Professional Documents
Culture Documents
V Semester FOM
V Semester FOM
management process
Change in procedures
Revision in plans
Planning
Purpose of a plan:
It is important to prepare a plan keeping in view the necessities of the hotel.
A plan is an important aspect of business. It serves the following three
critical functions:
1
Shriyesh Mane
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 1
FRONT OFFICE MANAGEMENT – V SEMESTER
easy, but if the team refers to stated goals and objectives, then the job is
much simpler. In this case, the overall purpose of the Program would be to
maximize sales by the front office staff of front office, food and Beverage
department, gift shop, and health facilities products and services. The team
must decide which area or areas would be most profitable. During the
brainstorming part of planning for a point-of-sale front office, the team
should also consider supporting concepts that will play an important part in
the success of a sales program—incentives. The point-of-sale plan should
include an incentive program, which entails understanding employees’
motivational concerns and developing opportunities for employees to achieve
their goals. This will encourage cooperation among the frontline employees
who will implement the point-of-sale plan. The front office manager is
responsible for determining how each employee is motivated. Many
motivational strategies require a financial commitment by management.
These costs must be included as a budget line item. When the owner can see
additional sales being created as a result of these programs, the idea of
sharing some of the profit is more acceptable.
Planning tool
VISION
MISSION STATEMENT
BUSINESS PLAN
2
Shriyesh Mane
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 2
FRONT OFFICE MANAGEMENT – V SEMESTER
Vision
Vision: outlines what the organization wants to be, or how it wants the world
in which it operates to be an "idealized" view of the world. It is a long term
view and concentrates on the future. It can be emotive and is a source of
inspiration.
For Example, The vision of a business hotel may be to be the best hotel for business
travelers in Bangalore, to provide comfort as well as all business related facilities and to
build a name and a brand in India and globally.
Mission
For Example: The mission statement of a business hotel may be to meet the needs of
the business traveler by providing desired products and services (sleeping and meeting
rooms, food and beverage) and a business center.
3
Shriyesh Mane
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 3
FRONT OFFICE MANAGEMENT – V SEMESTER
∙ To provide each arriving and departing guest the opportunity to obtain assistance with
their luggage and transportation and ensure their predetermined rooming procedures
on a consistent basis.
∙ To display friendly and courteous service at all times.
These are long term plans made keeping in mind a longer duration of time.
An example of a long range plan of a business hotel may be: To obtain 60 % of all
business meeting revenues in Bangalore within the next 7 years. To conquer the
business market segment and achieve operational profits double that of the initial 2
years.
Marketing Plan
Marketing strategies adopted by the front office Managers vary from hotel to
hotel, some of the common strategies mostly followed are:
4
Shriyesh Mane
Revenue strategy
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 4
FRONT OFFICE MANAGEMENT – V SEMESTER
ORGANISING:
∙ Establish deadlines
∙ Flow of communication in organization
∙ Relationships between different organizational levels
∙ Unity of command
∙ Direct reports
∙ Line positions
∙ Staff positions
∙ Chain of command
COORDINATING:
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 5
FRONT OFFICE MANAGEMENT – V SEMESTER
STAFFING:
LEADING:
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 6
FRONT OFFICE MANAGEMENT – V SEMESTER
CONTROLLING:
EVALUATING:
∙ Front office will always have more than one rate category for each
of its guest rooms.
∙ Differences are based on criteria such as room size, location, view,
furnishing and amenities.
∙ There could be different types of rack rates. For example the
commercial hotels have rack rates based on the number of people
in the room whereas the resorts have same rates for one or two
people.
∙ Rack rate gets its name from the manual filing system at the front
desk called a “Room Rack” hence the term “Rack Rate”.
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 7
FRONT OFFICE MANAGEMENT – V SEMESTER
Special Rates:
Sales of the rooms at special rates are rigidly controlled as it may affect the ARR
and the room revenue.
Some guidelines to be implemented by the FOM:
∙ Ensure FO staff adheres to the prescribed policies.
8
Shriyesh Mane
Pricing Objectives:
Objectives are what we want to accomplish. Without them it is hard to
assess where we are going or how we are going to get there.
Pricing Objectives can be divided into 3 categories. The first is Profit Oriented
Pricing objective. This is established in order to attain a certain targeted
profit or to generate the maximum profit. In the former target
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 8
FRONT OFFICE MANAGEMENT – V SEMESTER
Last but not the least is Status Quo-Oriented Pricing Objectives, where the
position related to the competitors is the main target. This can be called
competitive pricing. A firm tries to match its competitor’s price closely. This
is the follow the leader approach.
