aha presentation - nsw hotel trends - june 2014

14
NSW Hotel Trends June 2014

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Presentation for Australian Hotels Association and hotel, bar, hospitality businesses in NSW on the hotels trends as at June 2014. Presented by DFK Crosbie accountants and buinsess advisers.

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Page 1: AHA presentation - NSW Hotel trends - June 2014

NSW Hotel Trends

June 2014

Page 2: AHA presentation - NSW Hotel trends - June 2014

DFK Crosbie are specialist accountants and business advisers to the hospitality industry, with over 50 years of experience. Our specialist team provides:

Business Sales and AcquisitionsExpert advice on lease conditions, business valuations, loan submissions, business structure and Capital Gains Tax implications, profitability analysis, due diligence.

Business FinanceOffering extensive experience in arranging and securing finance, especially for redevelopment or expansion.

Management ServicesAssistance can be provided to help improve your management system procedures, including industry specific benchmarking, cost controls, profit improvement, increase cash flow and pricing options

Tax ServicesAll areas of taxation planning, income tax returns, Capital Gains Tax, Goods & Services Tax and Fringe Benefits Tax

DFK Crosbie provides a comprehensive service to help your business compete in an ever-changing environment

Derrick Eube, PartnerBusiness Services

Page 3: AHA presentation - NSW Hotel trends - June 2014

Liquor Trends

Gross profit margin on liquor

• Top 25% of Hotels achieved average Gross Profit of 68%

• Average of Hotels achieved Gross Profit of 61%

• Bottom 25% of Hotels achieved average Gross Profit of 49%

• To maintain current dollar profit gross profit margin should be 63%

Page 4: AHA presentation - NSW Hotel trends - June 2014

Liquor Trends

Areas impacting gross profit margin

• Price Discounting/Happy Hours

• Shrinkage

• CPI Increases February and August

Page 5: AHA presentation - NSW Hotel trends - June 2014

Liquor Trends

Page 6: AHA presentation - NSW Hotel trends - June 2014

Food Trends

Gross Profit Margin on Food

• Top 25% of Hotels achieved average Gross Profit of 67%

• Average of Hotels achieved Gross Profit of 55%

• Bottom 25% of Hotels achieved Gross Profit 32%

Page 7: AHA presentation - NSW Hotel trends - June 2014

Food Trends

Areas Impacting Gross Profit Margin

• Cost Increase in Food

• Portion Control

• Shrinkage

• Discounting

Page 8: AHA presentation - NSW Hotel trends - June 2014

Gaming Trends

NSW Gaming Statistics

• Across NSW there has been an increase in gaming profitability of 4.2%

• The Central West, South Eastern & Mid North Coast Local Government areas have shown the highest increases

• The Far West and Northern NSW have shown the greatest decline

Page 9: AHA presentation - NSW Hotel trends - June 2014

Region2013 2014 %

Revenue in $m Revenue in $m change

Central Coast 1,534 1,674 9%

Central West 1,398 1,557 11%

Far West 1,184 1,036 -13%

Hunter 1,610 1,738 8%

Illawarra 1,715 1,805 5%

Mid-North Coast 1,290 1,443 12%

Murray 2,068 2,157 4%

Murrumbidgee 1,558 1,464 -6%

North Western 1,329 1,273 -4%

Northern 1,351 1,232 -9%

Richmond-Tweed 1,565 1,569 0%

South Eastern 1,399 1,669 19%

Sydney 3,437 3,729 9%

Gaming Trends - NSW Hotels MAY

Page 10: AHA presentation - NSW Hotel trends - June 2014

Operational Trends

Bar Wages as a percentage to Bar Sales

• Top 25% of Hotels achieved an average of 12%• Average of Hotels achieved 17%• Bottom 25% of Hotels achieved an average of 23%

Food Wages as a percentage to Food Sales

• Top 25% of Hotels achieved an average of 30%• Average of Hotels achieved 36%• Bottom 25% of Hotels achieved an average of 42%

Page 11: AHA presentation - NSW Hotel trends - June 2014

Operational Trends

Increase in operational costs

• Total operating costs as a percentage to sales have increased by nearly 7% over the last 3 years.

• Power costs have increased on average from 1.6% of sales in 2010 to 2.2% in 2014 a 37% rise.

• Pay Television and Sky have increased on average from 1.0% of sales in 2010 to 1.4% in 2014 a 40% rise.

• Superannuation is rising from 9.25% to 9.5%.

• Modern Award Wage increase.

Page 12: AHA presentation - NSW Hotel trends - June 2014

Bank Lending Trends Hotel Lending Environment

• Covenants – continuing concentration on hotels in meeting the banks financial covenants.

• Reporting requirements – more detailed information required to be provided to the bank.

• Loan to Value Ratios – come down in the last 5 – 7 years from 75% to between 50 – 60%.

• Debt Reduction – added pressure to reduce debt.

• Market – competition is strong and the banks are looking to increase business so opportunities available.

Page 13: AHA presentation - NSW Hotel trends - June 2014

Summary Maintain Hotel Profit

• Review pricing regularly

• Monitor stock with strong procedures

• Control expenses

• Negotiate supplier contracts

• Review current interest rate with your bank

Page 14: AHA presentation - NSW Hotel trends - June 2014

Whether you are seeking traditional accounting services or more specialised advice about the performance of your business, we can help. Get in touch with DFK Crosbie today:

Website: www.dfkcrosbie.com.au

Email: [email protected]

Phone: 1800 234 000