NIGHT AUDIT

Conduct a night audit

Identify the role of a night auditor

Describe the activities undertaken by a night auditor

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’. This process is usually conducted overnight on the 23:00 - 07.30hrs shifts.

The transactions and records 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.

The Night Auditor will have to identify and rectify discrepancies which may relate to incorrect posting, errors in guest folios, computer errors and errors in source documentation. The work will impact on a number of financial systems including petty cash, floats, debt or control and banking procedures.

The Night Auditor will also have to prepare reports which may relate to occupancy, sales performance, breakdown by department, commission earnings, supplier activity, sales returns, commercial account activity and foreign currency activities.

The activities undertaken by a night auditor

The main function of the night auditor's role is to audit the financial transactions; the process of checking and reviewing all financial and non-financial transactions to determine accuracy. The process of night audit usually occurs during the overnight shift and will also require the night auditor to fulfil some reception duties, possibly also cashiering, portering and even room service or housekeeping duties.

The main activities of the night auditor are to identify any errors, correct them and ensure all guest accounts and departmental charges are accurate. The Night Auditor will reconcile all financial transactions in the establishment, reconcile the cash registers balancing all transactions and, when the audit is complete, roll over the business date and post the nights’ accommodation charges.

The night auditor will also produce a number of reports which allow the other departments to plan their activities. These reports include projected occupancy reports, arrival and departure reports, departmental revenue reports and in-house guest list to name a few.

Generally a hotel or resort with an electronic cashiering system will post charges to a guest account at the time of consumption through a Point Of Sale [POS] system; charges are posted directly to a guest’s account.

Properties without a POS system will have a cash register at the outlet to process the guest charge and then each department will transfer the charges incurred that shift to the front office or front office cashier who would then post them to the guests’ folio.

There are several internal management reports which will be generated, such as the Arrival and departures report, no show reports, the trace or special request or a departmental report.

It is up to the night auditor to post the room rate each night to all room accounts and report any discrepancy. The Room Rate Variance report, which provides a listing of all occupied rooms sorted by room rate code, is used to verify room rate.

It is important to check room rate variances so that the correct rate is posted to each room and therefore reflected correctly in the daily revenue and occupancy figure.

The night auditor may have to provide general front office services, including check-in and check-out of guests, dealing with room allocation, account settlement and other specific guest services related to accommodation and rooming requirements. Even if the night auditor does not undertake any of the reception tasks, they need to be conversant with these duties, particularly reception and cashiering duties, as it is these departments’ work that the night auditor is auditing.

The night auditor will be responsible for reconciling the cash and preparing the cash for banking. This will include counting, sorting and preparing the cashier floats. The float is the ‘starting’ bank; a pre-set combination of notes and coin. The total amount will vary from location to location; a cashier with EFTPOS capabilities will need a substantial float. The float is collected, signed for, checked for accuracy and placed in the till drawer ready for use.

               Describe the responsibilities of a night auditor

Introduction

The night manager would be performing front office manager duties during their shift. The night auditor would follow the same procedure as other Front Office staff, attending a briefing or handover, logging on to the computer system, checking for updates and staff memos. Staff Memos will have information about changes in policy, events or security alerts.

Responsibilities of a night auditor

A night auditor also takes the duties and responsibilities of the night manager at the front desk. These include:

·         Supervising or conducting the security checks within the establishment, checking all floors and exit doors and public spaces

·         Collecting the room service orders, especially the breakfast orders, and posting the charges to the guests’ accounts

·         Prepare express checkout folios or room accounts with appropriate envelope and have them placed under the door of each room listed as an expected departure for guests who have requested an express checkout

·         Process the establishment's newspaper requirements and place the order

·         Process any payments, early departures, deposits or re-payments

·         The night auditor will receive and process all the floats and re-establish the pre-set combination of notes and coin

·         At the conclusion of the night audit process, the night auditor will roll the business date and process the room charges for the night and then process the in-house reports for distribution to departmental managers and supervisors

·         In the case of emergency during the night shift the night auditor would take responsibility at the premises

·         In the management role at the front desk the night auditor would be required to deal with guest queries and complaints

·         The night auditor would also be responsible for organising night staff meetings and hand over discussions.

Duties of the Night Auditor

Most businesses conduct an audit monthly or quarterly but accommodation venues audit each night because of the number of financial transactions and non-financial transactions in a single day. A hotel or resort may have several different outlets, which can mean many areas to balance and an increased margin for errors.

Before the night audit can be commenced the night auditor will process late arrivals and any no shows, and post all outstanding charges and payments.

Finally the night auditor processes the floats and balances the shift, collecting all receipts and batching them, separating them into each type of charge, cash, credit card or account charge. A printout of the journal copy for each posting code is then reconciled against each voucher (or receipt) to each posting.

If the establishment has an electronic cash register system all source data will be stored electronically. If not, and the night audit is to be completed manually then departments will have ‘deposited’ their source documents, balance sheets and takings (money) with the front office at the end of each shift, such as after breakfast, lunch and dinner in the restaurant or at the end of morning or checkout shift and the afternoon or check- in shift.

Any errors in guest accounts need to be tracked and corrected before the guest departs, and there is a need to check and monitor any outstanding accounts such as corporate accounts. Following internal codes of conduct, policies and procedures the night auditor must ensure that all guest accounts are accurate. Verification that guest account postings match source documents or electronic records needs to occur and this will also include posting any late charges such as an overlooked mini bar account.

After posting all departmental charges a night auditor will take each guest account and post the accommodation charge and check that the quoted room rate is still applicable. For example, has the guest asked for extra services that will change the room rate such as an extra rollaway bed or an extension of stay?