Pricing Approaches:
Before dealing with few of the most popular methods of pricing let us start
with the distinction made by Morrison (1989) between unsophisticated,
sophisticated and multistage approach. We limit ourselves to an overview.
9
Shriyesh Mane
The Competitive Approach: Here the firm sets prices based on the
competitors’ prices. The approach is also called as the Common Sense
Approach. Management looks at comparable hotels and sees what they are
charging for the same product. These properties are often called as the
“competitive-set”. Usually they comprise of 6-10 properties in a market that
are most important competition for a property. The competition is based on
Location, Property ratings, Property Type, Brand Identification etc. The
thought behind this approach is that the hotel can charge only what the
market will accept, and this is usually dictated by the competition. This
information is available through various public domain sources, including a
periodic ‘Blind-Call’ to competing hotels.
The Blind call does not identify the hotel making the call and simply asks for
availability and rates on specific days.
Market Condition would be determined by:
∙ How does the product rates compare to those in the competition?
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 9
FRONT OFFICE MANAGEMENT – V SEMESTER
∙ If the property is new, construction cost will most likely be higher than
those of the competition.
∙ The value of the property is not taken into consideration. With the
property being new and perhaps having newer amenities, the value of
the property to guests can be greater.
New product pricing: This evolves setting a different price for a new product.
There are different strategies for introducing a new product; the two best
known are price skimming (an artificially high priced for a new product) and
penetration pricing (introducing a new product at a very low price).
Price lining: where the firm pre-establishes prices that it feels confident will
attract customers.
Psychological pricing: where slightly lower prices are used to give customers
11
Shriyesh Mane
Leader pricing: where a firm offers a product for a short time at a price below
its actual costs, or offers something special with the purchase of a product
(e.g. a beer with the purchase of spaghetti).
1. Competitors
2. Customer characteristics
3. Customer demand volumes
4. Costs
5. Channels
6. Corporate objectives
7. Corporate image and positioning
8. Complimentary services and facilities
9. Consistency with marketing mix elements and strategy
Break-even Analysis
between those which are "variable" (costs that change when the production
output changes) and those that are "fixed" (costs not directly related to the
volume of production).
Total variable and fixed costs are compared with sales revenue in order to
determine the level of sales volume, sales value or production at which the
business makes neither a profit nor a loss (the "break-even point").
12
Shriyesh Mane
Fixed Costs
Fixed costs are those business costs that are not directly related to the level
of production or output. In other words, even if the business has a zero
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 12
FRONT OFFICE MANAGEMENT – V SEMESTER
output or high output, the level of fixed costs will remain broadly the same.
In the long term fixed costs can alter - perhaps as a result of investment in
production capacity (e.g. Adding a new factory unit) or through the growth
in overheads required to support a larger, more complex business.
13
Shriyesh Mane
Variable Costs
Variable costs are those costs which vary directly with the level of output.
They represent payment output-related inputs such as raw materials, direct
labour, fuel and revenue-related costs such as commission. A distinction is
often made between "Direct" variable costs and "Indirect" variable costs.
Direct variable costs are those which can be directly attributable to the
production of a particular product or service and allocated to a particular
cost center. Raw materials and the wages those working on the production
line are good examples.
Semi-Variable Costs
Whilst the distinction between fixed and variable costs is a convenient way
of categorizing business costs, in reality there are some costs which are
fixed in nature but which increase when output reaches certain levels. These
are largely related to the overall "scale" and/or complexity of the business.
For example, when a business has relatively low levels of output or sales, it
may not require costs associated with functions such as human resource
management or a fully-resourced finance department. However, as the scale
of the business grows (e.g. Output, number people employed, number and
complexity of transactions) then more resources are required. If production
rises suddenly then some short-term increase in warehousing and/or
transport may be required. In these circumstances, we say that part of the
cost is variable and part fixed.
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 13
FRONT OFFICE MANAGEMENT – V SEMESTER
One of the most common tools used in evaluating the economic feasibility of
a new enterprise or product is the break-even analysis. The break-even point
is the point at which revenue is exactly equal to costs. At this point, no profit
is made and no losses are incurred. The break-even point can be expressed
in terms of unit sales. That is, the break-even units indicate the level of
sales that are required to cover costs. Sales above that number result in
profit and sales below that number result in a loss. The break-even sales
14
Shriyesh Mane
Break-even analysis is based on two types of costs: fixed costs and variable
costs. Fixed costs are overhead-type expenses that are constant and do not
change as the level of output changes. Variable expenses are not constant
and do change with the level of output. Because of this, variable expenses
are often stated on a per unit basis.
