Matakuliah
Tahun
: V0282 - Manajemen Akuntansi Hotel
: 2009 - 2010
Revenue Management for Hotels
Chapter 8
Chapter Outline
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•
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Establishing Room Rates
Revenue Management
Non-Room Revenue
Learning Outcomes
•
•
•
Utilize alternative methods when establishing a hotel’s
room rate structure.
Apply revenue management and analysis techniques to
the administration of a hotel’s room rate structure.
Recognize the importance to a hotel of properly
managing and controlling its non-room revenue.
Establishing Room Rates
•
•
•
Any serious exploration of hotel room rates and their
management must include basic information about
room rate economics.
Room rate economics recognizes that, when the supply
of hotel rooms is held constant, an increase in demand
for those rooms will result in an increase in their selling
price.
Conversely, when supply is held constant, a decrease
in demand leads to a decreased selling price.
Establishing Room Rates
•
•
•
Understanding the law of demand is critical because,
unlike managers in other industries, hoteliers cannot
increase their inventory levels of rooms (supply) in
response to increases in demand.
Hotel managers must also understand that their own
inventory of rooms is highly perishable.
If a hotel does not sell room 101 on Monday night, it will
never again be able to sell that room on that night, and
the potential revenue that would be generated from the
sale is lost forever.
Establishing Room Rates
•
•
•
•
A rack rate is the price at which a hotel sells its rooms
when no discounts of any kind are offered to the guests.
In some cases, it makes sense for hoteliers to create
special event rates. Sometimes referred to as “super”
or “premium” rack, these rates are used when a hotel is
assured of very high demand levels (e.g., Mardi Gras in
New Orleans and New Year’s Eve in New York City).
Hotels often negotiate special rates for selected guests.
In most cases, these negotiated rates will vary by room
type.
In addition to rack and negotiated rates, hotels typically
offer corporate rates, government rates, and group
rates.
Establishing Room Rates
•
•
•
Some hotels have great success “packaging” the guest
rooms they sell with other hotel services or local area
attractions.
When a hotel creates a package, the package rate
charged must be sufficient to ensure that all costs
associated with the package have been considered.
In addition, the use of one or more authorized fade
rates, a reduced rate authorized for use when a guest
seeking a reservation is hesitant to make the
reservation because the price is perceived as too high,
can result in even more room rates to be managed.
Establishing Room Rates
•
•
•
A hotel’s revenue managers can also create discounts
at various percentage or dollar levels for each rate type
we have examined.
The result is that a hotel, with multiple room types and
multiple rate plans, may have literally hundreds of rates
types programmed into its property management
system.
A property management system (PMS) is a computer
system used to manage guest bookings, online
reservations, check-in/check-out, and guest purchases
of amenities offered by the hotel.
The Hubbart Room Rate Formula
•
•
•
•
•
The Hubbart formula is used to determine what a hotel’s
average daily rate (ADR) should be to reach the hotel
owner’s financial goals.
The Hubbart formula is a “bottom-up” approach as
shown in Figure 8.2.
To illustrate the Hubbart formula, the Blue Lagoon
Water Park Resort’s Income Statement is shown in
Figure 8.3.
For a detailed analysis of the Hubbart formula, see Go
Figure! following Figure 8.3.
For a summary of the Hubbart formula calculations for
the Blue Lagoon Water Park Resort, see Figure 8.4.
Figure 8.2 Comparison of Normal and Bottom-Up Formats
Normal Format for the
Income Statement
Bottom-Up Format for the
Hubbart Formula
Operated Department Income
(Rooms)
Net Income
+ Operated Departments Income
(Excluding Rooms)
+ Taxes
-
Undistributed Operating Expenses
+ Nonoperating Expenses
-
Nonoperating Expenses
+ Undistributed Operating Expenses
-
Taxes
-
=
Net Income
= Operated Department Income
(Rooms)
Operated Departments Income
(Excluding Rooms)
Figure 8.3 Income Statement
Blue Lagoon Water Park Resort
Income Statement
For the Period: January 1 through December 31, 2010
Net
Revenue
Operated Departments
Rooms
Food
Beverage
Telecommunications
Other Operated Departments
Rentals and Other Income
Total Operated Departments
?
