Cost Containment & Revenue Development

Home » Cost Containment & Revenue Development » Operating Margin & Business Unit Performance
Operational Improvements

Operating Margin

The operating margin is defined as the net revenue before retirement of internal debt, allocated cost payments and reinvestment to/from reserves. In FY 2005, the operating margin was $15M, which grew to $31M in FY 11, for a cumulative growth average of 58.7% and a year over year growth average of 13.4%.

Improving Operating Efficiency

The success of our revenue enhancement is due in part to efforts to improve operating efficiency and productivity. Between FY 2005 and FY 2011, Business Services' revenue increased 13.8%; our staff decreased by 3.95% resulting in revenue per employee increasing by 19.2%.

Driving Business Unit Improvement

BSD had made strategic investments in its operating units that have resulted in increased revenue. Examples include:

  • In Fiscal Year 11, a $9.8 M renovation was completed at the Inn at Penn which resulted in a 2.8% increase in occupancy and a 19.3% increase in revenue per available room.
  • In Fiscal Years 09 & 10 a $9.3 M renovation was completed at the Sheraton which resulted in a 13.5% increase in occupancy and a 28.5% increase in revenue per available room.
  • From 1999-2011 $286,6M was invested to renovate the College Houses (Quad, Rodin, Harnwell, Harrison, Du Bois, Sansom Place East and West and Kings Court English House). As a result, from FY05 to FY11, revenue from housing has increased 33% and conference services 51% and a 99% occupancy rate has been maintained.
  • The "Procure-to-Pay" (P2P) streamlined our financial processes and made it easier for our suppliers to do business at Penn. As a result supplier payment performance increased 67.2% from FY 06 to FY 11.