If there is a discrepancy between the guest information and room rate to be charged, the night auditor must determine which is correct and make appropriate adjustments, ensuring that the adjustment is documented. A night auditor will also check the status of each room to ensure the reports are given to Housekeeping, and used by Front Office the next day in order to accurately reflect whether a room is occupied, vacant, clean or dirty.

The guest folio file will be checked against the final, most up to date, room status report of the day produced by Reception or Housekeeping. The status of each room on the room status report will be compared to the guest folio file to see if guest information is filed for that room.

When using a computerised system the room charge can be added simultaneously by selecting the "post room charge option'. When all the departments have balanced, the record of charges posted that day by each department is printed and compared to the departmental totals with the Banking report totals. Any discrepancies then need to be tracked and corrected. When this function is conducted on a computer the system will not continue with the night audit until all discrepancies are corrected.

The final task of the night audit involves several internal management reports which will be generated, such as the arrival and departures report, the trace or special request or a departmental report.

Introduction

The night auditor usually reports to the Front office manager and, because they work often through the night, a night auditor can also take the night manager’s position, which means the night auditor manages the hotel or resort overnight, especially if the general manager lives off site. The night auditor is responsible for providing management with reports on the financial activity of each department, reports and statistics of all financial activity of the establishment and the statistics of guests’ financial activity. These reports and statistics will allow a quick response to potential problems or losses and provides accurate information on which to base business decisions.

Front Office organisational chart

          Identify the experience required by a night auditor

Introduction

An important part of the role of the front office and the night auditor is to maintain the financial records. This requires numeracy and bookkeeping skills and accountancy knowledge. Financial records are a set of accounts that show what income a business has received and what expenses a business has incurred. Financial records will also keep track of business assets and liabilities.

Skills and experience

The night auditor will also need experience with all the duties of the front desk, checking guests in, allocating rooms and issuing keys, explaining the location of the room and updating the guest reservation. The correct use of the front office accounting system includes handling cash and adhering to the cash control procedures and posting of charges and internal protocols relating to validation of charges and their allocation to the correct accounts/folios. All types of payment methods will have to be processed, including corporate accounts with fixed rate contracts. The front office will also require staff to have competent computer skills to operate a computer based property management system and to monitor internet bookings. They are need to have the ability to take reservations, including the operation of the front office reservation and other electronic systems. The night auditor will also need staff management and guest services skills since as the night manager the night auditor will need to handle guest complaints or answer guest requests.

   Interpret enterprise policies and procedures that apply to the delivery of night auditor functions

Introduction

A Hotel or Resort will establish procedures for managing financial system accuracy and security to help reduce the likelihood of theft or loss.

Cash transactions

An important feature of cash security is the counting of cash out of the guests’ or public’s view. Cash counting and balancing procedures are best undertaken in a secure environment, such as a locked room so the guests don’t see the amount of cash. Venues cannot force staff to pay for the loss of money or other assets because of failure to follow procedures. It is the venue’s responsibility to enforce procedures. However, if loss should occur (because a staff

member didn’t follow procedure), it is likely to result in disciplinary action against that staff member.

Credit policies

The accounts department needs the following information from companies before a credit facility can be established:

·         Reference from the company’s bank

·         References from other entities with whom they trade (companies already extending credit)

·         Company director’s authority. Company directors must sign the credit application form stating that if the company becomes insolvent the directors will be personally liable for any charges not paid.

This information is then passed on to a credit agency that specialises in this type of work.

When approved, it is set up in the establishment’s debtor’s section and given an account code. The company will be added to the establishment’s list of approved companies, which is distributed to the reservations department. This procedure is important because it helps reduce the likelihood of a house limit, set by the venue, which is the amount a guest or company can charge to their account before some form of payment must be made.

The credit card companies set a floor limit. A floor limit is a set limit on how much a venue can allow a guest to charge to their credit card before authorisation by the credit card company must be sought. House and floor limits are established to reduce the venue’s and credit card companies’ exposure to potential losses. A credit check report is produced each night. This report lists all the accounts whose totals are near to or in excess of their limit. Those guests or companies whose credit limit is reached or are in excess are asked to make a payment (all or some of the outstanding balance) on their account, thereby ensuring credit is maintained and the establishment does not expose themselves to losses.

All transactions of the day must be supported by written documentation. This documentation includes vouchers, receipts, guest folios, dockets, adjustment or correction slips, printed reports, registration cards, control sheets

and auditing documents or any other source document. All source documents are kept by the venue for a minimum of seven years. It is stored for legal reasons and stored in such a way that it is easy to access and retrieve. It is usually kept in a bag (referred to as a “day bag”) or box identified by date and stored in the back office on a monthly basis. Cashiers and accounts staff may have to refer to these documents to answer guest

queries. Each month’s documents are later placed in long-term storage.

All businesses are required to have emergency management and protocols during an emergency, usually reflected in the organisational chart. For Hotels or Resorts in areas where natural disasters such as hurricanes, tsunamis, floods or earthquakes may occur, the venue has to have procedures and policies to ensure the safety and security of guests and staff. Management need to have comprehensive risk management procedures documented.

A hotel or resort will usually have procedures to handle situations where guests’ behaviour is dangerous to themselves or other guests.

Risk management

What is the process when commencing a night audit run and the computer goes down? Prior to commencing the run, the night auditor would have made a back-up copy of all the information and stored it on a separate disk. Thus if there is a problem it will only be necessary to input all transactions which have taken place since the back-up time to make the system’s information current. Many computerised systems will automatically print basic reports on a regular basis in case of a system failure.

In most emergency situations, the front desk or telephonist is called, either by a guest or colleague. In the event of an emergency, front desk supervisors are responsible for calling emergency services (the fire brigade, ambulance and police). When receiving information advising of an accident or illness, it is important to convey information and get assistance. A regular practice drill needs to be performed to establish all staff know their responsibilities and routine in case of evacuation. Guests and staff members’ welfare is the main priority in a hospitality establishment in the event of an emergency.

