1. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. HOUSEKEEPING MANAGEMENT SECOND EDITION ︳ MATT A. CASADO

2. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. CHAPTER Main Concepts 9 Controlling Operations Useful Tips on Budget Interpretation Housekeeping Operating Budget Consolidated Room Sales Rooms Division Budget Section Housekeepers’ Man-Hour Justification Useful Tips on P&L (P&L) Statement Interpretation The Profit and Loss and Variance Analysis Productivity Control Weekly Labor Forecast Computerized Housekeeping Management

3. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. USEFUL TIPS ON BUDGET INTERPRETATION (I) Revenue is the amount of dollars generated from selling rooms. Expenses are the costs of the items required to operate the rooms division. Profit is the amount of dollars that remain after all expenses have been paid. Revenue - Expenses = Profit

4. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. USEFUL TIPS ON BUDGET INTERPRETATION (II) The following terms are synonymous: revenue and sales expenses and costs Revenue - Expenses = Profit

5. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. USEFUL TIPS ON BUDGET INTERPRETATION (III) Labor Costs – Cost of all employees, including taxes. Other Expenses – All expenses not associated with payroll.

6. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. USEFUL TIPS ON BUDGET INTERPRETATION (IV) Percent (%) means “out of each hundred.” There are three ways to write a percent: – Percentage Form “%” sign is used, as in 10% – Fraction Form the part, or a portion of 100, as in 10/100 – Decimal Form the decimal point (.), as in 0.10

7. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. USEFUL TIPS ON BUDGET INTERPRETATION (V) Percentage of revenue that a particular expense costs: Expense Revenue = Expense %

8. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. THE HOUSEKEEPING OPERATING BUDGET The purpose of the operating budget is twofold: 1.To allocate funds for expenditures for a determined period of time, generally one year. 2.To measure and control the department’s performance. The housekeeping operating budget is part of the rooms division budget, which also includes the front office.

9. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. CONSOLIDATED ROOMS SALES The projected revenue of the rooms division consists of the dollars to be generated by the sales of rooms at a certain unit price. Sales = Number of rooms sold X Average daily rate (ADR)

10. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. SECTION HOUSEKEEPERS’ MAN-HOUR JUSTIFICATION Used to ascertain the wages of section housekeepers and laundry workers, as these employees report to work based on number of rooms that need to be serviced daily. Purpose of this statement is to warrant the amount that must be obtained in the upcoming budget.

11. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. USEFUL TIPS ON P&L STATEMENT INTERPRETATION The P&L lists actual revenue, payroll costs, other expenses, and profit for a certain period of time, usually monthly. The P&L is important because it indicates the financial performance of the rooms division operation.

12. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. SAMPLE PERCENTAGES USED IN A ROOMS DIVISION P&L STATEMENT 1.Labor Cost Revenue = Labor Cost % 3.Other Expense Revenue = Other Expense % 4.Total Expense Revenue = Total Expense % 5.Profit Revenue = Profit %

13. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. VARIANCE ANALYSIS The variance analysis is a report indicating the changes in revenue and expenses from each budget category. The purpose of the variance analysis is to alert department heads of percentage changes from budget.

14. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. COST PER OCCUPIED ROOM The cost per occupied room is a good determinant of expenses per room sold. The cost is obtained by dividing each expense category for a certain period of time by the rooms sold during that period of time. – For example, if rooms sold = 9,672 and expense = $17,830, the cost per room would be $1.84

15. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. PRODUCTIVITY CONTROL Productivity is a measure of output compared to input. A useful ratio to control productivity is: – Revenue : Hours of work = dollars per labor hour. Another indicator of productivity is: – Hours of works : rooms cleaned = mean hours per room serviced

16. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. WEEKLY LABOR FORECAST The weekly labor forecast projects the section housekeeper hours needed to service the forecasted occupied rooms for a particular week. By dividing the estimated revenue for the week by the section housekeeper hours, the revenue generated per hour worked is obtained. The result is compared to the amount stated in the yearly budget.

17. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. PAYROLL CONTROL If significant variations with planned results occur, management must: – Determine if there is too much overtime or overscheduling of workers – Take corrective action

18. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. COMPUTERIZED HOUSEKEEPING MANAGEMENT Executive housekeepers use technology to perform tasks such as controlling inventory supplies, scheduling operational routines, tracking departmental man-hours and costs. Software packages exist that perform personnel management tasks, track inventory supplies, establish quality assurance programs, schedule guestroom maintenance, or print daily work schedules.

19. Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. COMPUTERIZED HOUSEKEEPING MANAGEMENT (CONT.) Steps in selecting a computerized housekeeping management software system are: – Determine the needs of the department – Select a system that will fulfill the requirements to have the job done – Ensure that the vendor will provide technical support and employee training