7,200,000
3,264,000
72,000
540,000
109,800
25,201,800
Cost of
Sales
?
2,138,400
451,440
169,200
79,200
15,840
2,854,080
Undistributed Operating
Expenses
Administrative and General
Information Systems
Human Resources
Security
Franchise Fees
Transportation
Marketing
Property Operations and
Maintenance
Utility Costs
Total Undistributed
Operating Expenses
Gross Operating Profit
25,201,800
2,854,080
Payroll
and
Related
Expenses
Other
Expenses
Income
(Loss)
?
2,188,800
534,960
54,000
180,000
48,960
5,973,120
?
532,800
201,600
28,800
64,800
10,800
2,077,200
?
2,340,000
2,076,000
-180,000
216,000
34,200
14,297,400
921,600
144,000
525,600
199,440
0
50,400
771,840
435,600
244,800
57,600
77,760
0
284,400
780,480
1,357,200
388,800
583,200
277,200
0
334,800
1,552,320
291,600
0
905,400
1,071,000
1,197,000
1,071,000
2,904,480
3,857,040
6,761,520
8,877,600
5,934,240
7,535,880
Rent, Property Taxes, and
Insurance
Depreciation and Amortization
1,760,400
1,260,000
Net Operating Income
4,515,480
Interest
1,272,000
Income Before Income
Taxes
3,243,480
Income Taxes
1,297,390
Net Income
1,946,090
go figure!
The steps required to compute the Hubbart formula in this example are:
1. Calculate the hotel’s target before-tax net income. Multiply the required
rate of return (ROI) of the owner’s investment, and then adjust the answer for
before-tax net income.
Assume an investor considers paying $16,217,417 for the 240 room hotel at
the Blue Lagoon and desires a 12% return on the investment.
$16,217,417 x 0.12 = $1,946,090 ROI (hotel’s target net income)
Calculate before-tax net income. Divide the after-tax net income (owner’s
ROI) by 1.00 minus the tax rate.
After-Tax Net Income (ROI)
1.00 – Tax Rate
= Before-Tax Net Income
or, assuming a tax rate of 40%
$1,946,090
1.00 – 0.40 = $3,243,483.30 ~ $3,243,480 (rounded down)
In order to be consistent with the Income Before Taxes number in Figure 8.3,
we will round the before-tax net income down to $3,243,480. Normally, you
wouldn’t round this number down (the IRS would not like that!), but in order
for the Blue Lagoon statements to work nicely for the entire book, the rounded
down number works better.
(go figure! continued)
2. Calculate estimated nonoperating expenses. Calculate estimates of
nonoperating expenses including rent, property taxes and insurance plus
depreciation and amortization plus interest expense.
In this example, the total nonoperating expenses are as follows:
Rent, Property Taxes, and Insurance
Depreciation and Amortization
Interest Expense
Total Nonoperating Expenses
1,760,400
1,260,000
1,272,000
$4,292,400
3. Calculate estimated undistributed operating expenses. Calculate
estimates of undistributed operating expenses including administrative and
general, information systems, human resources, security, franchise fees,
transportation, marketing, property operations and maintenance, and utility
costs.
In this example, the total undistributed operating expenses are as follows:
Administrative and General
Information Systems
Human Resources
Security
Franchise Fees
Transportation
Marketing
Property Operations and Maintenance
Utility Costs
Total Undistributed Operating Expenses
1,357,200
388,800
583,200
277,200
0
334,800
1,552,320
1,197,000
1,071,000
$6,761,520
(go figure! continued)
4. Calculate estimated operated departments income excluding rooms.
Calculate estimates of revenues minus expenses to determine estimated
income for all non-rooms departments. These include income from food,
beverage, telecommunications, other operated departments, and rentals and
other income.