Enterprise policies and procedures will cover protocols for the safety and internal security of guests and property and this may include working with the security staff. The venue will have security systems including cameras and electronic key use tracking software.

Management staff will have discretionary authority when dealing with guests and resolving complaints. This may include a complimentary item to a guest whose complaint is upheld. Staff will have internal rules to follow to protect the image or reputation of the establishment. Contravention may involve staff management and perhaps a discipline process. Staff will have protocols to follow when offering discounts or rooms free of charge.

   Identify and explain the role of communication in night auditor activities

Introduction

The night auditor will most commonly communicate with printed or written documents, as the auditor works at night often through the night, and most staff work during the day.

Communication

When a cashier makes or identifies a mistake they generally do not have the authority to delete any transaction, because there is a need to preserve the audit trail. So if a mistake is made the cashier will have to perform a negative or reverse posting, removing the mistake from the guest’s copy and moving the mistake and the correction to a new account screen or page. The cashier will complete a correction or adjustment slip which is either handwritten or added to an electronic account.

As the night manager the night auditor will have all the responsibilities for staff supervision and instruction with verbal instruction. This will involve running staff meetings or briefings.

The night auditor will communicate with management through the reports and statistics that are generated and relate to the financial and non-financial activities of the venue. This information is distributed to staff who need the information to better do their jobs or to management to be used to make business decisions.

Process internal financial transactions

   Verify that all relevant financial transactions have been posted

Introduction

The night auditor will check all financial transactions and verify that all charges have been posted accurately. Guest may make advanced deposits to secure their booking. This may be part of the room charge or the guest may pay the whole amount of the room charge. These payments have to be posted onto the guest account putting the account into credit until the guest arrives and then the night auditor will post a room charge.

Financial transactions

Guests who choose to pay with cash will be asked to pay for their accommodation and leave a security deposit at check-in. During the guests stay they may pay off part of their account and each payment means an adjustment to the guest account and receipts generated to verify the posting.

If guests leave credit card details or charge account details this is a secure or guaranteed method of payment and ensures the venue will be paid. These guests will be able to charge items to their room accounts, such as food and beverage, entertainment, room service, mini bar, gift shops, sporting facilities, disbursements, laundry, functions, meeting rooms and then settle at check-out by authorising payment. The posting will normally be done at the point of sale verified with a transaction number or receipt number.

Once a night auditor has completed posting charges to guest accounts he/she will check the outstanding balance or amount owed on each guest folio. This is then compared to the establishment’s predetermined floor limit for each method of payment specified by the guest on check-in. If any accounts are over the limit the guests must be contacted first thing in the morning.

If a guest has booked with a travel agent or taken a package deal the hotel will issue a voucher for use to secure services such as breakfast or a meal in a restaurant. Some guests may use gift cards or vouchers to pay for services. These still need to be processed through a cash register to establish an audit trail and verify the payment.

Complimentary services or services offered free of charge may be offered as part of a complaint settlement or as part of a package deal. Once again these services need to be processed through the cashier system to establish the audit trail. Vouchers or complimentary certificates need to be checked for currency or expiry date.

    

   Validate transactions and charges that have been posted

Introduction

All transactions should be traceable through an audit trail. This means a transaction will have a code or number attached which identifies it individually. In a hotel or resort the transaction is either paid and a receipt issued or signed for with a hard copy signature or an electronic signature or perhaps by pin number or password.

Validation

Transactions are validated by checking the code or numbering system of an item on a guest account and linking it to a hard copy or electronic cash register record which will also include a time stamp and server ID. This ensures allocation of monies and charges to correct accounts, departments and budget and forecast reports.

The night auditor may take a representative sample of guest accounts and individually check them for accuracy of charges and validate the record. As a hotel or resort has many guests a computerised system will also check but the night auditor has to factor in human error in data entry. Often a guest will pick up a mistake at the point of sale or when they check their advanced bill and question a charge.

All charges made through the hotel’s system will have a transaction code or identification and a docket or reference number or code ensuring only legitimate charges are posted. Non-monetary charges also need to be validated to credit or debit the correct supplier of the complimentary service or free of charge item.

   Post charges to guest accounts

Introduction

The various departments in the venue keep track of those goods and services consumed by guests. Adding charges or payments is called 'Posting' to the guest account. Posting charges to guest accounts includes operating the in-house system to record legitimate charges against appropriate guest accounts.

Posting

Posting is the record of the details of a financial transaction which can be a charge or a payment on a guest’s account. Charges are posted to a guest’s account when each department transfers the dockets for charges incurred in the outlet to the front office, or if the charge has been processed on a POS terminal it is charged directly where it occurred. Alternatively if processed during the night by the night auditor, this may occur if the guest has used a service from a third party provider.

A credit charge decreases the balance owed by a guest and a debit charge increases the balance owed by a guest to a hotel or resort.All guest charges post to one or more folios once the guest is in-house.

Introduction

Reconciling an account means proving or documenting that an account  balance is correct.

We achieve this by comparing guest accounts with departmental and cashier reports in hard copy or electronic form and any source documents.

After posting all charges a night auditor will take each guest account and post the accommodation charge shown on the folio. The night auditor will check that the quoted room rate is still applicable. For example, has the guest asked for extra services that will change the room rate, for example, an extra bed or an extra guest sharing the room?

If there is a discrepancy between the guest information and room rate to be charged, the night auditor must determine which is correct and make appropriate adjustments, ensuring that the adjustment is documented. A night auditor will also check the status of each room to ensure the reports are given to Housekeeping and used by Front Office the next day so as to accurately reflect whether a room is occupied, vacant, clean or dirty.

