Chapter 5 – Night Audit

Introduction

Night auditing is a control procedure which is undertaken on a regular basis to ensure

accuracy of guest and non-guest accounts. It is also called the ‘end-of-day close’ or
‘end-of-day processing’.
The transactions and records you deal with may relate to arrivals and departures, food
and beverage, mini-bar, laundry and other services, inter-departmental vouchers,
foreign currency activities and all types of payment.
Night auditors identify and rectify discrepancies which may relate to incorrect posting,
errors in guest folios, computer errors and errors in source documentation. This work
will impact on a number of financial systems including petty cash, floats, debtor control
and banking procedures.
The activities of the night auditor relates to the preparation of reports which may relate
to occupancy, sales performance, break up by department, commission earnings,
supplier activity, sales returns, commercial account activity and foreign currency
activities.

Features of night audit

 A process undertaken daily in large establishments or weekly in smaller operations

 Undertaken during the 2300hrs - 0700hrs shift of front office when all of the majority
of outlets in the establishment have closed
 Cannot be conducted while charges are still being made by guests using the
facilities
 Has a set time for finalizing departmental charges for night audit purposes.

Night Auditor Responsibilities:

A dedicated night auditor or front desk staff member performs the night audit. This role
requires attention to detail, strong numerical skills, and a thorough understanding of the
hotel's operations and financial processes. The night auditor:

 Ensures all transactions are accurately recorded and posted.

 Identifies discrepancies and resolves any errors in folios or revenue postings.
 Prepares detailed financial reports for management.
 Balances cash drawers and verifies accuracy of payments.
  Updates room availability for the next day's reservations.
 Ensures data integrity by conducting system backups.
 Collaborates with other departments to address any issues identified during the
audit.
Overall, the night audit process is essential for maintaining financial accuracy, data
integrity, and operational efficiency in the front office of a hotel. It ensures that guests
are charged correctly, revenue is properly recorded, and the hotel is prepared for the
next day's activities.

To ensure accuracy and prepare the hotel for the upcoming day. Here's a
breakdown of the night audit process:
1. Timing and Purpose:
Night audit is typically conducted during the late evening or early hours of the morning
when the hotel's guest activity is at its lowest. The primary purpose of the night audit is
to:
Verify the accuracy of guest folios (individual guest accounts).
Reconcile revenue generated from room sales, food and beverage, and other services.
Update room availability and status for the upcoming day.
Prepare accurate financial reports for management.

2. Steps in the Night Audit Process:

a. Guest Folio Verification:

* Review guest accounts (folios) for accuracy in charges and payments.
* Ensure that posted charges match the services availed by the guests.
* Verify room rates, discounts, and any additional charges.
EXAMPLE:
Scenario:
Guest: John Smith
Check-In Date: August 10, 2023
Check-Out Date: August 15, 2023
Room Rate: $150 per night
During John Smith's stay, he ordered room service twice and visited the hotel's
restaurant for dinner. The night auditor is responsible for verifying the accuracy of
charges on John Smith's guest folio before completing the night audit.
Guest Folio:

Date Description Charges ($)

Aug 10, 23 Room Charge $150
Aug 11, 23 Room Service - Dinner $30
Aug 12, 23 Restaurant - Dinner $50
Aug 13, 23 Room Service - Breakfast $20
Aug 15, 23 Check-Out -$150

Night Auditor's Verification Process:

 Review Charges: The night auditor begins by reviewing the charges posted on
John Smith's guest folio. They check each transaction's description, date, and
associated charges.
 Verify Dates: The auditor ensures that the dates of the charges match the dates
when the services were provided. In this case, the room charge, room service,
and restaurant charges seem to correspond to the correct dates.
 Calculate Total Charges: The night auditor calculates the total charges by
summing up all the positive amounts on the folio. In this case, the total charges
amount to $250 ($150 + $30 + $50 + $20).
 Check-Out Adjustment: The night auditor notices the "Check-Out" entry on
August 15 with a negative charge of -$150. This entry indicates that the room
charge is being reversed due to John Smith's check-out. The negative charge
balances the room charge, resulting in a net charge of $0 for the room.
 Final Verification: The auditor verifies that the calculated total charges match the
overall financial impact of the guest's stay. In this example, the guest's total
charges are indeed $250, and the folio accurately reflects the transactions during
John Smith's stay.
 Error Check: The night auditor performs a final error check to ensure that all
calculations and entries are accurate and properly balanced.
 Resolution of Discrepancies: If the auditor identifies any discrepancies, such as
incorrect charges or missing transactions, they would investigate and correct the
folio accordingly. For instance, if there were a charge that John Smith did not
 incur, it would be removed, or if there were any missing charges, they would be
added.