In this example, estimated operating departments income excluding rooms is
as follows:
Food
Beverage
Telecommunications
Other Operated Departments
Rentals and Other Income
Total Operated Departments Income Excluding Rooms
2,340,000
2,076,000
-180,000
216,000
34,200
$4,486,200
5. Calculate the operated department income for rooms. Using the results
from steps 2 through 4: add the owner's desired ROI (adjusted for before-tax
net income), add total nonoperating expenses, add total undistributed
operating expenses, subtract total operated departments income excluding
rooms (see Figure 8.2).
In this example, estimated operated department income for rooms is as
follows:
Before-Tax Net Income
Total Nonoperating Expenses
Total Undistributed Operating Expenses
Total Operated Departments Income Excluding Rooms
Operated Department Income for Rooms
$3,243,480
+ 4,292,400
+ 6,761,520
- 4,486,200
$9,811,200
(go figure! continued)
6. Calculate the estimated rooms department revenues based on
estimated occupancy. Add estimated operated department income for
rooms (from step 5) to estimated rooms expenses based on estimated
occupancy to determine estimated rooms department revenues.
From historical data, the rooms manager has calculated that payroll and
related expenses and other expenses for rooms is $60 per room. Also, the
manager has determined that the hotel has an average occupancy % of 80%,
and the hotel has 240 rooms (see Chapter 1).
Calculate the estimated number of rooms to be sold in the year:
240 rooms x 365 days in a year x 0.80 occupancy = 70,080 rooms
Calculate the estimated rooms expenses based on $60 per room:
70,080 rooms x $60 = $4,204,800
Calculate the estimated rooms department revenues:
Operated Department Income for Rooms
Estimated Rooms Expenses
Estimated Rooms Department Revenues
9,811,200
+ 4,204,800
$14,016,000
(go figure! continued)
7. Calculate the hotel’s required ADR. Divide the estimated rooms department
revenues (from step 6) by the estimated number of rooms to be sold (from
step 6):
Estimated Rooms Department Revenues
Estimated Number of Rooms to be Sold
= Hotel’s Required ADR
or
$14,016,000
70,080
= $200
Thus, the ADR that should be charged for the Blue Lagoon’s rooms in order to
achieve the owner’s desired net income (ROI) is $200.
Figure 8.4 Summary of Hubbart Formula Calculations for the Blue Lagoon
Steps 1-5:
Bottom-Up Format for the Hubbart Formula
Calculations
Before-Tax Net Income
$ 3,243,480
+
Nonoperating Expenses
+ 4,292,400
+
Undistributed Operating Expenses
+ 6,761,520
-
Operated Departments Income (Excluding Rooms)
- 4,486,200
=
Operated Department Income (Rooms)
$9,811,200
Step 6:
240 rooms x 365 days in a year x 0.80 occupancy = 70,080 rooms
70,080 rooms x $60 expense per room = $4,204,800 estimated rooms
expenses
Operated Department Income for Rooms
Estimated Rooms Expenses
Estimated Rooms Department Revenues
9,811,200
+ 4,204,800
$14,016,000
Step 7:
$14,016,000
70,080
= $200
The Hubbart Room Rate Formula
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•
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The Hubbart formula is useful because it requires
managerial accountants and hoteliers to consider the
hotel owner's realistic investment goals and the costs of
operating the hotel before determining the room rate.
The formula has been criticized for relying on
assumptions about the reasonableness of an owner’s
desired ROI and the need to know expenses that are
affected by the quality of the hotel’s management.
Another criticism is that the formula requires the room
rate to compensate for operating losses incurred by
other areas (such as from telecommunications).