The guest folio or account will be checked against the final, most up to date room status report of the day produced by Reception or Housekeeping. Any discrepancies will be monitored and fixed.

If the room status report indicates that a room is occupied, there should be guest information in the guest folio file for that room. A common discrepancy occurs when a room is shown as occupied on the status report, but there is no information in the guest file. This generally occurs when an incorrect room number has been written on the guest folio and the guest information has been misfiled or the guest has been transferred to another room.

It is up to the night auditor to ascertain which room the guest is occupying. If unable to do this, the night auditor must leave a message for Housekeeping or Reception explaining the discrepancy.

   Identify and resolve discrepancies in the posting of internal charges

Introduction

Depending on the type of discrepancy located, it is often necessary to record the type and amount of the discrepancy, especially if the error is on a guest’s account. Many establishments use a docket or a voucher called a credit voucher to document the adjustment. This will record not only the type of charge and amount being corrected, but a description or explanation as well.

Discrepancies

Discrepancies can be recorded using a guest folio discrepancy report. This records all discrepancies on guest accounts for one day. At the end of the day the night auditor will file the report with the rest of the daily documentation for later reference and checking. If to correct an error a charge needs to be added to a guest’s account, then the appropriate docket or electronic comment is used to explain the change.

Some common discrepancies include:

·         If the guest name does not match room given this is checked with the front Office or reception desk to check any room changes. The guest may be a share arrangement and the second name is not listed on the system. The guest may be a 'passer-by' a day visitor to a guest registered in the house. If the staff cannot confirm the guest as a registered guest then they will be asked to pay for all services as they are received

·         If incorrect prices have been posted staff will enter a correction which is processed when the total charge for an item is removed from the account. This is managed by a negative post to a separate window or folio. If the amount has been entered correctly but the quantity is incorrect then an adjustment is processed when the total charge for an item is altered.

The staff with supervisory status will usually have the authority to complete these processes.

All guests will have a copy of their account to review either electronically or in hard copy. This is a policy to check accuracy and adjust any inconsistencies. To resolve incorrect postings, such as postings to incorrect guest folios, staff will need to remove the charge and postings cannot be deleted but can be corrected and hidden from the guest account by a negative post.

To negative post an item is moved to a new window or folio then staff repost the item as a negative quantity or negative $ amount writing ‘ Posting error’ in the ‘Reference’ or supplementary field or section.

If a guest exceeds their house/guest limits with excess charges staff will ask the guest to settle part or all of the account and may list the guest as ‘Cash Only’ until the situation has been rectified.

System errors can be difficult, especially with electronic systems. In this case the usual process is to revert to a manual system. A hard copy template of documents and manual cashiering systems needs to available as backup.

   Implement requirements of internal financial systems and controls

Introduction

Internal financial systems and controls designed to keep strict control over the accounting process are necessary so that all transactions can be accounted for and so that the venue does not lose money through theft or poor control.

All transactions of the day must be supported with written documentation and include vouchers, receipts, guest folios, dockets, registration cards and any source documents to name a few. All cash monies need to be counted and kept in a secure location.

Cashiers float

The float is signed out at the beginning of a cashier’s shift

and signed in at the end of the shift to help the venue keep track of the location of all floats and to reduce the likelihood of loss. It also makes people accountable for their float. Balancing the cash register at the end of a shift, and submitting the monies and receipts, will enable monitoring of the accuracy in transactions. Some establishments do blind drop and a third party checks and balances the cash register monies. This may include checking petty cash allocations and receipts for accuracy. EFTPOS machines and computerised cashiering systems will produce an internal check identifying any imbalances.

Docket control

Docket control is a financial control system that helps keep track of all dockets issued to guests by the venue. Many venues maintain a docket numbering system to ensure that all dockets are accounted for, even those that are subsequently cancelled. In those venues where this occurs, it is not uncommon to find that the night auditor is responsible for accurately recording the numerical sequence of the dockets issued to each department each day. That department then becomes responsible for the dockets issued to them on a daily basis. Each docket must be used to record charges incurred by guests. Spare dockets are returned to the night auditor at the end of the trading day along with any cancelled dockets. Each of the venue’s outlets completes a control sheet, issued with the actual dockets, on which all docket numbers are listed. As a docket is used, the cashier in that venue records on the control sheet the transaction details in a similar way to the information contained on any other source document. While docket control procedures seem tedious, it does help reduce the opportunity for theft or fraud on behalf of establishment employees.

Debtor control

While night audit is often responsible for identifying and reporting to management those accounts that have reached or exceeded their credit limit, it is not usually their responsibility for the follow up of unpaid accounts. In cases of a guaranteed booking where the hotel has payment details then staff post a late charge or a delayed charge. A delayed charge would be recorded on a guest’s account after a guest’s departure.

Delayed charges are sometimes necessary because not all charges reach reception before the guest checks out.

At the end of each month, a statement for company accounts (city ledgers) is sent to each company with an outstanding account balance. Credit terms, when companies are expected to settle, are usually 7, 14 or 30 days. The statement will list all charges incurred during the past 30 days, any payments received, and any outstanding balance from previous accounting periods.

If a guest departs and the venue then learns that a guest has outstanding charges, if it is less than $10.00 for a local guest or $50.00 for an overseas guest, then the venue will not seek restitution. Instead, the venue will “write off” the lost revenue, usually because of the cost involved in retrieving payment. Also, the effect of sending an incorrect account to a guest may not be worth the money the establishment may receive.

   Check room status and reconcile variations

Introduction

If the room status report indicates that a room is occupied, there should be guest information in the guest folio file for that room.