By diligently verifying each transaction on the guest folio, the night auditor ensures that
the guest's charges are accurate, consistent with the services provided, and properly
balanced. This attention to detail contributes to the accuracy of the hotel's financial
records and guest billing.

b. Posting Revenue:
Post any pending charges from various departments, such as room service, restaurant,
and spa, to guest folios.
Verify that the revenue posted matches the sales generated during the day.
EXAMPLE
Scenario Continuation:
In the previous scenario, we discussed John Smith's guest folio and the charges
associated with his stay. Now, let's focus on the process of posting revenue from
various departments to John Smith's guest folio during the night audit.
Guest Folio:

Date Description Charges ($)

Aug 10, 23 Room Charge $150
Aug 11, 23 Room Service - Dinner $30
Aug 12, 23 Restaurant - Dinner $50
Aug 13, 23 Room Service - Breakfast $20
Aug 15, 23 Check-Out -$150

Revenue Posting Process:

 Room Service Charges: The night auditor reviews the records of room service
orders placed by John Smith during his stay. The total charges for room service
amount to $30 ($30 for dinner + $20 for breakfast). The auditor ensures that
these charges are accurately posted to John Smith's guest folio under the
respective dates.
 Restaurant Charge: The night auditor also reviews the record of John Smith's
visit to the hotel's restaurant for dinner on August 12. The charge for the
 restaurant meal is $50. The auditor posts this charge to the guest folio under the
corresponding date.
Updated Guest Folio:

Date Description Charges ($)

Aug 10, 23 Room Charge $150
Aug 11, 23 Room Service – Dinner $30
Aug 12, 23 Restaurant – Dinner $50
Aug 13, 23 Room Service - Breakfast $20
Aug 15, 23 Check-Out -$150
Total Charges: $150 (Room) + $30 (Room Service) + $50 (Restaurant) + $20 (Room
Service) - $150 (Check-Out) = $100
In this example, the night auditor posts revenue from room service and the restaurant to
John Smith's guest folio. The charges are accurately recorded under the corresponding
dates to reflect the services provided during his stay. The updated guest folio now
accurately reflects the total charges for John Smith's stay, which amounts to $100 after
deducting the check-out credit.
This revenue posting process ensures that all guest charges are properly recorded and
accounted for, contributing to the accuracy of the hotel's financial records and guest
billing.

C. Room Status and Availability:

Update room status to reflect check-ins, check-outs, and room changes.
Ensure that the inventory of available rooms is accurate for the next day's reservations.
EXAMPLE
Scenario Continuation:
In the previous examples, we discussed guest folio verification, revenue posting,
accounts receivable review, balancing, and financial reporting. Now, let's focus on the
process of updating room status and availability during the night audit for John Smith's
stay.
Current Room Status:
Room 101: Occupied (John Smith)
Room 102: Vacant
Room 103: Vacant
Room 104: Vacant
Guest Folio:
Date Description Charges ($) Payments ($)
Aug 10, 23 Room Charge $150
Aug 11, 23 Room Service - Dinner $30
Aug 12, 23 Restaurant - Dinner $50
Aug 13, 23 Room Service - Breakfast $20
Aug 15, 23 Check-Out -$150
Outstanding Balance $50

Updating Room Status and Availability Process:

 Check-Out and Room Cleaning: The night auditor notices that John Smith has
checked out on August 15. They update the room status of Room 101 from
"Occupied" to "Vacant." This room will now need to be cleaned and prepared for
the next guest.
 Room Availability: The auditor updates the available rooms count for the night
and the following day. Since Room 101 is now vacant, it is included in the
available rooms count.
 Updating Property Management System: The night auditor uses the property
management system to change the status of Room 101 to "Vacant." They also
update the system to reflect the correct number of available rooms for future
reservations.

