In the previous chapters we have presented material on numbers and how they are used to measure financial performance. At this point, students should be forming a solid foundation of financial knowledge and a good understanding of what financial analysis is, what it tells you, and how it is used in explaining hotel operations. The next concepts that we will discuss are other financial reports and methods of financial analysis used to compare and analyze hotel operations.

This chapter refers back to earlier chapters that presented basic accounting concepts and methods of financial analysis. A solid foundation of these fundamentals should now be in place. The next step is to learn about some helpful internal and external reports that can be used in analyzing and comparing operating results. Notice that we always start with operating performance, followed by the analysis of the financial results that operations produce.

Internal comparisons are made to company budgets, forecasts, previous months or periods, and established goals or standards. External reports are market or economic reports that are useful in comparing hotel operating and financial results with a competitive set, the industry average, or other external financial information.