Reconcile Variations

A common discrepancy occurs when a room is shown as occupied on the status report, but there is no information in the guest file. This generally occurs when an incorrect room number has been written on the guest folio and the guest information has been misfiled or the guest has been transferred to another room. Since the Room Charge is posted to all registered guests, it is necessary to check that all rooms have the correct rate attached. Some guest's rates change during their stay. For example, a convention attendee may stay after the convention concludes and the convention rate finishes and the standard rack rate is charged.

   Secure, record and prepare funds for banking

Introduction

The banking report contains the summarised amounts for the cash, credit cards, cheques, foreign currency and EFTPOS transactions managed during that shift. The night auditor would have checked all balances recording ‘unders’ and ‘overs’. ‘Unders’ refers to having less physical money than the computer says we should have. ‘Overs’ refers to having more physical money than the computer says we should have.

Prepare Funds

Before funds are taken to the bank a banking summary needs to be completed. This summarises the amounts of cash, credit cards, cheques, foreign currency and EFTPOS taken for the day or banking period. The amount of the float is removed from the cash takings of the day and the total amounts are written on a banking envelope. The cash amounts by denomination are written on the banking envelope and the amounts and other documentation are placed inside.

The Banking report is included and the funds are ready to be placed in the banking satchel or bag and banked.

Element 3:

Verify occupancy position of the property

   Check and validate room status

Introduction

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 computerised system many of these statistics will be calculated automatically.

Occupancy

This measures the percentage of rooms occupied or sold in a property. It can be used to:

·         Indicate how successfully the Sales and Front Office staff are selling rooms

·         Measure the volume of business generated by guests in revenue-producing departments, comparing sales figures with the occupancy

·        No. of rooms occupied        * 100

   Total no. of rooms available

Provide information for management on which to base budgetary considerations. The formula to calculate Occupancy Percentage is:

Example

The occupancy rate of a hotel which has 141 rooms occupied of its 186 available rooms is: 141/186 x 100 = 76%

It must be remembered that room occupancy may be calculated differently according to the way in which out-of-order rooms and free-of-charge rooms are handled. Find out what the policy is in your establishment before calculating room occupancy figures.

Double or multiple room occupancy

This statistic is used to determine linen and guest amenity requirements, food and beverage stock requirements and potential revenue in outlets. There are two methods for calculating this ratio:

Option 1

 Multiple occupancy %

Number of guests - Number of rooms occupied   * 100

 Number of rooms occupied

      

Example

(198 - 141)/ 141 x100 = 40.4% of all occupied rooms have more than one person in them

Option 2

Average guests per room occupied

Number of paid guests Number of rooms occupied

Example

198/141 = 1.4 guests per room

Average room rate

It is used to show how much, on average, each occupied room is generating in revenue and is a very important statistic when forecasting future room revenue. It is used to determine sales strategies and marketing promotions.

The formula is:

Net room revenue/Number of rooms occupied = Average room rate

Example

The average room rate per room occupied is based upon the total amount of revenue divided by the number of rooms that were occupied.

$22,500/141 = $159.57

Average rate per guest

Indicates how much, on average, each guest spends or pays for accommodation. It can be used to show spending patterns of particular types of guests, especially when used in conjunction with Food and Beverage information. This statistic is not used as frequently as occupancy percentage and average room rate.

Net rooms revenue/ Number of guests = Average rate per guest

Example

The average rate per guest is based upon the total amount of rooms revenue divided by the number of guests staying in the hotel.

$22,500/198 = $113.64

   Investigate discrepancies in room status

Introduction

If there is a discrepancy between the guest information and room rate to be charged, the night auditor must determine which is correct and make appropriate adjustments, ensuring that the adjustment is documented. A night auditor will also check the status of each room to ensure the reports given to Housekeeping (and used by Front Office the next day) accurately reflect whether a room is occupied, vacant, clean or dirty.

Discrepancy

The guest folio file will be checked against the final, most up-to-date, room status report of the day produced by Reception or Housekeeping. The status of each room on the room status report will be compared to the guest folio file to see if guest information is filed for that room.

If the room status report indicates that a room is occupied, there should be guest information in the guest folio file for that room. A common discrepancy occurs when a room is shown as occupied on the status report, but there is no information in the guest file. This generally occurs when an incorrect room number has been written on the guest folio and the guest information has been misfiled or the guest has been transferred to another room. It is up to the night auditor to ascertain which room the guest is occupying. If unable to do this, the night auditor must leave a message for Housekeeping or Reception explaining the discrepancy.

   Adjust internal records to reflect actual room status

Introduction

The room status report provides details of the state of each room. This can be linked to the movement report which shows actual departures and expected arrivals. Internal records will reflect actual room status. Room status files are constantly updated as the front office checks people in and out and housekeeping update the rooms ready for sale.

Room Status

All guests who are registered in the establishment are included in the ‘In-house Guest List’. It lists basic details of guests such as arrival and departure dates, room and folio number, number of guests, special packages and any other details deemed necessary by an establishment.

The ‘Room Status List’ will indicate which rooms in the establishment are:

·         Vacant - an empty room but may not be ready for sale

·         Ready vacant - clean and inspected by housekeeping as ready for sale

·         Dirty occupied - occupied by an in-house guest, but not serviced by housekeeping today

·         Clean occupied - serviced by housekeeping

·         Dirty out of order - a room where maintenance or renovation is occurring.

Room status is checked against registration and reservation documentation and is often printed for reference and electronic files are frequently updated and offer an accurate list of rooms available for sale. Other operational reports reflecting room occupancy, such as housekeeping reports which may include ‘in- house activity report’, ‘departure report’, are used in conjunction with the room status reports.