Updated Room Status and Availability:

Room 101: Vacant
Room 102: Vacant
Room 103: Vacant
Room 104: Vacant
Night Auditor's Notes: The night auditor may also add notes in the property
management system to indicate that Room 101 was vacated, cleaned, and made
available for new reservations.
By updating room status and availability during the night audit process, the hotel
ensures that accurate information is available for front desk staff when managing
reservations and guest check-ins. It also helps in maintaining a seamless transition for
guests and streamlining the process of room turnover and housekeeping.

d. Accounts Receivable:
Review accounts receivable, which includes outstanding guest balances.
Follow up on any overdue payments or billing discrepancies.
EXAMPLE:
Scenario Continuation:
In the previous examples, we discussed guest folio verification and revenue posting.
Now, let's focus on the process of reviewing accounts receivable during the night audit
for John Smith's stay.
Guest Folio:

Date Description Charges ($)

Aug 10, 23 Room Charge $150
Aug 11, 23 Room Service - Dinner $30
Aug 12, 23 Restaurant - Dinner $50
Aug 13, 23 Room Service - Breakfast $20
Aug 15, 23 Check-Out -$150

Night Auditor's Review of Accounts Receivable:

 Outstanding Balance: The night auditor reviews the guest folio to check if there
are any outstanding balances or charges that have not been settled by John
Smith. In this case, John Smith's charges total $100 after accounting for check-
out adjustments.
 Payment Status: The auditor checks the payment status to see if John Smith has
made any payments towards his charges during his stay. If there are any
payments recorded, they are subtracted from the outstanding balance to
determine if there's any amount still due.
 Overdue Payments: The night auditor also reviews if any payments are overdue
based on the hotel's payment policies. If there are any overdue payments, the
auditor may need to follow up to ensure that these payments are collected.
Accounts Receivable Review Result:
 Based on the review, let's assume that John Smith paid $50 during his stay to
cover part of his charges. This leaves an outstanding balance of $50. Since there
are no overdue payments, the guest's accounts receivable status is in good
standing.
Updated Guest Folio:
Date Description Charges ($) Payments ($)
Aug 10, 23 Room Charge $150
Aug 11, 23 Room Service - Dinner $30
Aug 12, 23 Restaurant - Dinner $50
Aug 13, 23 Room Service - Breakfast $20
Aug 15, 23 Check-Out -$150
Outstanding Balance $50
In this example, the night auditor reviews John Smith's accounts receivable status and
confirms that he has an outstanding balance of $50 after deducting the payments made
during his stay. The guest folio is updated to reflect this outstanding balance, which will
need to be settled by John Smith.
Reviewing accounts receivable during the night audit ensures that the hotel's financial
records are accurate and that any outstanding balances are identified and appropriately
addressed.

e. Balancing:
Balance the guest ledger and various accounts to ensure that debits and credits match.
Reconcile cash, credit card, and other payment transactions.
EXAMPLE
Scenario Continuation:
In the previous examples, we discussed guest folio verification, revenue posting, and
accounts receivable review. Now, let's focus on the process of balancing during the
night audit for John Smith's stay.
Guest Folio:

Date Description Charges ($) Payments ($)

Aug 10, 23 Room Charge $150
Aug 11, 23 Room Service – Dinner $30
Aug 12, 23 Restaurant – Dinner $50
Aug 13, 23 Room Service - Breakfast $20
Aug 15, 23 Check-Out -$150
Outstanding Balance $50

Balancing Process:
 Calculating Total Charges: The night auditor calculates the total charges posted
on John Smith's guest folio. This involves adding up the charges for the room,
room service, and restaurant.
Total Charges = $150 (Room) + $30 (Room Service) + $50 (Restaurant) + $20 (Room
Service) - $150 (Check-Out) = $100
 Calculating Total Payments: The auditor calculates the total payments made by
John Smith during his stay.
Total Payments = $50
 Calculating Outstanding Balance: The auditor calculates the outstanding balance
by subtracting the total payments from the total charges.
Outstanding Balance = Total Charges - Total Payments
= $100 - $50
= $50

 Balancing Cash Drawer: The night auditor balances the cash drawer by
comparing the cash on hand with the expected amount based on the
transactions recorded during the night audit. Any discrepancies are investigated
and resolved.
 Comparing with Property Management System: The night auditor compares the
calculated outstanding balance from the guest folio with the outstanding balance
 recorded in the property management system. Any discrepancies are identified
and investigated.
 Reconciling Accounts Receivable: The auditor ensures that the outstanding
balance matches the accounts receivable section of the night audit report, which
summarizes the financial transactions for the night.
Balancing Result:
In this example, the night auditor's calculations and the property management system's
recorded data match, and the outstanding balance of $50 is confirmed. The cash
drawer is balanced, and the accounts receivable reconciliation is accurate.
Balancing is a critical step in the night audit process to ensure that all financial
transactions are accurately recorded, payments are properly accounted for, and any
discrepancies are identified and resolved. It contributes to the overall accuracy of the
hotel's financial records and helps maintain the integrity of the night audit process.

f. Financial Reporting:
Prepare financial reports, including revenue summaries, occupancy rates, and other key
performance indicators.
Generate reports that provide insights into the hotel's financial health and operational
efficiency.

