are we doing in banquets? And she would go down the line. And if you didn’t have the right kind of response, you were staying after school to get it figured out or go see David because you need to get better at this.
Josiah: I want to stay with this notion for a moment, David, because I think you just mentioned a bunch of metrics and I’m thinking for the general manager who’s listening to this, they may have a process, but I’m thinking about what are the most important metrics to look at? You kind of shared some, but I’m especially interested in what are those leading indicators? Because I think what you’re getting at here is how do you get ahead of it? And so I think something as specific as housekeeping and then the hours per occupied room, that feels like a leading indicator of profitability that everyone needs to be thinking about, right? Are there other metrics like that that come to mind where how do you get ahead of this and what are you looking at?
David: I think the number one concept, and it’s the biggest bite to chew off, basically, is that we want all of our department managers to do their budgets. So right now, we’re in budget season. August, September, October, that’s when budgets get put together. They get reviewed. They get pushed back. Someone might get approved. Who knows? But if I don’t push my department managers to prepare their own budgets and then battle it out with the director of finance to get into the consolidation, what gets approved, because normally in the budget process, department heads have rose-colored glasses. They want all of this extra payroll and expenses, and it never flies because it won’t fly, right? So let’s be realistic. We can have maybe three or 4% increase in our expenses or payroll, or maybe even less than that. Telegraph that from the very beginning so people have the right expectation and then set about preparing your budget for next year month by month in detail.
Now, the first time you do that, it’s going to be a lot to chew off, but once you’ve done it, you’re going to know so much more about your department and about how to manage your payroll and your expenses and what’s in each line. That’s what’s so important because the landscape of, let’s say if you’re running a food and beverage outlet, you’ve got a lot of expenses, you’ve got a lot of payroll, you’ve got to understand fixed and variable expenses, you’ve got to understand the direct labor and the indirect labor and how does it all work together and then what are the benefits, costs and the supplemental costs. So, putting it all together the first time, it’s a bit of a stretch, but at the same time, there’s nothing there that’s that tough. You just need to apply the effort. But once you do that, then you roll into next year. All of a sudden, you’re the master of January, February, March. You know what’s going on. And if I say, hey, we don’t have 60% occupancy in January anymore. It’s only going to be 50%. You in your mind know exactly what you can do to adjust your expenses and your payroll to go from 60 to 50. That’s all we want them to do is to flex. But if they don’t ever prepare their budgets, they’re not going to be able to have that understanding of what’s in each line and be able to flex.
Josiah: Well, it seems like that could be so empowering, right? And I think that’s what your life and your work has been all about is empowering people. I’m thinking about all the numbers you’re talking about. It’s a lot to keep track of. Are there any kind of tools or technologies you’re finding your clients are finding useful to keep track of all this?
David: Having great financial statements, not good financial statements, but great financial statements that are set up according to the uniform system. That’s the key. And those financial statements need certain attributes. We want to be able to see productivity. We want to be able to see flow through. We want to be able to see market segmentation. We want to be able to see cost per room occupied. We want to be able to see an enhanced top level statement so we can look at it in 30 seconds and know where we’re making it and where we’re not making it. I see so many financial statements that are just complete garbage because they’re not even set up properly. They don’t have any of these wonderful attributes that, I mean, today’s world with computers, it’s just a matter of getting it set up and programmed and then you’ve got it for that point forward. Every month you’re producing great financial statements.
And then on top of that, you need to have a package of reports where you’ve got a rolling forecast, 12-month report so you can see the trends both behind and ahead. And then have regular reviews of your financial statements with your managers. Do your prelims, do your closings, do your monthly commentaries and make sure everybody’s contributing their part of the story, what happened, what worked. And then I teach my workshop participants the five-step process to follow every month and that’s forecast. So you’ve already done your budget. So now I want you to do your re-forecast 30, 60, 90 days based on the latest revenue management information. What’s going on? Because it’s all going to change all the time. It always changes.
And then from there, I want you to be able to, in the month, for the month, track the revenues. Are we going to make it back to the morning meeting? Right. If I hear about it every day, and if it’s the fifth day of the month and I hear we’re not going to make revenues, I can do something if it’s the 20th of the month and someone says, Hey, we’re not going to make it. It’s too late. The third part is adjust. I want you to adjust your spending based on what you heard at the morning meeting. If we’re not going to make it, then you need to throw stuff off the ship. Reduce your payroll, reduce your expenses. If we’re going to exceed revenues, well, maybe there’s some stuff we can do this month that we haven’t been able to do for a couple of quarters, some deep cleaning or some repair that we were pushing off. So it works both ways.