Element 4:

Contribute to management decisions

Prepare management and operational reports

Introduction

The best method of communicating information is in the form of reports. The actual creation of reports will depend on who needs to know what information. Morning shifts will require different information to afternoon shifts. Apart from the room status report there are:

Daily room revenue summary report

To provide a summary of accommodation revenue and the number of guests staying in the property.

Daily revenue report

Is a summary of all revenue earned in the property that day. It can also be called the Daily Operations Report or Daily Activity Report or the sales and performance report, including foreign currency activity.

In-house activity report

This report is prepared for staff information in all areas of the establishment. It indicates the number and type of guests arriving, staying and departing the establishment that day. It will often indicate major groups, conferences or other activities taking place within the establishment.

The in-house activity report will also include outlining rooms occupied, expected departures and stayovers, expected arrivals, walk-ins and no-shows, rooms available, percentage occupancy by room and beds, free of charge (FOC) rooms, out-of-order rooms and single and multiple occupancy.

Arrival and departure lists

This is an essential report for Housekeeping and Front Office. It is sometimes compiled as two separate reports depending on the size of the property and the number of arrivals and departures. This includes a special packages report to record the number of packages and type of packages booked.

In-house guest list

This report lists all guests who are registered in the establishment. It lists basic details of guests such as arrival and departure dates, room and folio number, number of guests, special packages and any other details deemed necessary by an establishment.

Special requests report

This lists all special requests required by guests and is detailed by department. For example, if a guest needs a rollaway bed it would go to housekeeping's report. The electronic system provides an accurate ‘trace’ report for each department. A trace is an electronic message to request a service from a specific department.

Commission-related reports

This may include items such as travel agents commission report and lists all commissions payable for the reservations they have booked. This report is supplied to travel agents and third party booking agents to confirm commissions paid.

   Distribute reports internally according to enterprise requirements

The final duty of the night audit shift is the generation and distribution of activity reports which summarise the financial trading period, usually corresponding to the statement of financial performance and identifying statistical information about current and expected occupancy and forecasting projections

The reports are distributed to specific departments depending on requirements and planning needs within the venue.

Departments use these reports for forecasting staff needs, planning rosters, planning renovations, and purchasing supplies. For example the room service butlers need to receive the expected arrivals report to identify any expected VIPs so that rooms and amenities are all ready. Food and beverage may need to check on the number of group arrivals that require special breakfast service and adjust staffing to meet the need.

Back-up reports have to be done to source the information needed to bring all transactions up to date in case of electronic or computer failure. The hotel can still operate during a computer failure by using these reports and reverting to a manual system.

Reports may be generated nightly, weekly, monthly, yearly or for any other accounting period, depending on the information contained in the report and venue requirements.

Reports need to be distributed in a timely manner because they help management do their jobs. The information contained in the reports is often used to plan operational activities, set new (sales) targets and plan promotional activities.

The guest feedback report is an important report for management to draw up a profile of guest patterns. Using this, advertising campaigns can be tailored and targeted to specific markets. Management can improve facilities and services for guests depending on guest patterns. Information which may be included in the guest market breakdown:

·         Source of reservation

·         Market segment

·         Postcode of guest

·         Average rate per guest or market segment

·         Length of stay

·         How guests learned of the establishment - promotional source

·         Materialisation of travel agent, airline, corporate and group allotment bookings

·         Number of reservations for package deals.

   Monitor and evaluate night auditing duties to provide feedback to management on opportunities for improvement

Generally Hotels and Resorts have a meeting of all departmental heads if not daily then at least once a week. The departmental heads will meet and compare revenue reports and other performance indicators. The Night Auditor’s duties are monitored by management daily through the timely issuing of these reports and the efficiency and accuracy of the guest accounts. One of the measures that may be used to evaluate the night auditor’s role is the level of customer complaints received about guest charges.

The main function of the night auditor's role is to audit the financial transactions of the hotel or resort; the process of checking and reviewing all financial and non-financial transactions to determine the accuracy of the posting process. This may expose bad practices or difficult procedures. If cashiers are all making the same error, the night auditor may recommend a change of procedure or an update of system to prevent the error. Also there may be opportunities for training to improve practices. Some errors may indicate a need for improved induction of cashiering staff. For example, if a cashier is not given the correct information and a report is completed in a pink ink it may not be legible or legal. These documents then need to be completed with black or blue ink.

Auditors may be monitored by external entities such as banking or government regulators and the reports that are produced measure the auditor’s performance and are sent to the Hotel or resort management. These regulators may Identify issues and set a time frame for completion.

Night Audit / End of Day process in Hotels

The Front office Audit is usually referred as Night Audit because hotels generally perform it during the late evening hours. Before the implementation of automated front office systems, The most convenient time to perform the audit was during the late evening and early morning hours, This helps the front office personal to work with minimal interruption and also most of the hotel outlets and revenue centres are closed during this time.

The audit is a daily review of guest account transactions recorded against revenue centre transactions. The routine helps guarantee the accuracy, reliability and thoroughness of front office accounting.

Night audit is generally comprised with the below functions:

Shift Commencement:

• Taking the shift handover from the evening shift.
• Counting and tallying the cash float.
• Printing essential Shift reports.
• Opening the Night audit Cashier.
• Reading the Log book and also listing down any pending tasks / follow ups from the evening shifts.
• Look for any uncleared traces for the day and take necessary actions.

Balance Food And Beverage outlets:

• The Outlets will close their day,  hand over the Check copy and drop the cash collection at front desk.
• Print the Outlet wise sale report from the Front office software ( PMS) and tally / balance  the revenues with similar report from the Point of Sale ( POS ) software. This will ensure that all revenues generated at the POS has been captured by the PMS.
• If there is any missing checks then the same has to be posted manually, Like wise any duplicate postings has to be voided.
• Tally the cash posting in PMS and print the cash receipt for the dropping done by restaurant team.
• Check if there is any Tips for the restaurant staff on credit card, Handover the same after making the corresponding paidout entry on the system.
• Once all restaurants had dropped their cash check out the Payment Master room ( PM ) for Cash, Credit Card and City Ledger. ( Eg: 9001, 9010, 9015 etc.)
• Check the lost posting PM to see if there is any lost interface posting lying on the folio. 
• Check-out the Lost posting PM room after taking any corrective / allowance.