The Hubbart Room Rate Formula
•
Despite its limitations, the Hubbart formula remains an
important way to view the necessity of developing a
room rate that:
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–
–
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Provides an adequate return to the hotel’s owner(s)
Recovers the hotel’s non-operating expenses
Considers the hotel’s undistributed operating expenses
Accounts for all the hotel’s non-room operated departments
income (or loss)
– Results in a definite and justifiable overall ADR goal
The $1.00 per $1,000 Rule
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One alternative way that hoteliers have historically
determined room rate is the $1.00 per $1,000 rule.
This rule states that, for every $1,000 invested in a
hotel, the property should charge $1.00 in ADR.
The dollar-per-thousand rule is most accurate for hotels
that have high occupancies, high ADRs for their area of
operation, and are newly built.
The $1.00 per $1,000 Rule
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Despite some limitations, the $1.00 per $1,000 rule
does reflect the tendency for hotel buyers to discuss
hotel selling prices in terms of a hotel’s cost per key
(average cost per room), which is the average purchase
price of a hotel’s guestroom expressed in thousands of
dollars.
It is important to recognize that the rate computed using
the $1.00 per $1,000 rule does not become the hotel’s
rack rate.
Instead, it is the overall ADR that the hotel must achieve
when its sells all of its various rooms at all of their
respective rates.
Alternative Room Rate Methodologies
•
Non-traditional, non-cost methods to establish rates:
– Competitive Pricing. Charge what the competition charges.
– Follow the Leader Pricing. Charge what the dominant hotel in
the area charges.
– Prestige Pricing. Charge the highest rate in the area and justify
it with better product and/or service levels.
– Discount Pricing. Reduce rates below that of the likely
competitors.
Web-Influenced Room Rate Methodologies
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Today’s hotel room rate structures have been changed,
and changed forever, by the advent of the Internet as
the most popular method used for selling hotel rooms.
As a result of the Internet, consumers can easily
compare prices, but so can a hotel’s major competitors.
While the call-around was standard practice as late as
the early 2000s, consider modern hoteliers utilizing one
of the many websites similar to
http://www.Travelaxe.com and others that allow him/her
to easily see other hotels’ rates.
Web-Influenced Room Rate Methodologies
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Guests care very little how much it “costs” a hotel to
provide its rooms.
They care about the lodging value they receive.
As a result, a hotel’s rates are heavily influenced by the
laws of supply and demand.
A guest can make a hotel reservation at a given rate,
and, every day until the date of arrival, can go online to
shop for an even lower price for the same room.
If a lower rate were to be found, the guest could recontact the hotel, cancel the original reservation, and
secure the new, lower rate.
Revenue Management
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Revenue management, also called yield management,
is a set of techniques and procedures that use hotel
specific data to manipulate occupancy, ADR, or both for
the purpose of maximizing the revenue yield achieved
by a hotel.
Yield is a term used to describe the percentage of total
potential revenue that is actually realized.
Revenue managers are responsible for making
decisions regarding the pricing and selling of guest
rooms in order to maximize yield.
go figure!
For example, consider a property that has the potential of generating $50,000
with a fully booked hotel, but only generates revenues of $30,000 on a given
Saturday. The hotel’s yield would be calculated as follows:
Total Realized Revenue
Total Potential Revenue = Yield
or
$30,000
$50,000
= 60%
Revenue Management
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RevPAR is a combination of ADR and occupancy %.
To increase yield simply means to increase the hotel’s
RevPAR.
Therefore, any change (decrease or increase) in either
or both of the factors comprising RevPAR will change
the yield of the hotel’s revenue.
RevPAR is calculated using the following formula:
ADR x Occupancy % = RevPAR
Revenue Management
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Revenue management techniques are used during
periods of low, as well as high, demand.
