FRONT OFFICE

ASSIGNMENTS

NAME-ROHAN SHARMA
ROLL NO.-1941110164
 ASSIGNMENT-1
Factors Affecting Front Office
Operations

A successful front office manager shall continuously

evaluate the results of department activities on a
daily, monthly, quarterly, and yearly basis. While
evaluating, the following items and tools shall be
used:
Daily operations report
Occupancy ratios
Rooms revenue analysis
Hotel income statement
Rooms division income statement or schedule
Rooms division budgets report
Operating ratios and ratio standards
Daily operations report:

It is also known as the manager’s report, the daily

report, and the daily revenue report. This very
report contains a summary of the hotel’s financial
activities during a 24-Hour period. Moreover, it
serves as to reconcile cash, bank accounts, and
revenue and accounts receivable, and as an
important data that must be input to link front and
back office computer functions.

Occupancy ratios:
Occupancy ratios measure the success of the front
office in selling the hotel’s primary product (i.e.
guestrooms). Below are some common ratios used
in the front office department:

Occupancy percentage = (number of rooms

occupied) / (total number of rooms available for
sale)
Multiple occupancy percentage = (number of rooms
occupied by more than one guest) / (total number of
rooms occupied)
Average guests per rooms sold = (total number of
guests) / (total number of rooms sold)
Average daily rate = (total rooms revenue) / (total
number of rooms sold)
Average rate per guest = (total rooms revenue) /
(total number of guests)

Rooms revenue analysis:

One main report to enhance control over room
revenue is the room rate variance report, which is
the one that lists those rooms that have been sold at
rates other than their rack rates. Another form is the
yield statistic, which is the ratio of the actual
revenue to the total possible potential revenue if all
rooms are sold at rack rates.
Yield statistic = (actual room revenue) / (potential
room revenue)

Hotel income statement:

This very statement provides important financial
information about the results of hotel operations for
a given period of time

Rooms division income statement:

The rooms division income statement (sometimes
called a schedule) shall be referenced on the hotel’s
income statement. Moreover, the rooms division
schedule shall be prepared by hotel’s accounting
division not the hotel’s front office accounting staff.

Rooms division budget reports:

These reports are monthly budget forms that
compare actual revenue and expense figures against
budgeted amounts depicted both in dollar values
and percentage variances
Operating ratios:
Operating ratios (ex. occupancy ratios, yield
statistic…) assist managers in evaluating the success
of front office operations. Moreover, for ratios to be
meaningful they should be compared against proper
standards such as prior period’s, competitor’s,
and/or budgeted ratios.

ASSIGNMENT-2
 Basis/approaches for room rate
determination
The front office manager shall assign to each room
category a rack rate. In accordance, front office
employees are expected to sell rooms at rack unless
a guest qualifies for an alternative room rate (ex:
corporate or commercial rate, group rate,
promotional rate, incentive rate, family rate, day
rate, package plan rate, complementary rate…).

While establishing room rates, management shall be

careful about its operating costs, inflationary factors,
and competition. Generally, there are three popular
approaches to pricing rooms:

Market condition approach

Rule-of-thumb approach
Hubbart formula approach

MARKET CONDITION APPROACH

Under this very approach, management shall look at
comparable hotels in the geographical market, see
what they are charging for the same product, and
“charge only what the market will accept”. Some
drawbacks of this approach are that it does not take
into consideration the value of the property, and
what a strong sales effort may accomplish.

RULE OF THUMB APPROACH

In this very approach, the rate of a room shall be $ 1
for each $ 1,000 of construction and furnishing cost
per room, assuming a 70% occupancy rate. This
approach, however, fails to take into consideration
the inflation term, the contribution of other facilities
and services towards the hotel’s desired profitablity,
and assumes a ceratin level of occupancy rate.