Once the break-even point is met, assuming no change in selling price, fixed
and variable cost, a profit in the amount of the difference in the selling price
and the variable costs will be recognized. One important aspect of break even
analysis is that it is normally not this simple. In many instances, the selling
price, fixed costs or variable costs will not remain constant resulting in a
change in the break-even.. And these changes will change the break even.
So, a break-even cannot be calculated only once. It should be calculated on
a regular basis to reflect changes in costs and prices and in order to
maintain profitability or make adjustments in the product line.
Contribution margin
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 14
FRONT OFFICE MANAGEMENT – V SEMESTER
Variable Cost reflects outlays to produce and sell the product line (input
15
Shriyesh Mane
If these options are unattractive, the manager may decide to drop the
unprofitable product in order to produce an alternate product with a higher
contribution margin.
For example, a group may be negotiating for a lower room rate with a hotel.
In order to make an appropriate group profit, the hotel may require some
sort of additional food and beverage revenue like a continental breakfast or
group dinner. In other cases the hotel may be unwilling to negotiate room
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 15
FRONT OFFICE MANAGEMENT – V SEMESTER
16
Shriyesh Mane
Advantage of forecast: -
a. Management of reservation.
b. Effective room management.
c. Scheduling of employees in front office.
d. Scheduling of employees in housekeeping.
e. Scheduling of employees in Restaurants.
f. For ordering supplies in HK & Kitchen.
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 16
FRONT OFFICE MANAGEMENT – V SEMESTER
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 17
FRONT OFFICE MANAGEMENT – V SEMESTER
18
Shriyesh Mane
A. Forecast formula
Number of rooms available for sale =
Total number of rooms
-Number of out of order rooms
-Number of stay-over
-Number of reservations
+Number of room reservations*No-show factor (% of
no-show) +Number of room under-stays
-Number of room over-stays
This is not an original work, compilations from various sources including books, publications,
19
Shriyesh Mane
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 18
FRONT OFFICE MANAGEMENT – V SEMESTER
The FO manager & the reservation manager jointly develop the 10-day
forecast, at most hotels, possibly in conjunction with a forecast committee.
Many properties develop their 10-day forecast from their yearly forecast. A
10-day forecast usually consists of:
∙ Daily forecasted occupancy figures including room arrivals, room
departures, and rooms sold & number of guests.
∙ The no. Of group commitments with a listing of each group’s name,
arrival & departure dates, no. Of rooms reserved, no. Of guests &
perhaps quoted room rates.
∙ A comparison on previous periods forecasted & actual room counts
& occupancy percentages.
A special 10-day forecast may also be prepared for F&B, banquets &
catering operations. This forecast usually includes the expected no. Of
guests which is often referred to as the house count. Sometimes the house
count is divided into Group & Non Group categories so that the hotel’s
restaurant managers can better understand the nature of their business &
their staffing needs.
It helps various hotel depts. Plan their staffing & payroll levels for the
upcoming period. The 10-day forecast should be completed & distributed to
all department offices by midweek for the coming period. This forecast can
be especially helpful to the HK dept. A 10-day forecast form is developed
from data collected through several FO sources.
First, the current number of occupied rooms is reviewed. The
20
Shriyesh Mane
III. Three day forecast- It is updated reports that reflect a more current
estimate of rooms’ availability. It details any changes from the 10-day
forecast. It is intended to guide management in fine-tuning its plans.
A 3-day forecast is an updated report that reflects a more current estimate
of room availability. It details any significant changes from the 10-day
forecast. The 3-day forecast is indented to guide management in fine tuning
labour schedules & adjusting room availability information. In some hotels, a
brief daily revenue meeting is held to focus on occupancy & rate changes for
the next few days. The result of this meeting is often included in the 3-day
forecast.
∙ Have sales agents call competing properties for rates & consider
adjusting your rates.
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 20
FRONT OFFICE MANAGEMENT – V SEMESTER
Estimating expenses
Most expenses at front office are ‘direct expenses’ (expenses versus
revenue). Use of past data may be made to calculate the percentage of
room revenue that each item may represent. These figures can then be
applied to the total forecasted room revenue resulting in monetary estimate
for each expense category for the budget year.
