Return on Investment

“How profitable is the hospitality industry?”

Hospitality in Georgia

With over 176,000 hotel rooms, more than 56,000 direct jobs with $2.5 billion in direct wages in our state's lodging inventory, the lodging industry plays a critical role in Georgia's hospitality and tourism industry.

Tourism, the state's second largest industry has a: $35 Billion overall economic impact for our state. $10 billion in direct visitor spending in Atlanta alone. $1.5 Billion in state and local tax revenues generated. $6 Billion in resident wages for Georgia families and more

than 270,000 jobs produced, directly or indirectly. The hospitality industry saves each Georgia household

$760 in state and local taxes. (Visitor taxes accrued to the general fund support Georgia programs that would have been required from Georgia taxpayers).

What is ROI?

Return on investment is a calculation used to determine the ability of a product to generate profits.

It is the amount, or percentage, that you have earned (or lost) on an investment you have made.

In the food-service industry, an operator can either increase sales or reduce costs to generate more profits, or receive a ROI.

Return on Investment Formula

ROI  =R - I x 100 R = Money received after making the investment. I = Original money invested.

Example:  John invests $100 in a mutual fund for one year.  At the end of the year he has $108.  What was his return on investment?

ROI Examples

Nikki invest $20,000 in her business. At the end of the year her business has earned $42,000. What is her return on investment.

Carl invest $100,000 into opening his business. He hopes his business will receive a 20% return on investment. What must his profits be in order to reach his ROI goal?

Increasing Profits

Increase the average check amount. Raise prices of products/services. Encourage additional sales (appetizers,

desserts, etc.) Boost sales through better advertising and

marketing campaigns.