Seeing a resort’s pre-season cash gap before it arrives
A season that is profitable on paper can still strain cash before opening. A practical framework for spotting the gap weeks in advance with a weekly cash projection.
For a seasonal resort, the riskiest period of the year is often not the season itself but the weeks just before it. The P&L may show a strong year; cash in the bank, however, depends on the week in which costs are paid and revenue is collected.
Why profit and cash diverge
Profit follows accrual accounting; cash follows the collection and payment calendar. In a seasonal hotel, the gap between the two widens before opening:
- Costs come early. Maintenance and refurbishment, seasonal hiring, opening inventory, insurance and licence renewals are paid weeks before the first guest arrives.
- Revenue comes late. Tour operator and agency collections usually arrive after the stay, on contractual terms. Early booking deposits cover only part of the gap.
- Loan instalments ignore the calendar. Investment loans keep falling due through the winter months when there is no revenue.
The result: even with a balanced annual budget, cash can drop below the agreed floor in April and May.
Why a monthly view is not enough
A monthly cash table hides pressure within the month. May may close positive overall; but if payroll and a large supplier payment fall in the same week while collections arrive in the last week, the balance turns negative mid-month.
That is why short-term cash management uses a weekly view. The common horizon is 13 weeks: long enough to cover a quarter, short enough for weekly estimates to stay realistic.
The skeleton of a 13-week projection
Build the same structure for every week:
| Line | Content |
|---|---|
| Opening balance | All bank accounts and cash on hand, by currency |
| Cash in | Agency and tour operator collections, direct and online sales, card settlements, deposits |
| Cash out | Payroll and social security, suppliers, utilities, taxes, rent, capital spending |
| Financing | Drawdowns and loan instalments |
| Closing balance | Next week’s opening balance |
Add a minimum cash threshold next to the closing balance. It should rest on something concrete, such as one payroll cycle, the next loan instalment and a buffer for an unexpected breakdown. The projection’s real job is to show early which weeks fall below that threshold.
Where the inputs come from
A projection is only as reliable as the sources behind each line:
- Known commitments: loan schedules, leases, issued cheques and dated supplier invoices. These are not estimates; they are a calendar.
- Planned movements from the budget: the workforce plan gives the payroll calendar, the revenue plan gives expected collections, purchasing gives payment needs. The key is to place revenue on its collection date, not the month of stay.
- Actual movements: update the opening balance every week from bank and cash movements. A projection that never replaces estimates with actuals loses credibility within weeks.
Read currency risk separately
In many Turkish resorts a large share of revenue is in foreign currency while much of the cost base is in Turkish lira. Keeping the projection by currency is the only way to see how an exchange rate move affects each week. A single-currency table shows the total; it does not show which account runs short of which currency.
Your options once you see the gap
Seeing the gap weeks ahead widens your options:
- Rework the payment calendar: agreeing terms with a supplier early is always easier than asking for a delay in the final week.
- Bring collections forward: early booking deposits, interim payments from agencies or prepaid campaigns.
- Sequence spending: move capital items that do not affect the season to later.
- Plan financing in time: discuss credit lines with the bank before the need arises.
Run scenarios
One projection is not enough. Run at least two more: collections arriving two weeks late and opening-week occupancy below expectations. If the same weeks fall below the threshold in both, the action plan should focus on those weeks.
In DRM Budget, the cash flow module brings actual bank and cash movements, known commitments and planned movements from the budget onto one calendar, and shows the 13-week projection by property and currency. In the executive mobile view, bank balances and upcoming loan instalments can be followed from a phone.