What is a P&L Report?
P&L = Profit & Loss Statement
A financial report that shows your hotel's income (revenue) minus expenses over a period (monthly, quarterly, yearly). It tells you whether your hotel made a profit or loss.
Why P&L Matters for Hotels
Think of P&L as your hotel's "report card" for financial health:
- Know if you're profitable: Are you actually making money?
- Track trends: Is profit increasing or decreasing month over month?
- Identify problems: Which expenses are eating into your profits?
- Make decisions: Can you afford to hire more staff or renovate?
- Get loans: Banks ask for P&L before lending
- Tax filing: Required for income tax returns
Basic P&L Structure
Revenue - Expenses = Profit (or Loss)
If revenue is higher than expenses, you have profit. If expenses exceed revenue, you have a loss.
| Section | What It Includes |
|---|---|
| Revenue (Income) | Money coming in - room sales, F&B, other services |
| Cost of Sales | Direct costs - F&B ingredients, amenities, OTA commissions |
| Gross Profit | Revenue minus Cost of Sales |
| Operating Expenses | Salaries, utilities, maintenance, marketing, rent |
| Operating Profit (EBITDA) | Gross Profit minus Operating Expenses |
| Other Expenses | Interest, depreciation, taxes |
| Net Profit/Loss | Final profit after all deductions |
Hotel Revenue Categories
Your P&L should break down revenue by department:
1. Room Revenue (Typically 60-70% of total)
- Room sales from all sources (direct, OTA, corporate)
- Should show ADR and occupancy for context
2. Food & Beverage Revenue (20-30%)
- Restaurant sales
- Bar/beverage sales
- Banquet/event revenue
- Room service, minibar
3. Other Revenue (5-10%)
- Spa and wellness
- Laundry services
- Parking fees
- Business center
- Telephone (if any)
Hotel Expense Categories
Cost of Sales (Variable Costs)
- F&B Cost: Food ingredients, beverages (target: 25-35% of F&B revenue)
- OTA Commissions: 15-25% of OTA booking value
- Guest Supplies: Toiletries, amenities, cleaning supplies
Operating Expenses (Fixed/Semi-Fixed)
- Payroll: Salaries, PF, ESI (typically 25-35% of revenue)
- Utilities: Electricity, water, gas, internet
- Rent/Lease: If property is rented
- Maintenance: Repairs, upkeep, AMC contracts
- Marketing: OTA promotions, advertising, website
- Admin: Insurance, licenses, professional fees
Sample Hotel P&L
Monthly P&L - 20 Room Budget Hotel
| REVENUE | |
| Room Revenue | ₹8,00,000 |
| F&B Revenue | ₹1,50,000 |
| Other Revenue | ₹30,000 |
| Total Revenue | ₹9,80,000 |
| COST OF SALES | |
| F&B Cost (30%) | ₹45,000 |
| OTA Commissions | ₹1,20,000 |
| Guest Supplies | ₹25,000 |
| Gross Profit | ₹7,90,000 |
| OPERATING EXPENSES | |
| Salaries & Wages | ₹2,50,000 |
| Electricity | ₹80,000 |
| Rent | ₹1,00,000 |
| Maintenance | ₹30,000 |
| Marketing | ₹20,000 |
| Admin & Other | ₹40,000 |
| Operating Profit | ₹2,70,000 |
| OTHER EXPENSES | |
| Loan Interest | ₹50,000 |
| Depreciation | ₹30,000 |
| Net Profit | ₹1,90,000 |
Net Profit Margin: 19.4% (₹1,90,000 ÷ ₹9,80,000)
Key P&L Ratios to Track
| Ratio | Formula | Healthy Range |
|---|---|---|
| Gross Profit Margin | Gross Profit ÷ Revenue × 100 | 70-80% |
| Operating Profit Margin | Operating Profit ÷ Revenue × 100 | 25-40% |
| Net Profit Margin | Net Profit ÷ Revenue × 100 | 15-25% |
| Payroll Ratio | Payroll ÷ Revenue × 100 | 25-35% |
| F&B Cost Ratio | F&B Cost ÷ F&B Revenue × 100 | 25-35% |
Simple Rule: If your net profit margin is below 10%, something needs attention. Either revenue is too low, or expenses are too high. Compare with previous months to identify the problem.
Common P&L Mistakes
1. Mixing Personal & Business Expenses
Keep personal expenses separate. Your P&L should only show hotel business expenses.
2. Not Categorizing Properly
OTA commission should be a separate line item, not hidden in "marketing." This helps you see true acquisition costs.
3. Ignoring Depreciation
Furniture, AC, equipment lose value over time. Include depreciation to see true profit.
4. Missing Revenue Streams
Did you include parking, laundry, late checkout fees? Small amounts add up.
Pro Tip: Create a P&L template in Excel or use your accounting software (Tally) to generate monthly P&L. Compare month-on-month and same-month-last-year to spot trends.
How to Improve Your P&L
Increase Revenue
- Improve occupancy through better marketing
- Increase ADR during high-demand periods
- Upsell F&B and other services
- Drive more direct bookings (lower commission)
Reduce Expenses
- Negotiate better rates with suppliers
- Reduce energy costs (LED, solar, efficient AC)
- Optimize staffing based on occupancy
- Review all subscriptions and services
P&L Frequency
- Daily: Revenue and occupancy tracking (from PMS)
- Monthly: Full P&L review with management
- Quarterly: Detailed analysis, compare with budget
- Yearly: Annual P&L for tax filing and planning
Important: Never make major business decisions without looking at your P&L. Hiring staff, renovating, expanding - all need to be backed by your financial data.