Audit and keep things ready for the End of Day:

• Keep the duplicate copy of restaurant checks sorted according to the floor number / Room number and place them on to the respective rooms folders / slots.
• Print the Payment made today by all Method of Payments ( Cash, Credit card, Bill to Company etc. ) and tally the same with corresponding payment for the day.
• Take out all Invoice generated for the day and Tick mark net to the amount on the 'Payment report' for the day to indicate that payment type and the amount appearing on the folio is matching with the amount and type on the report.
• Reconcile all Bill to company settlement for the day and make sure that the corresponding billing letter and copy of the restaurant checks are attached to the same.

Print Reports for all interfaces from PMS:

• Posting report for Telephone postings.
• Posting report for Internet postings.
• Posting report for In Room Movie rentals.
• Refer the server report for all the above interfaces and tally the revenue with those posted on the PMS.
• Circle the last transaction to verify and also to ensure that the last charges has posted in the evening and not stopped sometime during the day.
• Reconcile all posting these  must balance guest accounts.
• Sign all the posting reports.

Log all Vacant Rooms, resolve room status and discrepancies.

Count the Key's in the slot ( For hotels using  Manual Metal keys )

Check the Rate check report / Rate variance report:

• Make sure that the correct room rate is entered on to the reservations.
• Any Zero rate rooms to be investigated and identified for Sharer, Complementary, House user or PM rooms.
• Investigate all Rate discrepancy.
• Check for correct assignment for Market and source segments to the reservation.
• Verify all correct by ticking or highlighting both the rate and the reservation / billing instructions.
• Sign off on the report once completed.

Balance Credit Cards:

• Print the 'Payment report only Credit Card' report from PMS.
• Perform the Batch closing on all EDC / CCD machines.
• Compare the settlements on the Batch close report with the 'Credit Card' report printed from PMS.
• Place a tick next to the amount of the report to indicate that paperwork is in order and complete.
• Do this for ALL payments made today. All paperwork must be filed in order of the report.
• Please ensure the end of day credit card terminal docket says settlement successful.
• Complete the Credit Card Reconciliation Form.
• Both PMS and credit card MUST balance to each other.
• Complete settlement on all the credit card terminals – after midnight

Check Pending Arrivals:

• Check all pending arrivals left.
• Show check in for those rooms which has been prepaid or has a guaranteed payment form agent or Company.
• All non arrivals that have not been prepaid need to be processed as a no show during EOD.

Check Pending departures:

• Review pending departures.
• If there are any departures left cross check the same with the bell boy errand card for departures to make sure that the room has departed. And show check out for the same on the system.

Balance Cash:

• Retrieve the Payments as at now sorted by MOP printed earlier
• Verify all cash drops
• Balance any paid outs from same or previous days
• Prepare deposit slip and express banking bag for net cash and cheques

Cash Register closure:

• Cash Register / Cash register closure. You must ensure all cash registers are closed (the only way to do this is to ensure you have all the cash register closure reports).
• You must ensure that there are no outstanding departures/arrivals (including group masters).
• Print Shift Reports before closure.
• Ensure that all postings are accounted for.
• Close Cash Register.
• Sign on the report printed while closing cash register.

Pre End Of Day Final Check:

• ALL Cash registers are CLOSED (reopen and close all registers to ensure they are closed)
• There are NO departures still to depart.
• There are NO non-guaranteed arrivals still to arrive (including group masters). 
• Check if there is a printer connected with enough paper loaded on to the computer you are running the EOD on.
• Log out all computers except the one on which the EOD will be performed.
• Inform all outlets to not to settle any checks till the time the EOD is completed.

Start End of Day / Night Audit Process on the Front office software.

After EOD Process is completed:

• Print Newspapers Report and complete daily newspaper order form. 
• Hand over the Newspaper report to the Bell Desk team.
• Report set to be printed for General Manager and all HOD's.
• Re check-in all PM rooms for the POS postings ( Cash, Credit Card, City Ledger, Lost posting )

Rooms Division Department:

Operational Issues

I- Forecasting Room Availability:

Forecasting room availability is forecasting the number of rooms available for sale on any future date. This type of forecasting helps manage the reservation process, guides the front office staff for an effective rooms management, and can be used as an occupancy forecast, which is, further, useful in attempting to schedule the necessary number of employees for an expected volume of business.

· In order to forecast room availability, the following data are needed:

a)      Number of expected room arrivals

b)      Number of expected room walk-ins

c)      Number of expected room stayovers

d)     Number of expected room no-shows

e)      Number of expected room cancellation

f)       Number of expected room understays

g)      Number of expected room check-outs

h)      Number of expected room overstays

· These above-mentioned data help the front office in conduct various daily operational ratios such as:

a)      No-shows % = (number of no-show rooms) / (number of rooms reserved) * 100

b)      Cancellation % = (number of cancellation rooms) / (number of rooms reserved) * 100

c)      Walk-ins % = (number of walk-in rooms) / (total number of rooms arrivals) * 100

d)     Overstays % = (number of overstay rooms) / (number of expected check-outs) * 100

e)      Understays % = (number of understay rooms) / (number of expected check-outs) * 100

· The forecasted number of rooms available for sale for any future date can be tracked using the following formula:

· Forecasted Number of Rooms Available for Sale = Total Number of Guest Rooms – Number of Out of Order Rooms - Number of Stayovers Rooms – Number of Reserved Rooms + Number of No-show Rooms + Number of Cancellation Rooms + Number of Check-Out Rooms + Number of Understay Rooms – Number of Overstay Rooms

· Under non-automated and semi-automated systems, the number of rooms available for sale forecasts can be calculated only upon demand and need and might vary from three-day to ten-day forecasts. However, under fully automated systems, forecasts can be done at any moment for any future period of time. For, computers run forecasts on a room count considerations, hence eliminating tedious labor work and human error margins.

