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    Accommodation Operation

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    Piyush Agarwal
    The document discusses budgeting and budgetary control in hotel housekeeping operations. It defines budgets as plans that project anticipated revenue and expenses. There are two main types of budgets: capital budgets that plan large asset expenditures, and operating budgets that forecast routine operational expenses and revenues. Preparing accurate budgets involves gathering historical data, forecasting occupancy levels, and determining expected expenses as percentages of anticipated revenue for each budget period. Budgets are important as they set objectives, provide performance guidelines, and allow managers to evaluate actual results against budgets.

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    Accommodation Operation

    Uploaded by

    Piyush Agarwal
    81 views21 pages
    The document discusses budgeting and budgetary control in hotel housekeeping operations. It defines budgets as plans that project anticipated revenue and expenses. There are two main types of budgets: capital budgets that plan large asset expenditures, and operating budgets that forecast routine operational expenses and revenues. Preparing accurate budgets involves gathering historical data, forecasting occupancy levels, and determining expected expenses as percentages of anticipated revenue for each budget period. Budgets are important as they set objectives, provide performance guidelines, and allow managers to evaluate actual results against budgets.

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    The document discusses budgeting and budgetary control in hotel housekeeping operations. It defines budgets as plans that project anticipated revenue and expenses. There are two main types of budgets: capital budgets that plan large asset expenditures, and operating budgets that forecast routine operational expenses and revenues. Preparing accurate budgets involves gathering historical data, forecasting occupancy levels, and determining expected expenses as percentages of anticipated revenue for each budget period. Budgets are important as they set objectives, provide performance guidelines, and allow managers to evaluate actual results against budgets.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    81 views21 pages

    Accommodation Operation

    Uploaded by

    Piyush Agarwal
    The document discusses budgeting and budgetary control in hotel housekeeping operations. It defines budgets as plans that project anticipated revenue and expenses. There are two main types of budgets: capital budgets that plan large asset expenditures, and operating budgets that forecast routine operational expenses and revenues. Preparing accurate budgets involves gathering historical data, forecasting occupancy levels, and determining expected expenses as percentages of anticipated revenue for each budget period. Budgets are important as they set objectives, provide performance guidelines, and allow managers to evaluate actual results against budgets.

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    © All Rights Reserved
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    Download as pptx, pdf, or txt
    of 21

    ACCOMMODATION OPERATION

    BHM15504

    BUDGET AND BUDGETARY CONTROL

    SUBMITTED BY- SUBMITTED TO-


    PIYUSH AGARWAL MR. YATENDRA KUMAR
    AKASH PATYANAK VICE PRINCIPAL
    B.SC.(HM) 3RD YEAR
    CONTENT

    INTRODUCTION
    DEFINITION
    TYPE OF BUDGET
    BUDGET PROCESS
    PREPARATION OF BUDGET
    PREPARATION OF OPERATING BUDGET
    HOTEL INCOME STATEMENT
    BUDGET REPORTS
    BUDGET EXPENSES
    INTRODUCTION:-
    • Since housekeeping is not a revenue-generating
    department, the executive housekeeper’s primary
    responsibility in achieving the property’s financial goals is
    to control the department’s expenses. In addition to
    salaries and wages, inventoried items are a key area for
    the executive housekeeper’s exercise of cost control
    measure.
    • Budget is one of the main planning activities for an
    executive house-keeper. It is the process by which based
    on actual performance of establishment in the past
    estimates of expenditure, & receipts are made &
    adjusted for forecasting future outcome.
    DEFINITION:-
    • A budget may be defined as plan which projects both the
    revenue the hotel anticipates during the period covered
    by the budget & the expenses require to generate the
    anticipated revenue.
    TYPES OF BUDGET:-
    Two types of budgets are used in managing a hotel’s financial
    resources: -
    1. Capital budget
    2. Operating budget
    Capital budget:-
    It plans for the expenditure of company assets for costly items.
    Typically, these items are not used up in the normal course of
    operations; instead they have a lifespan that exceeds a single
    year. E.g., furniture, fixtures, equipment, etc. In addition major
    initial purchases of recycled inventoried items (linen, towels,
    uniforms, etc) may fall under capital budget as they have a
    relatively long useful life.