HUBBART FORMULA APPROACH

This very approach considers operating costs,
desired profits, and expected number of rooms sold
(i.e. demand). The procedure of calculating a room
rate is as follows:
Calculate the hotel’s desired profit by multiplying
the desired rate of return (ROI) by the owner’s
investment.
Calculate pre-tax profits by dividing the desired
profit by 1 minus hotel’s tax rate.
Calculate fixed charges and management fees. This
calculation includes estimating depreciation, interest
expense, preperty taxes, insurance, amortization,
building mortgage, land, rent, and management
fees.
Calculate undistributed operating expenses. This
includes estimating administrative and general
expenses, data processing expenses, human
resources expenses, transportation expenses,
marketing expenses, property operation and
maintenance expenses, and energy costs.
Estimate non-room operating department income or
loss, that is, F&B department income or loss,
telephone department income or loss …
Calculate the required room department income
which is the sum of pre-tax profits, fıxed charges and
management fees, undistributed operating
expenses, and other operating department losses
less other department incomes.
Determine the rooms department revenue which is
the required room department income, plus other
room department direct expenses of payroll and
related expenses, plus other direct operating
expenses.
Calculate the average room rate by dividing rooms
department revenue by the expected number of
rooms to be sold.
· Doubles sold daily = double occupancy rate * total
number of rooms * occupancy %
Singles sold daily = rooms sold daily – number of
double rooms sold daily
Singles sold daily * x + doubles sold daily * (x + y) =
(average room rate) * (total number of rooms sold
daily)
Where: x = price of singles; y = price differential
between singles and doubles; x + y = price of
doubles.
 ASSIGNMENT-3
CLASSIFICATION OF BUDGET

1- MASTER BUDGET – A master budget is a

comprehensive projection of how management
expects to conduct all aspects of business over the
budget period, usually a fiscal year. Most master
budgets include interrelated budgets from the
various departments. Managers typically use these
subset budgets to plan and set performance
objectives. Master budgets are generally used in
larger businesses to keep many managers on the
same page.

2- OPERATIONAL BUDGET– The operational

budget covers revenues and expenses surrounding
the day-to-day core business of a company.
operating budgets are usually broken down into
smaller reporting periods, such as weekly or
monthly.
3- CASH FLOW BUDGET– A cash flow budget
examines the inflows and outflows of cash in a
business on a day-to-day basis. It predicts a
company’s ability to take in more money than it
pays out. Managers monitor cash flow budgets to
pinpoint shortfalls between expenses and sales.

4- SALES BUDGET- an estimate of future sales,

often broken down into both units and currency. It is
used to create company sales goals.

5- REVENUE BUDGET– consists of revenue

receipts of government and the expenditure met
from these revenues. Tax revenues are made up of
taxes and other duties that the government levies.

6- FLEXIBLE BUDGET– Flexible budgets are, as

their names suggest variable and flexible depending
on the variability in the results expected in the
future. Such budgets are most useful for businesses
that operate in an ever changing business
environment, and have the need to prepare budgets
that are able to reflect the many outcomes that are
possible.

7– FIXED BUDGET– Fixed budgets are used in

situations where the future income and expenditure
can be known, with a higher degree of certainty, and
have been quite predictable over time.
 ASSIGNMENT-4
BUDGET CYCLE

The budget cycle refers to the life of a budget from

creation to evaluation. it consist of four phases.

1- Preparing the Budget

2- Approving the Budget
3- Executing the Budget
4- Evaluating the Budget

Prepare Your Budget

The first step of the budget process is to create it.
Done right, this process starts with careful thought
at the ground level. How much income is needed
and what new initiatives can be started should be
considered.
As the small-business owner, your leadership and
vision will guide what’s included and what's
excluded from the budget. You’ll consider
anticipated revenues; expenses for employee wages,
operations and materials; and costs for any
improvements you plan to make to your company.

Get Your Budget Approved

While the political budgeting process is a bit messy,
one of its underlying principles is very meaningful
for your business. Budgets aren't approved on a yes
or no basis. Instead, they're the subject of debate.
While, at times, the political process can distort
budgetary priorities, businesses don't have to fall
prey to that problem. Instead, the approval process
can be an opportunity for you to step back and take
another view of how your company is spending its
funds.
Most small-business owners handle all four phases
of their budget’s cycle themselves. This is fine but
don’t do it in a vacuum. Have your accountant or a
trusted peer look at it before you stamp it
“Approved.”

Execute Your Budget

Once a budget is approved, it’s time to implement it.
Unlike the federal government, business owners like
you can’t impound funds to prevent wasteful
spending. But you can adjust your your business
tactics to handle increases in spending or lower than
expected revenues.
Most of the time money comes in and goes out in
accordance with the budget. A good budget isn't a
limitation on what your company can spend. It's a
financial embodiment of your company's strategy
and tactics for the year.

