secure cash handling in the Front Office.
The main system and procedures used to ensure cash handling in the Front Office includes the use of front office cashier banks. A cash bank is an amount of money given to a cashier at the start of each work shift so that he can handle the various transactions that happen during the shift. The cashier has the responsibility of this cash bank and for all cash, checks and other negotiable items received during the work shift. The hotel usually issues banks with a specific amount in item to cashiers and that amount is used for making change when guests settle their bills, processing paid-outs and other cash-related activities. The bank limit is the amount of cash contained in a cashier bank when it is issued at the beginning of a work shift. Good control procedures usually require the cashiers sign for their bank at the beginning of the shift and only that person who signed for the bank have access to it during the shift. At the end of the work shift, each front office cashier is responsible for depositing all cash, checks etc. received during the shift and ensuring that the bank is restored to the bank limit account. The cashier itemizes and records the contents of the front office cash envelope on the outside before dropping it in the front office vault. For internal control purposes, at least one other employee should witness this cash banking procedure and both employees should sign a log attesting the drop was actually done and stating the time of the drop.
Net cash receipts are the amount of cash, cheques and other negotiable items in the cashier’s drawer, minus the amount of the initial cash bank, plus the paid outs. An overage could happen when the total of money in the cashier’s bank is greater than the net cash receipts. This could happen due to a wrong charge to a guest, usually by giving back less money. A shortage occurs when the total of money in the cashier’s bank is less than the net receipts. This could happen when a front desk agent receives a cash payment from a guest and he returns more cash than required. Both overages and shortages are not good to occur. Overages and shortages are determined by comparing the cash totals of the cashier’s postings against the actual cash, checks etc. in the cashier’s bank.
A due back is a situation that occurs when a cashier pays out more than he or she receives. In the front office, due backs usually occur when a cashier accepts so many checks and large bills during a shift that he cannot restore the initial bank at the end of the shift without using the checks or large bills. Consequently, the front office deposit may be greater than the cashier’s net cash receipts. Front office due backs are normally replaced with small bills and coins before the cashier’s next work shift.
2. Part of a Front Office Manager’s job is to monitor sales. Explain the various reports that can be used to evaluate sales performance in the front office.
Evaluate the results of front office operations is an important management function. Successful front office managers evaluate the results of department activities on a daily, monthly, quarterly, and yearly basis. The following items and tools are those that front office managers can use to evaluate the success of front office operations:
1. Daily operations report:
It is also known as the manager’s report, the daily report, and the daily revenue report. This report summarizes the hotel’s financial activities during a 24-hour period. The report also serves as to reconcile cash, bank accounts, and revenue and accounts receivable. Furthermore, it provides important data that must be input to link front and back office computer functions.
2. Occupancy ratios:
Occupancy ratios are a measurement of the front office success in selling the hotel’s guestrooms. Occupancy ratios include average daily rate, revenue per available room, average rate per guest, sleeper rate, multiple occupancy statistics and occupancy percentage. In more detail the common ratios used in the front office department are:
The occupancy percentage is the percentage that relates the number of hotel rooms occupied to rooms available for sale during a specific period of time. The occupancy percentage calculated as follows:
- Number of Rooms Occupied x 100
- Number of Rooms Available
The sleeper rate is the percentage of guests in the hotel at a specific time. The sleeper rate calculated as follows:
- Number of Guests x 100
- Maximum Guest capacity
The average daily (ADR) is an occupancy ratio derived by dividing net rooms revenue by the number of rooms sold.
- Total Room Revenue
- Number of Rooms Sold
Revenue per available room (RevPAR) is a revenue management measurement that focuses on revenue per available room. The revenue per available room calculated as follows:
- Total Room Revenue
- Number of Available Rooms
The average rate per guest is an occupancy ratio derived by dividing net rooms revenue by the number of guests.
- Total Room Revenue
- Number of guests
3. Rooms revenue analysis:
One important report to enhance control over room revenue is the room rate variance report and is the one that lists those rooms that have been sold at rates other than their rack rates. Another formula used is the yield statistic, which is the ratio of the actual room revenue to the total possible potential revenue if all rooms are sold at rack rates.
The achieved revenue percentage (Yield Statistic): compares the revenue achieved with the potential revenue if the hotel had 100% occupancy and all rooms were sold at rack rate. This calculated as follows:
- Actual Rooms Revenue x 100
- Potential Rooms Revenue
4. Hotel income statement:
This statement provides important financial information about the results of hotel operations for a given period of time. The period may be one month or longer but should not exceed one year.
5. Rooms division income statement:
The rooms division income statement (schedule) shall be referenced on the hotel’s income statement. Furthermore, the rooms division schedule shall be prepared by hotel’s accounting division not the hotel’s front office accounting staff.
6. Rooms division budget reports:
These reports are monthly budget forms that compare actual revenue and expense figures against budgeted amounts described both in money values and percentage variances.
Complete the following exercise:
You will find below the basic data concerning ‘‘The Big Sneeze Hotel” in Montreal together with the results of 11th March. The hotel re-opened after its annual closing.
Basic data Advertised
* 60 Singles € 69.45
* 81 Doubles € 101.39
* 101 Twins € 109.22
* 3 Triples € 112.44
* 2 Presidential Suites (1 Double Bed) € 127.33
Occupied rooms Rate per room
* 43 Singles (43 pax) € 67.85
* 60 Doubles (111 pax) € 101.22
* 95 Twins (190 pax) € 99.34
* 2 Triples (6 pax) € 112.44
* 2 Presidential suites (4 pax) € 113.25
Work out the following calculations:
- The occupancy rate: occupied rooms/ total rooms x100= (202/247)x100 = 81.78%
- The sleeper rate: Number of guests/ maximum guest capacity x100 = (397/434)x100 = 91.47%
- The achieved revenue %: actual room revenue/ potential room revenue x100= (18,879.43/24,002.59)x100= 78.65%
- The average daily rate (ADR): total room revenue/ number of rooms sold = 18,879.43/202 =93.46 € per room
- The average rate per guest: room revenue/ number of guests = 18,879.43/397= 47.55€
- Revenue per available room (Rev PAR): total room revenue/number of available rooms =18,879.43/247= 76.43€
- The number of double rooms in single occupancy: double rooms occupied x guest in double rooms – total number of guests in double rooms = (60 x2) -111= 9 double rooms
3. How can a hotel monitor customer service standards?
First of all the hotel must understand the needs of its customers and the service they provide. Furthermore, how important is to meet the guests expectations and to understand how customer evaluate the service. The hotel to succeed in this should collect information from its customers as for their satisfaction from the goods and services that hotel provides. A method to do this is by giving guests to fill in questioners that have to do with the service in the different departments, the quality of the food, how they find the recreation facilities etc. This helps managers to understand if the hotel standards are followed and if not, what else should be done to meet these standards. Another way that I was experienced in my hotel during the summer was an inspection to our hotel from a lady from the “A small leading hotels of the world” without being aware of how is she. She came with different name and she stayed at the hotel for two days. She checked the rooms, the restaurants, the front desk agents to monitor if the standards are followed. The departure date she asked to speak with the manager and she told him who she really are and gave him the total grade of our hotel which shows if it will continue to be a member of the small leading hotels of the world or not. So, another way is to find people to visit the hotel as guests and evaluate the staff performance in the different departments.
Michael L. Kasavana, Richard M. Brooks P. B. (2005) Managing Front Operations (7th ed.). East Lansing MI: Educational Institute of the American Hotel & Lodging Association.