And then the fourth part is I want you to be able to review at the end of the month. I want you reviewing your financial statement during the prelim. I want you reviewing the general ledger detail listing and make sure that all of your accounts are correct. Because accounting has to close the books, we get invoices from corporate office, we get accruals, we get all the stuff that’s processed all month long. There’s a lot of stuff there and there’s a lot of eyeballs that need to be on pages to understand what’s going on. And the accounting department can’t do that by themselves. They need every manager to look at their own like they own it. And then the fifth part is write. Write your commentary. Tell me what happened with linen this month. Tell me what happened with the chemicals in the kitchen for stewarding. I mean, whatever it is, it’s all part of the picture and there’s someone who’s attached to it. So if we could do those five steps every month, forecast, track, adjust, review, and write, we’re away to the races. Because every month we just rinse and repeat.
Josiah: I love it. It’s about a repeatable system, right?
David: Yeah. And then before long, we have a bunch of department managers that know what’s going on. And I even teach my clients to keep track. Then we put a big chart on the wall with the names of the people down the side who are responsible when the five things across the top, and they have to check in every month. Okay, did you do your forecast in detail and did the director of finance use it in the consolidation? Yes or no. Did you track your revenues? Are you on top of your revenues? If I stop you in the hallway and say, Josiah, today is the 28th of the month, are we going to make revenue this month? And if you look at me like I got two heads, sorry, you failed.
Josiah: Yeah, yeah, you got to know this stuff. I love you getting into the details, David. It’s funny, since we last spoke, I actually joined Actabl that has, they own ProfitSword. And one of the big reasons of me joining was the conversations that we’ve had and the importance of being honest. And so I kind of have found with talking to people using ProfitSword, it’s that, how do you ingest everything? How do you have one place to look at this? Because it feels like a waste if you’re spending all your time kind of pulling this. What I’m hearing you describe is the use of the insight, right? Not the aggregation necessarily.
David: Right, and the whole reason why we produce a financial statement, whatever statement that is, there’s only ever two reasons. And if people can remember this, it’s really helpful. Number one reason is it tells us the score. Are we winning or losing? Are we ahead of budget? Are we ahead of last year? And then the second thing is, if we use it properly, it tells us exactly where the problem is. Right. We can look right at a line item in a department and go, okay, well, why are we spending so much on third party commissions? Okay. Well, we’re addicted to it. We know it. Well, what are we doing about it? Okay. Let’s set aside some really quality time to really dive into this. Let’s get some data from some other hotels in our system. How much are they spending per room occupied? And we got to try and solve this because it’s our single biggest runaway expense. Okay, great. Then what’s next? And then if we can remember that that financial statement points us in the direction, that’s what it’s for.
Josiah: I wonder, David, if we could close talking about something that we touched on in an earlier conversation, but I’d like to unpack a bit. And that is the case for investing in hotels. And the reason I want to get into this is a couple of weeks ago I was at the Hotel Data Conference. It was interesting hearing a lot of operators talk about the dynamics of hotel real estate investment, how that affects expectations of operators. In conversations that we’ve had before, we’ve talked about speaking the language of owners and investors, right? A lot of these reports filter up to owners and investors. I guess my question for you is, what are you seeing and hearing owners looking for now? In this moment, we’re recording as we head into fall 2025. What do you see owners looking for now and how can operators communicate well with them?
David: Well, owners are always looking for superior management, right? They want to make sure that they’ve got the best team managing their property because they’re not there. They’re over here back at corporate office and they leave the keys to the hotel with the GM and say, do a good job, right? So they’re looking for a team that knows what they’re doing, that they’re financially engaged. And quite honestly, most owners would be mortified if they knew just how unorganized financially most hotels are. I won’t get into that, but the brand that has a reputation of being really good with their numbers, they’re going to get more management contracts. They’re going to get more properties to run. The owners are going to look at that brand and go, that’s where I want my management contract to be. So that’s number one is realizing that we can build a reputation around that, just like you can build a reputation around service and colleague engagement and all that great stuff.
