1. Front Office Management Lecture Notes Joana Mills Quarshie M
Front Office Management Lecture Notes Joana Mills Quarshie M.Phil (Tourism Management)
21st Nov, 2017

2. Introduction

3. Introduction Cont’d Introduction of Topic – Guest Accounting
Definition of terms:
Guest accounting is the tracking of financial transactions within the front office. The accounting term “ledger” is used to identify what information is contained in a certain revenue-tracking vehicle. (Ismail, 2002)
The vehicles used to track the revenues and charges within the front office are the guest ledger and city ledger (Ismail, 2002)

4. Introduction cont’d Order of presentation: Guest Accounting
Process of Guest Accounting
Credit Control
Cash Control
Review /Conclusion

5. Guest Accounting Guest Accounting:
The term guest accounting from hotel point of view means knowledge of what is to be received from the guest and what is paid by the guest.
The objective of the guest accounting procedures is as follows:
To maintain accurate and up-to-date guest accounts.
To ensure that payment is received promptly and in full.
To provide management with accurate and up-to-date financial reports.

6. Guest Account cont’d Guest Bill:
The guest bill is updated immediately as it is received from the various departments / sales outlets. It is extremely important to maintain and record all up to the minute details of the accounts of the guest.
A person who checks into a hotel is usually entitled to credit facilities for his purchases of accommodation, food and beverages, telephone and other facilities.

7. Guest Accounting cont’d
Fig (1): Information Flow for Guest Bill

8. Guest Accounting cont’d
Guest Bill Communication Methods - speed and accuracy in preparing and maintaining of guest account is very important so as to avoid any late charges.
Depending upon the type of hotel the communication methods can be:
Manual - In small hotels, a bell boy or a waiter or a person from the department where sale has taken place rushes to the billing counter for entry into the guest folio.

9. Guest Accounting cont’d
2. Mechanical - some medium or large sized hotels have pressure suction tubes for sending signed vouchers of the guest from the department or outlet selling the service or commodity to the billing counter.
3. Fully Automatic Systems - from the point of sale terminal (POS) the entry is made to the centralized computer server where the guest folio is updated and stored.
This method is very efficient and convenient and is widely used today in almost all the medium sized and large hotels.

10. Activity (1)
Why is it important to obtain proper methods of payment from guests. Discuss with class.

11. Process of Guest Accounting
The process of guest accounting is based on the following concepts:
1. Financial transaction, creation and maintenance of accurate accounting details.
2. Making of necessary documents and recording of transaction on relevant documents.
3. Ensuring internal control, checking and establishing the accuracy of the recorded transaction.
4. Settlement of the accounts, which may be by cash or credit payment.

12. Process of Guest Accounting cont’d
Types of Financial Transaction for Guests:
1. Guest Ledger
According to Ismail (2002), the guest ledger is an all encompassing term used to track hotel transactions primarily before and during a guest’s or group’s stay.
The guest ledger is also used to track the daily transactions of each revenue-generating side of the hotel triangle (room, catering, and outlet/ancillary sales). Hotels will create an account within the guest ledger to track this inflow and outflow of revenue.

13. Process of Guest Accounting cont’d
The most frequently types of accounts used for guest billing are discussed below:
(a). House account - serves as a perpetual account to track recurring transactions that occur within the hotel.
A house account may be created to track the daily dry cleaning service. The charges and credits for each day’s dry cleaning must be tracked somewhere.
House accounts can be created to track commissions and other obligations.

14. Guest Accounting cont’d
(b). Guest Account - is created at some point between the creation of a room reservation, and the actual arrival of a hotel guest. Each individual guest account will track debits and credits incurred prior to and during a stay.
Advance deposits for individuals are placed, or posted to the guest account.
Room rates and outlet/ancillary charges are also posted to the guest account as they are incurred.
The guest account must be created prior to check-in so that the front desk will be prepared for arrival.

15. Process of Guest Accounting cont’d
(c). Master account - closely mirrors the individual guest account. The main difference is that a master account encompasses registration/accounting information for an entire group, not individual attendees.
Individual guest and group charges related to a specific group based on billing arrangements (i.e., room/tax, catering, etc.) are routed to the master account as applicable.

16. Process of Guest Accounting cont’d
2. City Ledger:
City ledger - is used to track revenues due to the hotel. These revenues are called receivables. Within the accounting department of the hotel, one or more individuals are responsible for the management of the receivables due. This department is called Accounts Receivable.
These individuals will manage the city ledger by creating a city ledger account in the accounting menu of the PMS for each guest ledger account that checks out with a balance due the hotel.

17. Process of Guest Accounting cont’d
City ledger cont’d:
Whether a master, house, or guest account, the guest ledger must be cleared of noncurrent accounts in order to make way for new arrivals.
An example of services provided include a guest’s visit to the bar or restaurant (and consumes drinks or food) or uses laundry facilities, or makes telephone calls, etc, and does not pay cash but signs a voucher (an undertaking that he agrees to the specified amount and shall pay later).

