Coffee BNG Hotel

Evaluating Front Office Operations

Evaluating the results of front office operations is an important management function. Without thoroughly evaluating the results of operations, managers will not know whether the front office is attaining planned goals. Successful front office managers evaluate the results of department activities on a daily, monthly, quarterly and yearly basis. Some important tools which front office managers can use for evaluating front office operations and to evaluate the success of front office operations are:

  1. The Daily Operations Report for Evaluating Front Office Operations– The daily operations report also known as the manager’s report, the daily report or the daily revenue report, summarizes the hotel’s financial activities during a 24-hour period. The daily operation report has a summary of cash, bank accounts, revenue and accounts receivable. Copies of the report are generally distributed to all department and division managers.
  1. Occupancy Ratios – Occupancy ratios measure the success of the front office in selling the hotel’s primary product – guestrooms. The following room statistics must be gathered to calculate basic occupancy ratios:
  • Number of rooms available for sale
  • Number of rooms sold
  • Number of guests
  • Number of guests per room
  • Net rooms revenue

Occupancy ratios that can be calculated from these data include occupancy percentage, multiple or double occupancy ratio, average daily rate, revenue per available room (REVPAR), revenue per available customer (REVPAC), and average rate per guest. These ratios are calculated on a daily, weekly, monthly and yearly basis.

  • Occupancy percentage = Number of Rooms Occupied / Number of Rooms Available
  • Multiple Occupancy Ratio = Number of Rooms Occupied by More Than One Guest / Number of Rooms Occupied
  • Average Guests per Rooms Sold = Number of Guests /Number of Rooms Sold
  • Average Daily Rate = Total Room Revenue /Number of Rooms Sold
  • REVPAR   Total Room Revenue / Number of Available Rooms
  • REVPAC   =                Total Revenue /Number of Guests
  • Average Rate per Guest = Total Room Revenue / Number of Guests
  1. Rooms Revenue Analysis – Front office staff members are expected to sell rooms at the rack rate unless a guest qualifies for an authorized discounted room rate. A room rate variance report lists those rooms that have been sold at other than their rack rates. One way for front office managers to Evaluating Front Office Operations and the sales effectiveness of the front office staff is to generate yield statistic, which is actual rooms revenue as a percentage of potential rooms revenue.

Yield Statistic =       Actual Rooms Revenue / Potential Rooms Revenue

  1. The Hotel Income Statement – The hotel’s income statement provides important financial information about the results of hotel operations and Evaluating Front Office Operations for a given period of time. The period may be one month or longer but should not exceed more than one business year. The hotel’s statement of income is also called a consolidated income statement because it presents a complete picture of all the hotel’s financial operations.

SAMPLE CONSOLIDATED STATEMENT OF INCOME

WESTVIEW HOTEL
Summary Statement of Income
For the Year ended 12/31/2012
OPERATED DEPARTMENTS SCHEDULE NET REVENUE COST OF SALES PAYROLL & RELATED EXPENSES OTHER EXPENSES INCOME (LOSS)
Rooms 1 6070356 1068383 473487 4528486
Food 2 2017928 733057 617705 168794 498372
Beverage 3 778971 162258 205897 78783 332033
Telecommunications 4 213744 167298 31421 17309 -2284
Rentals & Other Income 5 188092 188092
Total Operated Departments 9269091 1062613 1923406 738373 5544699
Undistributed Operating Expenses
Administrative And General 6 227635 331546 559181
Marketing 7 116001 422295 538296
Property Operation And Maintenance 8 204569 163880 368449
Utility Costs 9 546331 546331
Total Undistributed Operating Expenses 548205 1464052 2012257
Totals 9269091 1062613 2471611 2202425 3532442
Income After Undistributed Operating Expenses 3532442
Rent, Property Taxes And Insurance 641029
Income Before Interest, Depreciation, Amortization And Income Taxes 2891413
Interest Expense 461347
Depreciation And Amortization 552401
Income Taxes 469810
Gain On Sale Of Property (+) 1574
Net Income           1409429
  1. The Rooms Schedule – the hotel’s income statement shows only summary information. The separate departmental income statements prepared by each revenue center provide more detail and to help Evaluating Front Office Operations. Departmental income statements are called “schedules” and are referenced on the hotel’s statement of income.

SAMPLE ROOMS DIVISION INCOME STATEMENT

ROOMS – SCHEDULE # 1
WESTVIEW HOTEL
For the year ended 12/31/2012 Current Period
Revenue 6124991
Allowances 54635
Net Revenue 6070356
Expenses
Salaries and Wages 855919
Employee Benefits 212464
Total Payroll and Related Expenses 1068383
Other Expenses
Internet/Satellite Television 20100
Commissions 66775
Complimentary Guest Services 2420
Contract Services 30874
Guest Relocation 1241
Guest Transportation 48565
Laundry and Dry Cleaning 42495
Linen 12140
Operating Supplies 122600
Reservations 40908
Telecommunications 12442
Training 7122
Uniforms 60705
Other 5100
Total Other Expenses 473487
Total Expenses 1541870
Departmental Income 4528486
  1. Rooms Division Budget Reports – The hotel’s accounting division also prepares monthly budget reports that compare actual revenue and expense figures with budgeted amounts. These reports can provide timely information for evaluating front office operations. Front office performances are often judged according to how favorably the rooms division’s monthly income and expense figures compare with budgeted amounts which is very important to Evaluating Front Office Operations.

SAMPLE MONTHLY ROOMS DIVISION BUDGET REPORT

LANDMARK HOTEL
BUDGET REPORT – ROOMS DIVISION
FOR JANUARY 2013
    Variances
Actual Budget Amount %
Revenue
Room Sales 156240 145080 11160 7.69
Allowances 437 300 137 (45.67)
Net Revenue 155803 144780 11023 7.61
Expenses
Salaries and Wages 20826 18821 (2005) (10.65)
Employee Benefits 4015 5791 1776 30.67
Total Payroll and Related Expenses 24841 24612 (229) (0.93)
Other Expenses
Commissions 437 752 315 41.89
Contract Cleaning 921 873 (48) (5.50)
Guest Transportation 1750 1200 (550) (45.83)
Laundry and Dry Cleaning 1218 975 (243) (24.92)
Linen 1906 1875 (31) (1.65)
Operating Supplies 1937 1348 (589) (43.69)
Reservation Expenses 1734 2012 278 13.82
Uniforms 374 292 (82) (28.08)
Other Operating Expenses 515 672 157 23.36
Total Other Expenses 10792 9999 (793) (7.93)
Total Expenses 35633 34611 (1022) (2.95)
Departmental Income 120170 110169 10001 9.08%
Sending
User Review
3 (8 votes)

Leave a Comment

Your email address will not be published. Required fields are marked *