The owner wants to hear from their point person as to what we’re doing to manage your business. We’re the stewards of that business, right? So what are we doing? And being able to have an effective monthly or quarterly meeting with the owner’s rep and be able to bring in some of your department managers to talk about things that they’ve done where we’ve revamped our expenses and our payroll based on the latest review leading into 2025, all this political upheaval. That’s magic to the owner’s ears because they all of a sudden hear that you’re being proactive. They don’t have to ask you, hey, what are we doing? I don’t like the numbers that I’m seeing in the forecast, whereas you need to be in front of that and go and tell the story.
And then once that’s happening, then the owner is going to give the GM and the management team so much more leeway when it comes to doing things that they need to do that the owner might otherwise say, we can’t afford that. Whereas if they know you’ve really raked through things and you’re on top of your numbers, they have some confidence. Because if you come to them and say, look, we really need to invest in this training, and they’re going to go, well, we can’t afford that. Whereas if you’ve proven to them over and over again, that you’re ahead of things, they’re going to look at that and go, okay, well, tell me why. And then if you have a good reason as to why I want you to invest in financial leadership training for your managers, because next year we need to do even better and we need to dig in deeper and I need every one of my leaders to understand and be able to deliver on their payroll and expenses to the max, then that’s really powerful.
Josiah: Yeah, if we could just for a couple of minutes, I want to just stay with this thought because to the point of getting ahead, earlier you mentioned doing cost containment reviews, being proactive with that. You came back to this notion of proactivity. I wonder if we could spend a few moments talking about what does it look like to do an effective cost containment review? Because earlier you mentioned if you do this in a thoughtful way and it’s not rushed, you’d be way more effective. What does it look like to do that well?
David: I had what I would call a PhD degree in how to do this from my boss. And he was the regional vice president. I was the regional operations analyst. This was like two decades ago, maybe even longer. But we were kind of forced into doing the same thing. And when I say forced into, it was like he was like, OK, the clouds are mounting and it’s not going to be a smooth ride next year. I want to get on top of this. So we went to every single hotel. And we spent a whole day reviewing the numbers. So we would start out with a focus on the revenues and the marketing and the sales plan. And then from there, we would move into rooms and revenue management and food and beverage and minor operating departments, non-operating departments. We went through the whole schedule, soup to nuts. And we would bring in all the different department managers, along with the GM and the controller and the director of sales probably.
But it was really telling right away which hotels had their act together, which hotels didn’t. And then from there, when we review one hotel, the next hotel is exactly the same. The numbers are just different. So we get into a rhythm. What we did was we followed that up six months later with a re-review of all of those hotels. And then that became, he was so stoked about the results we were getting. Because I mean, all those GMs report to him, it’s his region. He wants to be successful, right? He was seeing tangible results, really good feedback from the teams as well. Because he didn’t come in there and be a prima donna and go, you guys don’t know what you’re talking about. Do this, do this, do this. He would just ask lots of really great questions. And I, for the most part, just listened honestly, but I got such a great education as to how to lead people around the numbers.
Josiah: And it’s all about getting them to want to do it. I love it. David, where can we point our listeners to learn more about you and your work?
David: Well, to my website and to my blog page and mentioning operational reviews, put in that word, search for it, because I’ve written blogs, whole detailed stories about exactly how we reviewed these things and what goes on in one of these meetings and some of the stories about things we uncovered, like plate covers. Someone screwed up and ordered the wrong plate covers. We found this out and it was great. They spent $25,000 and had the wrong size plate covers. And they didn’t want to tell anybody, but it came out in this meeting and it was a point of quite a bit of discussion. It’s all good stuff, but definitely my website, my blog, I have a YouTube page. I mean, those are the three primary places. In the blog tab, there’s over 400 weeks now of every Sunday I publish a blog. And if people want to get in on it upfront, just go to my website. It’ll ask you for your email address. I don’t spam you. I don’t sell it to anybody. All I do is send you an email every Sunday night with the latest video or blog or story or whatever that I have that I’m publishing. It’s a great way to stay on top of financial leadership.
Josiah: It really is. I can vouch for that. I’ll link to that. I’ll link to your book, The Prosperous Hotelier. David, I always learn a lot speaking with you. Thanks for taking the time to talk today.
David: Hey, it’s my pleasure.