    Operating budget:-
    It forecasts revenues and expenses associated with the routine
    operations of the hotel during a certain period. Operating
    expenditures are those costs a hotel incurs in order to generate
    revenue in the normal course of doing business.
    SOME POINTS KEEP IN MIND AT THE TIME OF
    PREPARATION OF BUDGET BY THE EXECUTIVE
    HOUSEKEEPER:-

    • A budget should not be prepared at the last minute. Ideally the house-
    keeper should have a list place in a convenient spot, in the office, & makes
    notes through out the year, for improvement.
    • Discussion should have previously taken, place, between the general
    manager, & the other department heads in order that they are aware of
    future company objectives which may be reflected.
    • Past records & previous budget may be used as a basis for the new one,
    taking into the account of inflation percentage..
    • The house- keeper must also consider any change in the companies
    purchasing policy.
    • He should also be aware of new technology & better product which are
    appeared in the market.
    BUDGET PROCESS:-
    • A budget is a plan. It projects both the revenues the hotel anticipates during the
    period covered by the budget and the expenses required to generate the
    anticipated revenues. The executive housekeeper’s responsibility in the budgetary
    process is two-fold.
    • First, he/she is involved in the planning process that leads to the formulation of
    the budget (what expenses the housekeeping department will incur in light of
    forecasted room sales).
    • Second, since the budget represents an operational plan for the year, the
    executive housekeeper ensures that the department’s actual expenses are in line
    with budgeted costs and with actual occupancy level. Budget may need to be
    adjusted in light of unforeseen or changing circumstances. As a plan, a budget is
    also a guide. It provides the managers with standards by which they can measure
    the success of the operations. By comparing actual expenses with allocated
    amounts, the executive housekeeper can track the efficiency of housekeeping
    operations and monitor the department’s ability to control it’s expenses within
    the prescribed limits The operating budget outlines the financial goal of the hotel.
    It relates operational costs to the year’s expected revenues. The yearly operating
    budget is broken down into budgets for each month of the fiscal year.
    PREPARATION OF BUDGET:-
    • IN A SMALLER SCALE HOTEL

    • IN A LARGER SCALE HOTEL


    SMALL HOTELS:-
    • In a smaller scale hotel or facility usually there is Front Office,
    Housekeeping and Maintenance and the expenses are
    controlled mainly by the Owner through the General Manager.
    They were the key decision maker in preparing the yearly
    budget with the assistance of an accountant or accounting
    firm. The budgeted amount needed to operate for the whole
    year is based on the expenses incurred on the previous years
    and other related occasions that will affect the preparation of
    budget for the coming year.
    LARGE HOTELS:-
    • In a larger scale hotel, expenses can be very complicated since
    the operation varies from the departments created for the
    smooth operation of the hotel. Some international hotels, the
    budget is being prepared by each department head through
    the assistance of the Financial Controller and General
    Manager then submitted to the owner/ corporation for
    approval. Once sanctioned, each department head is then
    held accountable in ensuring that the budget allocated is
    monitored and controlled based on the occupancy
    percentage. The General Manager gets a copy of the results of
    the budget every end of the month and discusses them with
    the department head.
    Example of departments in a larger scale hotel are: Administration, Front Office,
    Housekeeping, Laundry, Engineering, Food & Beverage, Kitchen, Finance, Human
    Resources, Recreation and any other departments created to suit the function and smooth
    operation of the hotel. Each of these departments have sub-departments such as Front
    Office with Reservation and Bell Service/ Concierge; Housekeeping with Laundry, Uniform,
    Linen, Tailoring, Flower shop, Gardening and Landscaping, Upholstery shop (the latter can
    be assigned to Engineering as well); Engineering with Carpentry, Masonry, Electrical,
    Mechanical, Computer Technician etc.; Food & Beverage with Banqueting and Outside
    Catering; Kitchen with Pastry shop; Finance with Purchasing, Receiving & Storage;
    Recreation with Swimming Pool, Golf Course, Tennis Courts, Spa etc.; Human Resources
    with Training and Clinic.
    HOTEL INCOME STATEMENT:-
    • The statement of income provides important financial information about
    the results of hotel operations (actual expenses as well as the net income)
    for a given period, which maybe monthly, quarterly or more but within a
    business year.
    • Separate departmental income statements prepared by each revenue
    center presents more detailed information. Housekeeping is related to the
    rooms’ division income statement. The executive housekeeper is directly
    concerned with some items listed in the expense section. They are: -