18. Process of Guest Accounting cont’d
3. Cash Transaction - means that the guest pays cash to the hotel. For example, when a guest goes to a restaurant and is served with drinks or food and then presented a bill, he pays cash for that bill.

19. Guest Accounting cont’d
Fig (2): Guest Receiving a Hotel Massage

20. Documents Generated During the Process of Guest Accounting
1. Vouchers - are also called checks. A document to detail transactions at point of sales and meant to transmit transactional information to front office of guest charges which need posting.
When a guest consumes some services / facilities / goods of the hotel from any of its departments or sections, the concerned department prepares the voucher. This is a support document of the financial transaction.

21. Documents Generated During the Process of Guest Accounting cont’d
2. Folio - is a document which is initiated at the time of arrival of the guest where all guest transactions are recorded. This is also known as 'guest accounts card' and is prepared for every guest and room.
In some hotels, it is also called guest weekly bill. All accounts receivable, payable and paid out transactions are entered in this document.

22. Documents Generated During the Process of Guest Accounting cont’d
Different Types of Folios used by Hotels:
Individual guest account card or folio - maintained to record transaction made by individual or independent guest with the hotel. Also called as Guest Folio.
Group folio - one folio given to a group for recording all the transactions made by the group (which are part of the package of the group). This is also called as 'Master Folio'.

23. Documents Generated During the Process of Guest Accounting cont’d
Semi-permanent or Non-guest folio - in this folio the credit financial transaction made by non-resident guests with the hotel are recorded. Also known as 'city account card‘ or 'non-resident guest account card'.
Employee folio - as the name suggests the financial transactions (if any) made by the employees are recorded in this folio. These folios help in calculating incentives to the employees.

24. Documents Generated During the Process of Guest Accounting cont’d
3. Posting - is a process of recording transaction on the folio. Posting will result in a new balance of account. The posting may be done by hand writing method (manually) by machine such as NCR (semi automatic system) or through computers (fully automatic system). 4. VTL (Visitors' Tabular Ledger) - is also called the 'tab' by some hotels. It is another document used in small hotels. It shows debits and credits activities of the guest account.

25. Documents Generated During the Process of Guest Accounting cont’d
5. Account Aging Report - a document telling and supervising the receivable account from the guest which have aged over a specific period of time.
Account aging refers to the method(s) of tracking past due accounts based on the dates the charges were incurred.
6. Cash Receipts - a document issued by the cashier to the guest when the cashier receives payment from the guest and then entered in cash register receipt ledger

26. Credit Control
The term credit control - refers to the various measures taken by a hotel to ensure that guests settle their account in full either themselves or someone else on their behalf and does that within a specified period of time.
Objectives of Credit Control Measures:
1. To avoid and prevent loss due to walk-outs. Here the term walk-out include all those guests who knowingly or unknowingly or by mistake leave the hotel without paying/ settling their bills.

27. Credit Control cont’d
Objective of Credit Control: 2. To reduce the problems of inconvenience which the cashier, the house keeper and the management (who may decide to start legal proceeding) will face because of a walk-out guest. 3. To prevent late settlement of guests accounts. The delay in payment can cause cashflow problems for the hotel and if there are many such cases the hotel may find itself in difficult situation to operate, and bad debts may increase

28. Credit Control cont’d
Objective of Credit Control: 4. To avoid guest dissatisfaction, embarrassment and annoyance at the check out time when all of a sudden a departure guest is informed that the hotel does not accept any particular company's credit and or a particular currency.

29. Common Causes for Unpaid Account Balance
Guest is not clearly explained to as to which credit cards and currencies are acceptable. Also when the bill exceeds the credit limit the guest will have to pay the balance in cash.
Communication gap between credit department and cashier. An example is failure of the credit department to timely communicate to the cashier that the guest bill has exceeded the limit.

30. Cash Control
Cash control - involves that all the transactions which the guest makes in cash with various sales sections of the hotel are recorded immediately and cash collected.
All the cash is kept properly under lock and key under the supervision of the cashier.
The petty cash is also controlled and a proper check on that is made since hotels don't encourage credit sales. With regards to proper cash sales, the cash control becomes very important for a hotel.

31. Review Guest Accounting Process of Guest Accounting Credit Control
Cash Control

32. Conclusion
From the hotel point of view guest accounting means knowledge of what is to be received from the guest and what is paid for by the guest.
The objective of the guest accounting is to maintain accurate and up-to-date guest accounts, to ensure that payment is received promptly and in full and provide management with accurate and up-to-date financial reports.
Financial transactions are generally of three types which are accounts receivable, accounts payable and cash transaction.
Documents associated with financial transactions include vouchers, folios, postings, visitors' tabular ledger, account ageing report etc.

33. THANK YOU