Balance Sheets deserve more attention and are an often-overlooked financial statement. While it is the Operator’s responsibility[1] to ensure accuracy, the simple fact that it isn’t tied to management fees means there is often little effort going into keeping it accurate. Meanwhile, the P&L statement predominates negotiations and is keenly scrutinized by all partners involved in the Hotel. However, it is of vital importance to question the P&L statement’s accuracy, and this can largely depend on the validity of the Balance Sheet. Unfortunately, the importance of a strong Balance Sheet, in particular when it comes to working capital, is not something that is reviewed as regularly or as detailed as a P&L.
