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When looking for a job in a hotel near you, you may stumble upon a management position in the hotel industry. So what does the hotel manager do? What are the challenges they face every day? What is the role of financial management? We will explore the different roles that make this work one of the most valuable jobs in the world.
For the purpose of this article, let’s start with the hotel manager’s budget process, and then work from there. Each year, the budget will be compiled in an accurate manner by highlighting each general ledger account (including income and expenses). Your income comes from any form of sales, and expenses are any expenses the company spends to provide quality services to customers. The budget will show everything for the coming year, and all income and expenses will be tracked through the general ledger. In order for hotel managers to be effective, they will prepare accurate budgets! how? Using historical figures is important and easy to learn. However, managers will understand how upcoming events will affect operations. For example, if the hotel is located on the waterfront, the manager will realize that during the summer months, families are more likely to take a vacation and increase in room income when staying at the hotel.
How does the hotel manager know whether he has executed the budget effectively? This is achieved through a process called analysis of variance. The idea is to minimize variances as much as possible, which means strictly following the budget with almost no deviations. Obviously, this is not always feasible, because market trends can affect occupancy rates in many ways. However, the general rule is that when income increases, expenditures may increase. vice versa. When the occupancy rate is lower than expected, the cost should move in the same direction. This brings us to the next part: revenue management.
In the hotel industry, there are many sources of income to generate income for properties. This includes sales of rooms, meeting rooms, food, and beverages, etc. As a hotel manager, it is extremely important to understand the impact of each business and its overall impact on total revenue. In short, without moving in, no money will flow into the property. The manager creates and follows up potential customers with the sales manager, takes on the work of being highly involved in the sales process, ensures that the revenue manager sets the best price for the property, advocates the quality of the food and beverage department, and puts the calendar in the meeting room.
So, what expenses do you usually see in hotel operations? This is the short answer: a handful! Generally speaking, salaries and wages are some of the largest expenditures in the hotel industry. This is the cost of all the work in the hotel. Every hour of work is an expense. This is why it is a common practice for managers to reduce employee working hours during downturns-remember what we said before: when income falls, your expenses must also fall. If the hotel pays employees for vacation or sick leave, it is usually paid in the form of salary and wages.
Another important expense in the hotel industry supplies. These are the amenities that fill the hotel. If you live in a hotel room, you will see many work items-toilet paper, bed sheets, toiletries, light bulbs, coffee supplies, water, snacks, and so on. Supplies used by the housekeeper-trolleys, cleaning chemicals, school uniforms, cleaning supplies, etc. Hotels usually provide contract services to provide guests with additional amenities. These include high-definition cables, Wi-Fi, gardening/land protection, newspaper subscriptions, indoor phones, etc. Let’s move on… what about other expenses? Marketing/advertising property or work, maintenance materials (for fixtures, furniture, and equipment), depreciation of major purchases/furnishings, and credit card sales expenses (yes, the merchant gets a large percentage every time the front desk staff swipes the credit card) and The biggest one-tax! Well, this is quite a list. The key is that by generating revenue, these expenses are easier to deal with! In addition, an efficient hotelier will find all possible ways to reduce all these costs. This is definitely one of the interesting parts of work.
Does this job seem to be difficult at the moment? Well, being responsible for this money is as important as generating revenue and managing expenses. If you don’t like accounting, it’s okay! I can assure you that you will learn it day by day at work. Financial management includes proper accounting treatment of all transactions within the hotel. Every hotel has an internal or external accountant who is responsible for ensuring that these transactions are recorded in the appropriate general ledger accounts. Usually, the most popular method is accrual accounting, in which transactions are recorded in the month in which they are carried out (as opposed to the cash system, where they are recorded as soon as they are spent). This allows better tracking of the overall budget. As a hotel manager, your job is to review and ensure that all funds entering and leaving the hotel are properly accounted for. Is it not easy enough?
Another important process in financial management is to ensure proper supervision of all funds of the hotel. For example, every hotel has a cash drawer that the front desk staff will use to allow guests to pay cash and perform any form of checkout. If you are a manager, you definitely want to ensure proper supervision of these drawers in order to maintain balance at the end of the day. The Property Management System (PMS) will record all cash transactions and can be accessed at any time.
It is not uncommon for hotel managers to randomly perform unexpected cash calculations in order to “show” to employees that you are doing your work through the financial control process (of course, if the cash count is not enough to deal with any problems). balance). Generally, theft is not a big problem in the hotel industry, but it is always vulnerable.
How to supervise your purchase? Put yourself in the perspective of the hotel manager for the time being. Your hotel has an employee who is responsible for purchasing all the aforementioned supplies in your residence. The process is as follows: purchase supplies, receive and inspect products or services, process payments (sometimes happen first), and then post the transaction to the ledger. Would you be happy that only one person will take over the whole process? Meaning, will they buy things, go downstairs to pick up the goods from the transportation company, and then authorize payment? The shortest answer is no. In smaller hotels, this may be the only possible option, but it is not necessarily the worst thing. However, separation of duties in the procurement process is always desirable. The person buying is usually not the person you want to receive, because there is a possibility of theft and it is difficult to track as a manager. Some hotels hire front desk assistants or other team members as pick-up agents for housekeeping items. This is a good example of strong financial control.