EXAMPLE
Scenario Continuation:
In the previous examples, we discussed guest folio verification, revenue posting,
accounts receivable review, and balancing. Now, let's focus on the process of preparing
financial reports during the night audit for John Smith's stay.

Guest Folio:
Date Description Charges ($) Payments ($)
Aug 10, 23 Room Charge $150
Aug 11, 23 Room Service - Dinner $30
Aug 12, 23 Restaurant – Dinner $50
Aug 13, 23 Room Service - Breakfast $20
Aug 15, 23 Check-Out -$150
Outstanding Balance $50
Night Auditor's Financial Reporting Process:
 Generate Financial Reports: The night auditor uses the property management
system to generate financial reports summarizing the night audit's findings and
the overall financial performance for the day.
 Revenue Summary: The auditor prepares a revenue summary report that breaks
down revenue generated from various sources, such as room sales, food and
beverage, and other services. This report provides insights into the hotel's
revenue distribution.

Example Revenue Summary Report:

Revenue Source Amount ($)
Room Sales $150
Food and Beverage $100
Other Services $50
Total Revenue $300

Occupancy Report: The auditor also prepares an occupancy report that includes
information about room occupancy, check-ins, check-outs, and room availability for the
night and the following day.
Example Occupancy Report:

Date Occupancy (%) Available Rooms Check-Ins Check-Outs

Aug 15, 23 75% 100 10 8
Accounts Receivable Summary: The auditor includes an accounts receivable summary
that provides information about outstanding balances and payments. This helps in
tracking the financial status of guests' accounts.
Example Accounts Receivable Summary:

Outstanding Balances Total Payments Net Receivables

$50 $50 $0
Financial Reporting Result:
In this example, the night auditor prepares financial reports that summarize revenue,
occupancy, and accounts receivable status for the day. These reports provide valuable
insights into the hotel's financial performance, room occupancy, and the status of guest
accounts.
Financial reporting during the night audit process helps hotel management make
informed decisions, track financial trends, and assess the overall health of the hotel's
operations.

g. System Backup:
Conduct a backup of the property management system and other relevant software to
safeguard data.

Preparing daily records and reports

Part of a night auditor’s duties is to prepare operational reports of an informative and

statistical nature. These are used by both staff and management in the daily running of
the establishment.
When compiling reports the night auditor will perform a number of simple, basic
calculations using standard industry formulas to produce the statistics required.
The basic statistics used include:
 Occupancy Percentage
 Double or Multiple Room Occupancy
 Average Room Rate
 Average Rate per Guest.
Where there is a computerized system many of these statistics will be calculated
automatically.
OCCUPANCY RATES
Occupancy Ratios: Formula:
1. Occupancy Percentage = no. of rooms occupied / total no. of rooms
available for sale x 100
2. Multiple Occupancy Percentage = no. of rooms occupied by more than 1 person /
total no. of rooms occupied x 100
3. Triple Occupancy Percentage = no. of triple rooms occupied / total no. of triple
rooms available for sale x 100
4. Double Occupancy Percentage = no. of double rooms occupied / total no. of double
rooms available for sale x 100
5. Single Occupancy Percentage = no. of single rooms occupied / total no. of single
rooms available for sale x 100

ROOM REVENUE
1. Average Guests Per Rooms Sold = total no. guests / total no. of rooms sold
2. Average Daily Rate = actual room revenue / total no. of rooms sold
3. Room Revenue Per Available Room (RevPar) = actual room revenue / no. of
available rooms
4. Revenue per Available Customer (RevPac) = actual hotel revenue / total
no. of guests
5. Average Rate Per Guest (ARG) = total room revenue / total number of guests

