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Understanding of Flow through in Hotel Business
Rating: 4.3 out of 5(7 ratings)
702 students

Understanding of Flow through in Hotel Business

Flow through concept by describing the business scenarios, benchmarks, calculation methods, and effectiveness
Created byGanesh Mathur
Last updated 5/2025
English

What you'll learn

  • How to calculate Flow through.
  • What are 4 business scenarios to assess the flow through. How we calculate it?
  • Understanding its impact on business, the indicators which can improve it to maximize profitability.
  • What are the activities and events in business unit, impacting profitability in short term period.
  • It will give the students a unique analytical skill to find out the business performance by review P&L quickly.

Course content

3 sections • 9 lectures • 46m total length

  • Introduction to flow-through concept4:10

    Flow-through is concept which anyone whether active or in-active stage of reviewing business should be aware of as it represents the success of business and focus on the efforts made by the team to make it a successful venture.

    To analysis any two period or actual with budgeted results or even comparison of two or more business units can be done by having flow-through calculation as it it reflects the relationship between variance in profit and revenue.

  • Benchmark & 4 business Scenarios6:10

    In this lecture, we discuss the 'benchmark' of flow-through which generally differ based on the industry but the most accepted benchmark is discussed.

    Also, discussion about 4 business scenarios in which the financial results are divided so that the user can place the correct formula to calculate the flow-through. The important point here is that we do have four different formulas to calculate the flow-through and each one applies to a unique business scenario, explained in this part of course. 

Requirements

  • Basic understanding of financial statements in enough to go through this course and make it useful in your working life.
  • The learning process simple, just by checking the revenue and profit of two periods, the growth can be ascertained.

Description

Any business owner, investor, manager, or consultant needs to understand the concept of flow-through. In technical terms, it refers to how much of your period's revenue is converted into profit, compared to the budget or previous periods.

It is important to know how flow-through is calculated in various situations. a solid understanding of this concept will give individuals an advantage in managing their business effectively, as this lecture explains the key factors that impact profit conversion.

While comparing any period, there will be only four situations

Revenue UP and Profit UP

Revenue UP and Profit DOWN

Revenue DOWN and Profit DOWN

Revenue DOWN and Profit UP

The calculation methods for the above four situations are different and defined differently.

Management needs to decide whether to continue or change the working model. They can make strategic decisions after the flow-through is calculated.

This makes 'Flow-through' calculation a unique tool not only for owners or investors, but also for the managers and the team responsible for running the business efficiently.

Also, if any business has a negative flow-through, which is because of lower revenue with the compered period, then the 'recovery of loss' is calculated.

So, a ratio below -50% is considered a better recovery because it shows the percentage of costs and expenses recovered in an adverse situation.

Who this course is for:

  • Business owners, Asset managers, Finance professionals, Managers
  • University students learning financial aspects.
  • Hotel & catering school students.

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