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NOW UPDATED FOR 2006!
The most recent benchmarking data for Motels is now available, both in print and in downloadable PDF format, with your purchase of the Motels Business Benchmarking Guide. (NOTE: 2006 updates not yet available in online HTML subscription version of this guide - please call the MAUS Sales Centre on 1 300 300 586 for further info.)
This Small Business Profile presents the results of a survey of Motels for the financial years up to June 30, 2004. The survey was based on 30 businesses.
One of the challenges in motels is to make sure that all the other people get paid before the owner: the landlord or the bank, the suppliers, the cost of leasing or depreciation on the equipment and so on. Many of these costs are fixed, they just keep rolling on, even if there are no guests!
For these reasons, a major focus has to be on keeping the occupancy rate up - location, promotion, repeat trade, special deals for the bus or tour companies, and special but targeted deals during the quiet months, are all important in driving that revenue line ever higher. It's necessary to spend regularly on the presentation of the premises and rooms, and to manage the variable costs such as labour, power and so on. If the guests don't keep the owners up late at night, then juggling these challenges certainly will!
Survey Results
These are the results of a survey of motels. These results should not be considered to be representative of all motels in Australia. However, they will allow business owners to identify strengths and weaknesses in the ability of their business to generate revenue, control expenses and earn sufficient profits. This is done by identifying these elements of business performance and comparing them with benchmark performance levels currently being achieved by the sample of businesses in this survey.
Most of the motels participating in the survey were from the eastern states of Australia. New South Wales was the most heavily represented area, while there were no firms participating from Tasmania or the Northern Territory. There were also firms from New Zealand within the sample.
Around 46% of the participating motels were from country towns with less than 20,000 population. The remaining motels were divided between larger regional cities and towns (population over 20,000) and suburban/major regional cities and capital cities.
Around 43% of the motels surveyed were located on highways, while around 22% of businesses were located in coastal/resort areas.
The following table will give you a snapshot of the variance in results found in your industry for various Key Performance Indicators (KPIs). Each KPI (shown in rows) should be considered independently of each other. For example, a business with a high percentage gross profit would not normally also have a high relative percentage of their income spent on wages.
For each KPI, the table shows the average, high and low results found in the business surveyed. The KPIs should not be 'added together' under the high and low columns as they do not necessarily relate to the same business.
The KPIs show the 6 th highest and 6 th lowest actual result for each performance indicator. The range of values shown therefore covers the middle 80% of reported results.
| Indicator | Average | Low | High |
|---|
| Total Income | $522,285 | $181,934 | $934,719 | | Costs of Goods Sold | 10.88% | 0.00% | 19.16% | | Advertising, Promotion, Franchise or Group
Fees | 3.36% | 0.84% | 7.33% | | In-room Supplies | 2.65% | 0.00% | 7.86% | | Other Depreciation, Lease and Hire Purchase | 5.97% | 2.06% | 10.29% | | Rent of Premises # | 19.35% | 14.74% | 21.89% | | Other Occupancy Costs | 8.00% | 4.29% | 12.96% | | Interest, Bank Charges, etc. | 6.83% | 0.81% | 15.77% | | Telephone & Fax | 1.91% | 1.14% | 3.24% | | Employees' Wages & Salaries | 17.56 | 8.02% | 31.30% | | Replacements, Repairs, Maintenance, Hire of
Plant & Equipment | 5.21% | 2.53% | 7.75% | | Net Profit (bos)* | 21.85% | 5.22% | 41.61% | | Proportion of Income Derived from Accommodation | 84.00% | 59.00% | 100.00% | | Number of Guest Rooms | 28 | 16 | 38 | | Average Guest Room Area (sq mtr) | 33 | 18 | 48 | | Occupancy Rate for Year | 63.00% | 44.00% | 76.00% |
# calculation excludes
any firms in freehold premises *(bos) before owners' salaries
and benefits
So, how does your firm 'stack up' against these averages? These results will give you an idea of where your business falls in relation to the sample and give you a better understanding of your relative strengths and weaknesses.
The remaining expense items each represented less than 2% of total income on average, however some businesses reported some larger results for such items as:
- Commissions to Agents of up to 5.46%;
- All Insurance of up to 3.97%;
- Staff On-Costs of up to 5.36%;
- Vehicle Operating Costs of up to 5.46%;
- All Other Expenses of up to 5.05%.
To summarise this, larger businesses had:
- Owners who worked fewer hours per year
- Higher staffing costs, but largely as a result of the changed staffing structure
- Lower non-salary overheads
- Higher productivity per room, assisted by a higher proportion of income being derived from sources other than accommodation.
The more profitable businesses:
- Were much larger, in number of rooms, number of people and in turnover too
- Had higher productivity per person and per dollar of wage cost
- Had a higher occupancy rate over the year, which is important since they derived a higher proportion of revenue from accommodation
- Had savings in many areas of overhead costs
- Had a personnel mix with fewer owners, and much higher numbers of employees
- Had relatively more equity invested in the business.
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