Although the actual revenue management techniques
used by hoteliers vary by property, in their simplest
form, all these techniques are employed to:
–
–
–
–
Forecast demand
Eliminate discounts in high demand periods
Increase discounts during low demand periods
Implement “Special Event” rates during periods of extremely
heavy demand
Revenue Management
•
Using information gleaned from the hotel’s historical
sales data, revenue management features in a property
management system (PMS) can:
– Recommend room rates that will optimize the number of rooms
sold
– Recommend room rates that will optimize sales revenue
– Recommend special room restrictions that serve to optimize the
total revenue generated by the hotel during a specific time
period
– Identify special high consumer demand dates that deserve
special management attention to pricing
Revenue Management
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In the hotel industry, a competitive set (comp set)
consists of those hotels with whom a specific hotel
competes and to which it compares its own operating
performance.
To fully evaluate RevPAR changes, hoteliers look to the
relative performance of their comp set.
They do so to better understand the room rate
economics that affected their own property during a
specific time period.
To better understand the shortcomings of an overemphasis on RevPAR, it is important to take a closer
look at its two fundamental components, occupancy %
and ADR.
Occupancy Percentage
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•
It might seem that the occupancy percentage for a hotel
would be a straightforward calculation.
A room revenue statistics report generated from the
Blue Lagoon Water Park Resort’s property
management system produced the information needed
to calculate their occupancy percentage.
Figure 8.6 The Blue Lagoon’s Room Statistics for Last Night
Room Revenue
Total Rooms in Hotel
Out-of-Order (OOO) Rooms
Complimentary (Comp) Rooms Occupied
On-Change Rooms*
Rooms Sold
$38,400
240
5
3
7
192
*On-change rooms are rooms that are vacant but not yet cleaned.
go figure!
From the data in this report, it is clear that the hotel’s total room revenue for the
day was $38,400, however, what is less clear is exactly how Paige should
compute her occupancy percentage. Should she:
1. Include only sold rooms in her computation? If so, her formula would be:
Rooms Sold
Total Rooms in Hotel
= Occupancy %
or
192
240
= 80.0%
2. Include complimentary rooms as well as sold rooms in her computation? If so,
her formula would be:
Rooms Sold + Comp Rooms Occupied
Total Rooms in Hotel
= Occupancy %
or
192 + 3
240
= 81.3%
(go figure! continued)
3. Subtract non-sellable out-of-order rooms from her rooms available count? If
so, her formula would be:
Rooms Sold
Total Rooms in Hotel – OOO Rooms
= Occupancy %
or
192
240 – 5 = 81.7%
4. Subtract non-sellable on change rooms from her rooms available count? If so,
her formula would be:
Rooms Sold
Total Rooms in Hotel – On-Change Rooms
or
192
240 – 7
= 82.4%
= Occupancy %
ADR
•
•
Average daily rate (ADR) is also a critical component of
RevPAR. Generally, hotel managers calculate ADR
using rooms sold or rooms occupied.
While both of these ADR formulas are commonly used,
neither of these may accurately reflect ADR since they
reveal different rates.
go figure!
To understand why, again consider the case of Paige Vincent. Utilizing her data
in Figure 8.6 and the “rooms sold” approach to ADR computation, her ADR for
the night would be:
Total Rooms Revenue
Total Number of Rooms Sold
= ADR
or
$38,400
192
= $200.00
Utilizing the data in Figure 8.6 and the “rooms occupied” approach to ADR
computation, which includes adds comp rooms to sold rooms, her ADR for the
night would be:
Total Rooms Revenue
Total Number of Rooms Occupied
or
$38,400
192 + 3
= $196.92
= ADR
Net ADR Yield
•
•
•
Despite the slight differences in these two ADR
computations, neither is as useful to the hotel’s owners
and managers as the computation of the net ADR yield.
Net ADR Yield is the percentage of ADR actually
received by a hotel after subtracting the cost of fees and
assessments associated with the room’s sale.
Today, most hotel guests already have a room
reservation prior to arrival, and the reservation
distribution channels (sources of reservations) used to
make their reservations will charge the hotel widely
varying fees for making them.