Evaluate Your Budget Regularly

Even the best planned budget should be reevaluated
from time to time and, if need be, revised. Changes
in revenue, adjustments to costs and new
information about your customer base are examples
of things that may require budget revisions.
The government audits and evaluates spending to
ensure that money is being spent lawfully. But
ongoing evaluation of your business’ budget
requires a wider lens. You’ll want to keep an eye on
how effectively money is being spent. But what
really matters in business is whether you’re
operating at a profit.

Think of your business’ budget as a living document

that can help you define your goals. The four phases
of a budget cycle provide the framework for
achieving those goals.
 ASSIGNMENT-5

Modules of Property Management

System

1)Reservation
For a property management system, the reservation
module, which aims to handle online bookings is
indispensable.
As a separate PMS module, the central reservation
system (CRS) or some other reservation platform
may be available.
The hotel reservation system keeps the records of
data and sends it to the front desk.
Hence, hotels must incorporate the reservation
system with the website booking engine and other
delivery channels.
If a specific reservation software is currently used by
a hotel or a hotel chain, PMS must provide
integration with the current service.

2)Front Desk Operations

A front desk module allows the front desk manager
to manage multiple bookings eliminating errors from
it and also saves time.
It allows routine operations such as check-ins and
check-outs of customers like individuals or
businesses man, and other groups of people.
Further, with the help of this module, you can send
booking confirmation emails and follow-ups for
pending deposits.

3)Revenue Management
Revenue management means keeping the right price
for potential guests at the right time.
But, there are many variables that come into play
and change frequently, so we have to consider
them.
Hence, integrating with the property management
system can make it easier.

Integrating revenue management with a property

management system helps to understand.

Ways to adjust procedures for improvement in

performance and monitor finances.

Dynamic pricing is allowed by the property

management module.

Using algorithms, this module allows hotels to

market rooms based on past reservation data.
As it tracks the pricing by competitors, weather
data, and nearby events.

All these make executing revenue management

decisions easier and increases the conversion rates
of guests.

4)Customer Relationship Management

When our customer is happy with hotel services,
then they will again visit the hotel.

For that, the maintenance of records of customer

data for building strong and enduring customer
relationships, thereby enhancing brand value.

If your hotel has its CRM system, then integrate it

with the property management system to collect
and store customer data.
Otherwise, integrate the CRM module with the front
desk and reservation system to personalize guest’s
experiences.

5)Channel Management
A channel manager is software that synchronizes the
inventory, rates on all channels where all channels
are listed.

We know that the Central reservation system keeps

all the information about the hotel rooms.

Hence, the channel manager connects to the Central

reservation system and sends this information from
it to distribution channels.

These channels are GDSs, OTAs, wholesalers, etc.

Every distribution channel has its audience.
So, it increases its visibility across its audiences.

For instance- connection to OTA.

Make it easier to meet a large number of

prospective guests, many of who book tickets or
schedule trips in advance.

Global Distribution System also connects business

travellers.

6)Housekeeping
Maintenance of the hotel is not an easy task if work
is not delegated and control in organised manner
chances of errors are high.
But when you connect the property management
system to the housekeeping module, then
management is possible from the front office.

It updates the maintenance tasks and reports for the

users.

The key function of this module is the cleaning and

maintenance of the hotel.

It includes keeping records to areas to be clean,

management of room status, assignment of the task
to a housekeeper.

Further, it maintains the records of areas that need

repair and maintenance.

7)Back Office
The hotel back office keeps records of annual
accounting reports or organizes financial details,
monitor administrative and technical issues.

It is important staff members can conveniently

access hotel systems.

And databases to make wise decisions to ensure

better guest experiences.

When we integrate the hotel back office with PMS

allows hoteliers to access the back office from
anywhere at any time.

Further, you can monitor it throughout the year to

keep financial and administrative technologies
functional.

Additionally, constant monitoring keeps your system

protected and compliant.
And efficiently execute and control hotel PMS and
other software.

8)Point Of Sale
When the point of sale and property management
system is not integrated.

Then billing of additional services of your hotel has

to communicate at the front desk manually.

Hence, their integration streamlines the process of

charging sales in restaurants and other charges to a
guest’s room.
It reduces manual errors, saves time, satisfies guests
and improves revenue.