OPERATIONAL STATISTICS
1. No-Show Percentage = no. of no-show rooms / no. of rooms reserved x 100
2. Cancellation Percentage = no. of cancellation rooms / no. of rooms reserved x
100
3. Walk-ins Percentage = no. of walk-in’s rooms / total number of rooms arrival x 100
4. Overstay Percentage = no. of overstay rooms / no. of expected check-outs x 100
5. Understay Percentage =no. of understay rooms / no. of expected check-outs x 100
SALES REPORT
PARTICULARS AMOUNT
Ms. Picos stays at Aida Hotel in deluxe ROOM CHARGE: $10,000
room at $2500/room/night with a duration DISCOUNT: $500
of 5 days and was given 5% discount as TOTAL: $9,500
Patronage privilege.
Mr. Fernandez was charged $1000 each ROOM CHARGE: $9,000 ($4500x2)
for the two extra person in his room that EXTRA CHARGE: $4,000 ($1,000x2x2)
made him paid $13,000 for 2 nights in
presidential suites.
Midnight snacks of Mr. Dahunog 2 pcs. $50 x 2 = $100 snack (do not forget to
 Clubhouse at $50 each. write the label)
Mr. Gomez paid was charged for his 12 $15 x 12 = $180 laundry (do not forget to
pcs. Laundered clothes at 15/pc. write the label)

CLUB MEMBERSHIP

1. Create and imagine your own hotel club and identify the different benefits and perks
of being its member. Create the hotel’s image, history, and concept, then invite the
guest to the showroom and explain each benefits or discounts as a club member in
going to the following pictures of the
1. Restaurants – 20% discount, bottomless drinks
2. Hotel rooms – first night stay is free, the rest is 10% discount
3. Gym – VIP treatment, priority access to gym equipment
4. Golf course – prioritized booking/reservation, 30% discount
5. Club/bar – complementary margarita drinks, 10% discount to every liquor
6. Water activities like jet ski, parasailing – 20% discount
7. Café/coffee shop – conduct meetings, meet client, free espresso coffee for 2, 30%
discount

EXAMPLE
Overview:
"LuxeStay Rewards" is a membership club offered by a luxury hotel chain known as
"Grand Horizons Hotels." The club is designed to provide exclusive benefits and
privileges to loyal guests who frequently stay at the hotel. Members can enjoy enhanced
experiences, personalized services, and special offers.
 Membership Tiers:
The membership club offers different tiers based on the frequency of stays and member
engagement:
 Silver Level:
Automatic enrollment upon the first stay.
Early access to hotel promotions and offers.
Complimentary room upgrades when available.
 Gold Level:
Achieved after three stays within a calendar year.
All Silver benefits, plus:
Priority check-in and check-out.
Complimentary access to the hotel's fitness center and spa facilities.
 Platinum Level:

Achieved after seven stays within a calendar year.

All Gold benefits, plus:
Complimentary breakfast for two during each stay.
Exclusive invitations to private events hosted by the hotel.

Membership Benefits:
Members of "LuxeStay Rewards" enjoy a range of benefits that enhance their hotel
experience:

Points Earning: Members earn points for every eligible stay, which can be redeemed for
future stays, room upgrades, or other hotel services.
Personalized Service: The hotel's staff is trained to recognize and cater to club
members' preferences, ensuring a tailored and comfortable stay.
Special Offers: Members receive exclusive access to limited-time promotions, discounts
on room rates, and packages for special occasions.
Room Upgrades: Depending on their tier, members enjoy complimentary room
upgrades to enhance their stay.
Early Check-In and Late Check-Out: Gold and Platinum members can enjoy the
flexibility of early check-in and late check-out, subject to availability.
Dining and Spa Benefits: Members receive discounts on dining at the hotel's restaurants
and access to special spa offers.
Exclusive Events: Platinum members are invited to attend private events, such as
cocktail receptions and gourmet dinners, hosted by the hotel.
How to Join:
Guests can enroll in "LuxeStay Rewards" during the check-in process at any
participating Grand Horizons Hotel. The enrollment process is simple and free of
charge. Members receive a membership card and are provided with information about
their tier and benefits.
Mobile App and Online Portal:
The hotel offers a dedicated mobile app and online portal for members to manage their
accounts, track their points, and access exclusive offers. Members can also use the app
for seamless booking and to request personalized services.

"LuxeStay Rewards" offers a unique opportunity for guests to enjoy a higher level of
service and exclusivity during their stays at Grand Horizons Hotels. It encourages guest
loyalty and provides a platform for the hotel to build lasting relationships with its valued
customers.XAMPLE