II- Operational Ratios:

1. 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 Ratios shall be computed on a daily basis by the Night Auditor, and communicated to related department managers the next day!

For any ratio to be significant, it should be compared to a certain benchmark, which might include:

1. Last Period’s Ratio
2. Budgeted or Planned Ratio
3.  Competitors’ or Industry Average Ratio

· Occupancy Percentage = (Number of Rooms Occupied) / (Total Number of Rooms Available For Sale) * 100

· Multiple Occupancy Percentage = (Number of Rooms Occupied by More Than One Guest) / (Total Number of Rooms Occupied) * 100

· Single Occupancy Percentage = (Number of Single Rooms Occupied) / (Total Number of Single Rooms Available For Sale) * 100

· Double Occupancy Percentage = (Number of Double Rooms Occupied) / (Total Number of Double Rooms Available for Sale) * 100

· Triple Occupancy Percentage = (Number of Triple Rooms Occupied) / (Total Number of Triple Rooms Available For Sale) * 100

Let’s consider the following problem:

Yasin Hotel has 204 rooms: 45 are triple, 60 are double and the remaining is single. On the night of May 9^th, 03 the night auditor counted 195 rooms occupied, 43 are triple, 58 are double, and the remaining are single. Moreover, the housekeeping department communicated only 4 rooms (all single) out of order for the night of May 09^th, 03

a)      What is Yasin Hotel's Occupancy Rate for the night of May 09^th, 03?

·         Hotel’s Occupancy Rate = 195 / (204 - 4) * 100 = 97.50 %

b)      What is Yasin Hotel's Single, Double, and Triple Occupancy rates for the night of May 09^th, 03?

·         Single Occupancy Rate = 94 / (99-4) * 100 = 98.95 %

·         Double Occupancy Rate = 58 / 60 *100 = 96.67 %

·         Triple Occupancy Rate = 43 / 45 *100 = 95.56 %

2. Other Operational Statistics:

· Average Guests Per Rooms Sold = (Total Number of Guests) / (Total Number of Rooms Sold)

· Average Daily Rate = (Actual Room Revenue) / (Total Number of Rooms Sold)

·   Average Rate per Guest = Revenue Per Available Customer (RevPAC) = (Actual Room Revenue) / (Number of Guests)

·   Revenue Per Available Room (RevPAR) = (Actual Room Revenue) / (Number of Available Rooms)

Let’s consider the following example:

Cordoba Hotel has 120 rooms: 53 of them are single and 67 are double. On the night of 09/12/03, Cordoba Hotel’s Night Auditor counted a total of 85 rooms occupied, 42 of which were occupied by more than one guest. Moreover, on the same night 127 guests were registered. In addition, 2 rooms were on a complimentary basis. From the Housekeeping Room Status Report (for the night of 28/11/07), there were a total of 4 rooms Out of Order, 3 of which were Single. Lastly, the Actual Room Revenue for the same night was at the order of $ 6,960.

a)      Calculate the Average Guest Per Room Sold

b)      Calculate the Average Daily Rate

c)      Calculate the Average Rate Per Guest (RevPAC)

d)     Calculate the RevPAR

Answer:

·         Average Guest Per Room Sold = 127 / (85 – 2) = 1.53 Guest Per Room Sold

·         Average Daily Rate = $ 6,960 / (85-2) = $ 83.86

·         Average Rate Per Guest (RevPAC) = $ 6,960 / 127 = $ 54.80 Per Guest

·         RevPAR = $ 6,960 / (120 – 4) = $ 60.00

3. Yield Statistic:

· Yield Statistics is an operational ratio that needs to be calculated on a daily basis by the Night Auditor and communicated to the Rooms Division Manager to show how successful the Rooms Division Department is selling its rooms at a rate very near the rack rate!

· Yield Statistic is one approach to come up to a solution to Yield Management, which is:

“Maximize Room Revenue Subject to Space”

· Yield Static can be computed in the following way:

· Yield statistic = (Actual Room Revenue) / (Potential Room Revenue)

Let’s consider the following example:

The following data is pertinent to the room price and room type rack rates of Sinan’s Hotel for the Night of December 10^th, 03:

Number of Rooms	Room Type	Room Rate	Rack Rate
54	Single	$ 40	$ 55
40	Single	$ 45	$ 55
19	Double	$ 52	$ 70
39	Double	$ 55	$ 70
14	Triple	$ 60	$ 80
16	Triple	$ 63	$ 80
13	Triple	$ 70	$ 80

Could you calculate Sinan Hotel's Yield Statistic?

Answer:

Number of Rooms	Room Type	Room Rate	Rack Rate	Actual Room Revenue	Potential Room Revenue
54	Single	$40	$55	$2,160	$2,970
40	Single	$45	$55	$1,800	$2,200
19	Double	$52	$70	$988	$1,330
39	Double	$55	$70	$2,145	$2,730
14	Triple	$60	$80	$840	$1,120
16	Triple	$63	$80	$1,008	$1,280
13	Triple	$70	$80	$910	$1,040
			Total	$9,851	$12,670

· Sinan Hotel’s Yield Statistic = $ 9,851 / $ 12,670 *100 = 77.75 %