Guest Charges, Payment, and Check-out Chapter 11 Guest Charges, Payment, and Check-out

Accounting for Guest Charges Guest charges can include: Guest room charges Taxes related to the sale of guest rooms Guest-initiated room telephone charges Food and beverage and other product/services purchases charged to the guest’s room Charges for any other goods and services directly interfaced with the PMS

Accounting for Guest Charges Generally Accepted Accounting Principles (GAAPs): Standards and procedures that have been adopted by those responsible for preparing business financial statements for the purpose of ensuring uniformity. Accounting: The process of summarizing and reporting financial transactions. Bookkeeping: The process of initially recording financial transactions.

Accounting for Guest Charges Assets: Items owned by a business including cash on hand, money in checking or other accounts, money owed to the business, inventories, property, equipment, and furnishings. Liabilities: Debts owed by a business. Owner’s Equity: What remains after subtracting what the business owes others (its liabilities) from what the business owns (its assets).

Accounting for Guest Charges Uniform System of Accounts for the Lodging Industry (USALI): A standard set of accounting procedures used to record a hotel’s financial transactions and condition.

Accounting for Guest Charges Account: A device used to show increases or decreases in the asset, liability, or owner’s equity sections of the fundamental accounting equation. Because of their shape, accountants refer to these as “T” accounts.

Accounting for Guest Charges Accounts Receivable (AR): Money owed to a hotel. Accounts Payable (AP): Money owed by a hotel. Retained Earnings: Profits earned but not paid (disbursed) to the business owners.

Accounting for Guest Charges Double Entry Accounting: A system of recording financial transactions in a way that maintains the equality of the fundamental accounting equation: Assets = Liabilities + Owner’s Equity

Accounting for Guest Charges Debit: An accounting transaction that records a change on the left side of a “T” account in an asset, liability, or owner’s equity account. Credit: An accounting transaction that records a change on the right side of a “T” account in an asset, liability, or owner’s equity account.

Front Office Accounting Front Office Accounting System: The automated and/or manual data collection and reporting system that summarizes and documents the financial activities of a front office.

Front Office Accounting Guest Ledger: The set of accounts used to record charges to and payments from the hotel’s registered guests. City Ledger: The set of accounts used to record charges to and payments from the hotel’s non-registered guests. General Ledger: The primary ledger that contains all of a hotel’s accounts and that is used to create its income (profit and loss) statement.

Front Office Accounting Adjusting accounts can be necessary as a result of: Posting Errors Hotel-related problems Guest-related problems Total Monthly Allowances and Adjustments = Total Room Room Allowance and Adjustment % Revenue

Back Office Accounting Back Office Accounting: The process of summarizing and documenting the financial activities and condition of the entire hotel. Controller: The individual (or department) in a hotel responsible for maintaining the back office accounting system.

Back Office Accounting Settlement (Account): The collection of a payment for an outstanding account balance. Settlement may involve the guest paying cash or charging the account balance to a valid payment card or another hotel-approved account. House Account: An account whose entries are assessed to another hotel entity.

Back Office Accounting Payment card processing: Initiation Address Verification Service (AVS): A company that, for a fee, allows access to its database of current addresses. Authorization Chargeback: Payment card charges disallowed (reversed) when a cardholder successfully protests the legitimacy of the charge or because the hotel made an error in processing it. 3. Completion of transaction 4. Receipt of funds

Managing Guest Credit Establishing credit limits: Block (Funds): The amount by which a card’s available credit (if a credit card) or balance (if a debit card) is reduced; also called a “hold.” Monitoring credit limits

Managing the Check-Out Process Departure List: A report, by name and room number, of all guests scheduled to leave the hotel on a specific date. Late Check-out: An arrangement that allows a guest scheduled to leave the hotel to maintain access to his/her room after the standard check-out time.

Managing the Check-Out Process Bucket Check: Industry jargon for a systematic examination of guests’ folios to ensure the accuracy of guest information. Bucket checks typically include rate verification, credit monitoring, and confirmation of departure date and guest room assignment.

Managing the Check-Out Process Check-out fundamentals: Creation of departure list Confirmation of guest identity Quality of stay inquiry Property exchange Final data entry/posting of charges Guest folio inspection Processing guest payment Future reservation inquiry Filing documentation Revision of room status

Managing the Check-Out Process Account settlement methods: Cash and check Payment card Direct bill Combined settlement No-show billing

Managing the Check-Out Process Check-out variations: Late check-out charges Express Check-out: Any number of methods of guest-initiated check-out that do not require guests to be physically present at the hotel’s front desk for folio payment. Unpaid accounts: SOF: Short for “Signature on File”; refers to a signature obtained from a guest at check-in.

Managing the Check-Out Process Other check-out challenges: Room damage assessments Group allowance strategies Post check-out complaint adjustments