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

2. 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

3. 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.

4. 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).

5. 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.

6. 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.

7. 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.

8. 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

9. 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.

10. 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.

11. 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.

12. 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

13. 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.

14. 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.

15. 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

16. 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

17. 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.

18. 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.

19. 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

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

21. 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.

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