TUTORIAL 1

Compare Room Divisions P& L from Hotel 1 and Hotel 2 (Hotel 1 or Hotel 2 is better?)

Look at the % of payroll, some key expense items, total expenses and departmental profit for both hotels

Item Hotel 1 Hotel 2 Comments and interpretations

ACTUAL BUDGET ACTUAL BUDGET
TOTAL ROOM SALES 5,035 5,049 6,513 5,940 Hotel 1 is unfavourable because the actual is less than the
budget
Hotel 2 is favourable, because the actual is more than the
budget. Hotel 2 better

P&L % actual % actual % actual % actual

this month year to date this month year to date
1. Payroll 12 13.7 8.27 11.82 Hotel 1 favourable, Hotel 2 also favourable. Same result

2. TA commission 11.4 6.4 4.56 4.26 H1: UF H2:UF

3. Guest supplies 0.3 0.3 2.56 2.95 H1: F H2: F , Hotel 2 better

4. Cleaning Supplies 0.1 0.1 0.16 0.2 H1 F H2 F Hotel 2 better

5. Contract cleaning 0.4 0.4 0.27 0.34 H1 F H2 F Hotel 2 better

6. Total Expenses 15.2 14.8 20.3 24.45 H1 UF H2 F

Departmental profit 72.8 71.6 79.7 75.5

Hotel 2 better than Hotel 1 bases on the sales , payroll, Ta…..

Hotel 1 is good also because Whatever they budgeted is whatever they spent.
Favourable situation: Remain consistence, identify reason for the good result (brenchmark this strategy that give an opportunity for company to
perform better than the budgeted plan), and follow current best practice, continue progress and monitoring system

Unfavourable situation: identify the reason of poor performance, not good, due to overspending situation, there is a need to analyse the reason for
additional expenditure(RMXXX), 5m ( man , method, management, machinery, material)

1. Operational aspect (choose the m that is more relevant to the situation in the question)
2. Refer to overall budget performance(opex performance can change due to revenue/sales perform)

TUTORIAL 2

“What happened to the figures?”

Answers the following, based on King Hotel November 2019 Room Division Sales and Expenditure report:

1. List the expenses under housekeeping division

2. List the expenses under front office division
3. Use table 1 and calculate the ‘Cost per room’ based on expenses under housekeeping division
4. Use table 2 to determine the housekeeping expenses performance for King hotel. Which expenses stands out as the biggest
problem for the hotel, offer possible explanation for the causes and what could be done to fix them?
KING HOTEL NOVEMBER 2019 ROOM DIVISION SALES & EXPENDITURE RECORD

Revenue Actual Budget

Total room available 12600 12600
Room night sold 9450 9702
Room occupancy 75% 77%
Average length of stay 3 nights 3 nights
Rooms sales total RM2,707,425 RM2,866,941
Average room rate RM286.50 RM295.50
     
Expenditure Actual Budget
  RM RM
Payroll expenses( both department) 185,686 162,027
     
Linen hire (HK) 5,246 5,185
Uniforms( HK) 2,546 2,536
contract cleaning (HK) 1,664 1,556
Laundry and valet (HK) 14,648 12,566
Flowers(HK) 8,645 8,567
Guest supplies(HK) 55,645 55,854
Fruit & flower(HK) 380 206
Cleaning materials (HK) 1,254 1,143
Telephone and fax(FO) 2,546 2,526
Postage and stationery (FO) 856 758
     
Total Operating Expenses 403,250 382,859
Net departmental profit 613,861 1,125,210
Table 1: Cost per room for based on Housekeeping division expenses

HK Expense Budget Monthly Actual Monthly Budget cost per room Actual cost per room
5185 divide by total room sold 5246/9450=0.55
Linen hire (HK) 5,185 5,246 5185/9702= 0.53
2536/9702=0.26
Uniforms( HK) 2,536 2,546
0.16
contract cleaning (HK) 1,556 1,664
1.29
Laundry and valet (HK) 12,566 14,648
0.88
Flowers(HK) 8,567 8,645
5.75
Guest supplies(HK) 55,854 55,645
0.02
Fruit & flower(HK) 206 380
0.11
Cleaning materials (HK) 1,143 1,254

** Cost per room will be based on the total room sold.

If expenditure is unfavourable, cut cost, look for other alternative supplier that can give better rate at the same quality and time.
Table 2: Housekeeping Expenses performance

HK Expense Comments (favourable / unfavourable)

Line
UF

Linen hire (HK)

Uniforms( HK)

contract
cleaning (HK)

Laundry and
valet (HK)

Flowers(HK)