In my seven years of business, I've found that hotels consistently outperform traditional rental properties in cash flow – but this reward comes with a catch. Unlike managing a portfolio of long-term leases, hotel operations demand daily attention and constant optimization. This is where the power of a manager's report comes in. While it can't reduce the work required to generate those ridiculous returns, it transforms complex daily operations into clear, actionable data. Think of it as a daily diagnostic tool: rather than piecing together information from multiple sources, you get a complete picture of a hotel's performance in one document. For investors willing to step beyond traditional real estate, understanding how to read these reports can be the key to sustainable high cash flow returns.
What is a manager’s report?
A manager's report is a daily document produced at a hotel that highlights key statistics such as average daily rate (ADR), revenue, and occupancy, among others. These figures are categorized into daily, monthly, and yearly data, providing valuable insights into the property’s performance.
A manager’s report narrates the story of the hotel by comparing the current data to the same periods from last year.
Each franchise has its version of the manager’s report. However, they all provide similar data.
What are the parts of a manager’s report?
Average Daily Rate
The average daily rate (ADR) measures how much a guest pays for a room per night, excluding complimentary rooms and unused inventory.
For example, If a hotel sells 100 rooms in one night and earns $15,000 in room revenue, the ADR would be $15,000 ÷ 100 = $150 ADR.
While this amount may not perfectly reflect what everyone paid, it represents the AVERAGE spent for that particular night. Some guests may have paid $170, while others spent around $130.
ADR is an important data point because it helps benchmark against competitors. If similar properties in the market have a higher ADR, the pricing needs to be adjusted. Tracking historic ADR gives a snapshot of what to expect in the future. This allows the hotel to prepare for higher or lower guest volumes by planning out expenses (future supply orders, payroll hours, etc.).
Room Revenue
Room revenue reflects the income a hotel earns from room sales. By rearranging the variables used to calculate ADR, you can solve for room revenue. For instance, if the hotel’s average daily rate is $150 and sells 100 rooms that night, the room revenue will be $15,000.
Additionally, if the hotel charge for pet fees, no-shows, late check-outs, rollaway/cribs, or similar items, they will be added to the room revenue and recorded in this line item. Sometimes, these can also be listed under other revenue. The other revenue category varies from hotel to hotel and an hotelier’s preferences.
Looking at the manager’s report every day helps you understand how the hotel measures up against last year’s corresponding year’s revenue. In our experience, this helps our team stay focused on improving revenues and statistics year over year.
The manager’s report keeps you connected to the heart of the hotel.
Food and Beverage Revenue
Food and beverage revenue changes from property to property. In select-service hotels, there is only complimentary breakfast, meaning food and beverage revenue will always almost be $0.
Full-service hotels, on the other hand, have restaurants, coffee shops, and bars that sell food and drink. They also rent out their banquet halls and meeting rooms. The daily sales for these items will be reported under the Food and Beverage Revenue section of the manager’s report.
Other Revenue
Other revenue typically includes gift shop sales, but it can also include parking, washing machines, valet, etc.
By separating these revenues, hotels can understand the performance of each department. For instance, when I was evaluating one of our full-service hotels, I noticed the F&B department was underperforming. Using this data, I determined the restaurant, specifically, was not meeting expectations. Thanks to the data from the manager’s report, we were able to make changes and improve restaurant sales by over 100% (by advertising more effectively to our guests).
Rooms Occupied
Rooms occupied are the number of rooms sold in a specific period. This is usually the number of bookings the hotel has. However, the number of rooms occupied may not equal the number of bookings if there are cancellations or no-shows.
Percent (%) Rooms Occupied
Percent (%) Rooms Occupied is calculated by dividing the number of rooms in use by the total number of rooms in the hotel. For example, if a 60-room hotel has 30 rooms occupied, then the (%) of rooms occupied is 50% for that day.
Out of Order Rooms (OOO)
Out-of-order rooms are the number of rooms in a hotel that are not sellable. This can be due to many reasons, such as maintenance issues, cleaning needs, or renovations. It is imperative that hotel rooms are a great product that guests will enjoy, so reducing the OOO can help the hotel meet booking demands.
Complimentary Rooms
Complimentary rooms are the total number of rooms awarded or given to guests. They do not generate revenue and are often used for service recovery.
House Use Rooms
House use rooms are the total number of rooms being used by the property. They are out-of-order rooms but serve a specific purpose. For example, they can be used to store materials for renovation, stock supplies for the hotel, or provide office space to team members.
Arrival Rooms
Arrival rooms refer to the number of rooms ready to welcome new guests who will be checking in. It's essential to make sure that the hotel has enough rooms available for everyone coming in. If the hotel is overbooked, then the property may be on the hook for a room at another hotel nearby.
Departure Rooms
Departure rooms are the total number of rooms that are going to be checking out.
Total In-House Persons
This is the total number of people staying at the hotel. It accounts for all the rooms with multiple people and should accurately count the total number of guests. This number should help the breakfast/food and beverage staff. Occasionally, if guests do not reveal the proper number of people staying in their rooms, this number may not be accurate.
Conclusion on Manager's Report
Mastering the data in a manager's report is essential for any hotel investor seeking consistently high returns. It’s more than just numbers—it’s a daily pulse check on your property’s performance, offering actionable insights to optimize operations and maximize revenue. From understanding ADR and room revenue to tracking occupancy rates and other revenue streams, the manager’s report gives you a comprehensive view of your hotel's strengths and areas for improvement.
As an investor, learning to interpret this data not only positions you to make smarter decisions but also ensures you’re leveraging every opportunity to improve cash flow and reduce inefficiencies. Whether it’s adjusting pricing strategies, identifying underperforming departments, or optimizing occupancy rates, the information in these reports helps turn your investment into a well-oiled, profit-generating machine.
If you’re ready to step beyond traditional real estate investing and tap into the lucrative world of hotel ownership, understanding how to read and act on the manager's report is the key to unlocking sustainable, long-term returns.