Net ADR Yield
•
When a guest makes a reservation via the Internet, no
less than three reservation-generation fees are typically
charged to the hotel, including fees from:
– Internet Travel Sites - websites for booking travel to end-users
– Global Distribution System (GDS) - system that books and sells
rooms for multiple companies
– Central Reservation System (CRS) – system used by
companies to centrally book reservations
Net ADR Yield
•
•
•
With increased usage of high priced distribution
channels, a room’s selling price (quoted) and the ADR
the hotel actually receives can be radically different.
Clearly, it is the ADR after the cost of reservation
generation fees that should be most important to
hoteliers and their attempts to increase RevPAR.
If net ADR yield is not used, hotel owners and
managers run the risk of significantly over inflated
RevPARs accompanied by significantly reduced profits
as well.
go figure!
Consider again, the case of the Blue Lagoon. Assuming that a guest paid $200
for a room night and total reservation fees of $80 were charged to the hotel. The
net ADR yield for the room night is as follows:
Room Rate - Reservation Generation Fees
Room Rate Paid
or
$200 - $80
$200
= 60%
= Net ADR Yield
Flow-Through
•
•
•
Flow-through is a measure of the ability of a hotel to
convert increased revenue dollars to increased gross
operating profit dollars.
Consider the simplified income statements detailing
revenue and expenses for January 2010 and for the
same month of the prior year for the Blue Lagoon Water
Park Resort (see Figure 8.8).
Gross operating profit (GOP) is, in effect, total hotel
revenue less those expenses that are considered
directly controllable by management.
Figure 8.8 Vertical Income Statements
Blue Lagoon Water Park Resort
Vertical Income Statements
For the Months Ended January 31, 2009 and 2010
Last Year
(2009)
%
This Year
(2010)
%
1,105,000
847,850
1,952,850
56.6%
43.4%
100.0%
1,200,000
900,150
2,100,150
57.1%
42.9%
100.0%
335,890
537,034
872,924
17.2%
27.5%
44.7%
353,100
558,300
911,400
16.8%
26.6%
43.4%
1,079,926
55.3%
1,188,750
56.6%
Total Undistributed Operating Expenses
559,986
28.7%
560,760
26.7%
Gross Operating Profit
519,940
26.6%
627,990
29.9%
Rent, Property Taxes, and Insurance
Depreciation and Amortization
146,700
105,000
7.5%
5.4%
146,700
105,000
7.0%
5.0%
Net Operating Income
268,240
13.7%
376,290
17.9%
Interest
106,000
5.4%
106,000
5.0%
Income Before Income Taxes
162,240
8.3%
270,290
12.9%
Income Taxes
64,896
3.3%
108,116
5.1%
Net Income
97,344
5.0%
162,174
7.7%
Revenue
Rooms
Non Rooms
Total Revenue
Operated Department Expenses
Rooms
Non Rooms
Total Operated Department Expenses
Total Operated Department Income
go figure!
From Figure 8.8, the Blue Lagoon’s flow-through for January 2010 is calculated
as the change in gross operating profit (GOP) from the prior year divided by the
change in total revenues from the prior year as follows:
GOP This Year- GOP Last Year
Total Revenues This Year – Total Revenues Last Year
or
$627,990 – $519,940
$2,100,150 – $1,952,850
= 73.4%
= Flow-Through
Flow-Through
•
•
•
Flow-through was created by managerial accountants to
measure the ability of a hotel to convert increases in
revenue directly to increases in GOP.
When flow-through is high (over 50%), it reflects
efficiency on the part of management in converting
additional revenues into additional profits.
For most hotels, flow-throughs that are less than 50%
indicate inefficiency in converting additional revenues
into additional profits.
GOPPAR
•
•
•
Gross operating profit per available room (GOPPAR) is
defined as a hotel’s total revenue minus its
management’s controllable expenses per available
room.
For example, the costs of a hotel’s lawn care services,
utility bills, and even food and beverage expenses are
considered when computing GOPPAR.
