The management company's email says only: "Interior is 5.3% over budget. Please explain." Your stomach drops. But you built the budget on 200 guest days and the owner actually came aboard for 230, so you did not overspend at all — you underspent, per guest, by a comfortable margin. You just have to be able to prove it in one table.
What a Variance Is
A variance is the difference between budget and actual. A variance is information, not a verdict. Overspend against a bigger programme can be excellent performance; underspend caused by a cancelled charter is not performance at all.
- Adverse (unfavourable) variance — actual is higher than budget. Shown in brackets.
- Favourable variance — actual is lower than budget.
Worked Variance Table
| Interior line | Budget (EUR) | Actual (EUR) | Variance (EUR) | % |
|---|---|---|---|---|
| Cellar and beverage | 20,000 | 23,000 | (3,000) | 15.0% over |
| Guest supplies and amenities | 18,000 | 20,700 | (2,700) | 15.0% over |
| Flowers and decor | 12,000 | 9,600 | 2,400 | 20.0% under |
| Laundry and dry cleaning | 9,000 | 11,250 | (2,250) | 25.0% over |
| Uniform | 8,000 | 8,000 | 0 | 0.0% |
| Interior consumables | 7,500 | 6,900 | 600 | 8.0% under |
| Equipment and soft goods | 5,500 | 4,800 | 700 | 12.7% under |
| Total | 80,000 | 84,250 | (4,250) | 5.3% over |
Actual: 23,000 + 20,700 + 9,600 + 11,250 + 8,000 + 6,900 + 4,800 = 84,250. Variance: 80,000 − 84,250 = (4,250), and 4,250 ÷ 80,000 = 5.3% adverse.
Normalising the Variance
The budget assumed 200 guest days at EUR 400.00 per guest day (200 × 400 = 80,000). The owner actually spent 230 guest days aboard.
| Measure | Budget | Actual |
|---|---|---|
| Guest days | 200 | 230 |
| Total spend | 80,000 | 84,250 |
| Cost per guest day | 400.00 | 366.30 |
84,250 ÷ 230 = EUR 366.30 per guest day — about 8.4% below the budgeted rate. The headline overspend is a volume variance; on a price and usage basis the department beat its budget. That is the story you send, in one table, before anyone has to ask twice.
Explaining the Lines
- Laundry 25% over — 30 extra guest days, plus two black-tie events. Volume-driven, expected.
- Cellar 15% over — a guest preference for a wine at four times the usual bottle price. Flag it; it is a guest choice, not a control failure.
- Flowers 20% under — local sourcing and longer rotations. This is a genuine saving; say so.
Onboard Notes
- Explain variances before they are queried. A variance disclosed by you is management; a variance found by them is a surprise.
- Never fix a variance by moving spend into the wrong cost code, or into the wrong month. That is misstatement, not cost control.
- A zero variance every month is not reassuring. It looks managed, in the wrong sense of the word.