    • Salaries and wages


    • Contract cleaning
    • Laundry and dry-cleaning
    • Linen
    • Operating supplies
    • Uniforms
    In the budget planning process the room manager will solicit information from the
    executive housekeeper concerning the expense category falling under
    housekeeping department’s area of responsibility. Expected expenses are assessed
    as a percentage of the revenue forecasted for room sales. This percentage is
    standardized in relation to generated revenues.
    Budget reports

    Based on monthly income statements, a room’s division budget report is prepared,


    which shows the variances between budgeted expenses and actual expenses.
    When the actual revenue exceeds the budget, or budgeted expenses exceeds
    actual, it is a favorable variance. When the budgeted revenue exceeds the actual or
    the actual expenses exceed the budgeted ones, it is an unfavorable variance.
    Percentage variances are determined by dividing the variance by the budgeted
    amount.
    BUDGET REPORTS:-

    • Based on monthly income statements, a room’s division


    budget report is prepared, which shows the variances
    between budgeted expenses and actual expenses. When the
    actual revenue exceeds the budget, or budgeted expenses
    exceeds actual, it is a favorable variance. When the budgeted
    revenue exceeds the actual or the actual expenses exceed the
    budgeted ones, it is an unfavorable variance. Percentage
    variances are determined by dividing the variance by the
    budgeted amount.
    PREPARING THE OPERATING
    BUDGET
    • The process of planning an annual operating budget involves
    gathering information, formulating initial plans, reconsidering
    goals and objectives and making final adjustments. Operating
    budgets are typically prepared for each fiscal year. Monthly
    operating budgets are also prepared to enable managers to
    clearly outline seasonal variations in expected revenues and
    corresponding expenses.
    BUDGET EXPENSES:-

    • Since the expense levels in the entire expense category on the


    departmental income statement vary with occupancy, everything in
    the operating budget depends upon how accurately occupancy
    levels are forecasted. The rooms’ manager gives the executive
    housekeeper the yearly forecast of occupancy levels broken down
    into monthly budget periods. Using historical data along with input
    from hotel’s marketing department, the rooms’ manager will
    provide an occupancy percentage for each budgeted period. The
    executive housekeeper can predict a certain level of expense when
    he/she knows

    • • Cost per occupied room for each category of expense


    • • Number of occupied rooms forecasted for each budget period
    WHY DO WE NEED TO PREPARE
    A BUDGET?
    • To determine and clearly list our objectives

    • To provide us with a guide to achieving our objectives

    • To serve as a basis for evaluating performance


    Preparing a Budget for Housekeeping • Different Types of Budgets • Zero-based
    budgeting • Incremental budgeting 4
    Preparing a Budget for Housekeeping • Capital Budget • Operating Budget • Fixed Cost •
    Variable Cost • Operating Equipment 5
    Fixed Costs and Variable Costs • Fixed cost A cost or expense that will not change as a
    result of changes in revenue or level of business • Variable cost A cost that changes in
    direct proportion to the revenue or volume of business
    Fixed Costs and Variable CostsPayroll • Payroll is an example of fixed and variable costs
    (the largest cost we control) • Depending on Hotel Occ % this needs to be budgeted to
    flex. • However this is one of the costs that needs to be monitored on a day by day basis.
    Guest & Operating Supplies • Cost of consumable supplies • Daily • Weekly • Monthly 8
    Operating Equipment • How much you will use during a period? • How much is the cost
    to order? • How much is the cost to carry the items in inventory?
    The Impact of Inventory on Cash The cost of: • The item • Storing the item • Money
    TEAMWORK! • Financial Success is about teamwork. • It is EVERYONE’S responsibility to
    ensure that the hotel is as profitable as possible and, therefore, meets its financial targets!
    THANK YOU

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