These same expenses are not, of course, considered
when computing RevPAR.
go figure!
Using the Blue Lagoon Water Park Resort January 2010 income statement in
Figure 8.8, total rooms available to be sold are 7,440 (240 rooms x 31 days =
7,440) and GOP-PAR is calculated as follows:
Gross Operating Profit
Total Rooms Available to Be Sold
or
$627,990
7,440
= $84.41
= GOPPAR
GOPPAR
•
•
•
RevPAR indicates the performance of a hotel in terms
of rooms inventory sales and marketing, however, it
provides no indication of how much money the hotel
actually is, or should be, making.
GOPPAR takes into consideration the cost containment
and management control of the hotel and must be
considered in any effective rooms pricing strategy.
The difficulty is not that RevPAR is a poor
measurement, but rather it is the fact that RevPAR
should not be the only measurement of a hotel’s
revenue manager’s effectiveness.
Non-Room Revenue
•
•
•
Non-room revenue is important to the managers of both
limited service and full-service hotels.
It is common for limited service hotels to generate 520% of their total revenue from non-room sources. In
full-service hotels, the non-rooms revenue generated
may range from 20-50% of total revenue.
Not every hotel will create revenues in every non-room
revenue area.
Non-Room Revenue
•
Non-room revenue on a hotel’s income statement is
attributed to one of the following categories:
– Food
– Health Center
– Beverage
– Swimming Pool
– Telecommunications
– Tennis
– Garage and Parking
– Tennis Pro Shop
– Golf Course
– Other Operated Departments
– Golf Pro Shop
– Rentals and Other Income
– Guest Laundry
Food and Beverage Revenue
•
•
•
Food and beverage revenues typically make up the
largest portion of a hotel’s non-room revenue.
In a properly managed hotel food and beverage (F&B)
department, the department head wants to financially
support the hotel through sales.
However, this may be more complicated than it first
appears.
Food and Beverage Revenue
•
•
•
For example, in many hotels, complementary breakfast
is served to all overnight guests.
The food and beverage department may be reimbursed
for the “cost” of providing breakfast, but the actual
“sales” value of the breakfast, including a profit, would
not likely be transferred.
Another example is a holiday weekend package plan
that includes one night’s stay, dinner, and breakfast
sold to guests for one price.
Food and Beverage Revenue
•
•
•
Food service is often viewed as an amenity to attract
guests and to provide food and beverage alternatives to
increase the hotel’s revenues.
The role of the F&B department is, appropriately,
secondary to that of those departments that sell and
service guest rooms.
Experienced managerial accountants understand this
and resist the temptation to aggressively and
expensively seek to market the F&B operation to nonhotel guests living in the local area.
Food and Beverage Revenue
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Food and beverage in a hotel may include revenue and
expense detail one or more of the following categories:
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Room Service
Banquets
Breakfast
Lunch
Dinner
Meeting room rental
Meeting room set-up and décor
Audio and Visual (A/V) equipment rental
Service Charges
Telecommunications Revenue
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In the not so distant past, in-room telephone toll
charges contributed a significant amount of money to a
hotel’s annual revenue.
Today, however, the advent of cell telephones, and the
reputation for excessive charges that has plagued
hotels have lead to significant declines in this revenue
source.
Many hotel brands have had to reduce or even
eliminate their local telephone charges.
As a result, for most hoteliers, focus on the telephone
department has shifted from a “pricing” concern to a
“cost” accounting and management concern.
Other Operated Departments Revenue
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Pay-per-view movies
Pay-per-play in-room games
In-room safes
Internet access charges
Miscellaneous other income
Review of Learning Outcomes
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Utilize alternative methods when establishing a hotel’s
room rate structure.
Apply revenue management and analysis techniques to
the administration of a hotel’s room rate structure.
Recognize the importance to a hotel of properly
managing and controlling its non-room revenue.