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 21
FRONT OFFICE MANAGEMENT – V SEMESTER
Note: We also have to identity here which costs are rising as a percentage of
revenue & why. Then we must also develop control measure. Another
method of estimating expenses is to calculate variable cost per room sold &
multiply these cost by projected occupancy.
Most hotels refine expected results of operations & revise operations budgets
as they progress through the budget year. Re-forecasting operations budget,
such variance may indicate that conditions have changed since the budget
was prepared.
EVALUATION
a. Rate applied
b. Existence of POS bills
c. Guest signature on POS bills
23
Shriyesh Mane
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 22
FRONT OFFICE MANAGEMENT – V SEMESTER
Daily operations report: Also known as the manager’s report, the daily report,
or the daily revenue report contains a summary of the hotel’s financial
activities during a 24-hour period. The daily operations report provides a
means of reconciling cash, bank accounts, revenue, & account receivable.
Occupancy ratios: This ratio measures the success of the front office in
selling the hotel’s primary product: guest rooms. The occupancy ratio’s
taken in to consideration viz. Number of rooms available for sale, number of
rooms sold, number of rooms occupied by guest, number of guests, net
room revenue. Generally, these data are contained on the daily operations
report.
Room revenue analysis: Front office employees are expected to sell rooms at
the rack rate unless a guest qualifies for an alternate room rate. A room rate
variance report lists those rooms that have not been sold at rack rates. With
this report, FOM can review the use of various special rates to determine
whether staffs have followed all appropriate front office policies &
procedures. In a hotel with a computerized front office system, the computer
can readily prepare a room rate variance report.
24
Shriyesh Mane
information about the results of hotel operation for a given period of time.
The period may be one month or longer, but should not exceed one business
year.
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 23
FRONT OFFICE MANAGEMENT – V SEMESTER
Rooms’ division income statement: The hotel accounting division prepares the
room division schedule. It shows a detailed listing of income from the
various units. By carefully reviewing the rooms division income statement,
the FOM may be able to develop action plans to improve the divisions
financial status & services.
Room division budget reports: The hotel accounting division also prepares
monthly budget report that compares actual revenue & expense figures to
budgeted amounts. These reports provide timely information for evaluating
front office operations. This budget also shows both monthly variance &
year-to-date variance.
Operating ratios & ratio standards: These ratios assist the managers in
evaluating the success of front office operation. Operating ratios should be
compared against proper standards - here being the budgeted percentages.
Ratios are meaningful only when compared against useful criteria such as: -
Planned ratio goals
- Corresponding historical ratios
- Industry averages.
The hotel annual operating budget is a profit plan that addressed all revenue
sources & expense items. Annual budgets are divided into monthly plans &
which in turn are divided into weekly plans. Budget plans are standards
against which the management evaluates the actual result of operations. An
accurate room’s budget is vital to the overall budget because room revenue
& profits are usually greater than any other department. Budget planning
requires closely coordinated efforts of all management personnel. FOM
prepare the room revenue forecast Accounts department provides all
departments with statistical data. It also coordinates all departmental
budget plans, & prepares a comprehensive hotel budget. The GM & financial
controller review all departmental budgets &prepare a budget report.
25
Shriyesh Mane
Elements requiring changes are returned to HOD’s for review & revision.
i) One way is to analyze room revenue for past few years &
calculate the percentage increase per annum &predict for the
budget year.
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 24
FRONT OFFICE MANAGEMENT – V SEMESTER
B. Estimating expenses
Most expenses at front office are ‘direct expenses’ (expenses versus
revenue). Use of past data may be made to calculate the percentage of
room revenue that each item may represent. These figures can then be
applied to the total forecasted room revenue resulting in monetary
estimate for each expense category for the budget year.
Typical room division expenses are as follows: -
26
Shriyesh Mane
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 25
FRONT OFFICE MANAGEMENT – V SEMESTER
27
Shriyesh Mane
Budgeting
A budget is a business plan usually expressed in monetary terms. To make
meaningful decisions about the future, a manager must look ahead. One way
to look ahead is to prepare budgets and forecasts. A forecast may be very
simple. By contrast in a large organization a budget might entail forecasts up
to five years. (such as furniture and equipment purchases.),as well as
requiring day today budgets(such as staff scheduling)budgets not expresses
in monetary terms could involve numbers of customers to be served,
number of rooms to be occupied, number of employees required, etc. the
three main purpose of budgeting can be summarized as follows:
This is not an original work, compilations from various sources including books, publications,
28
Shriyesh Mane
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 26
FRONT OFFICE MANAGEMENT – V SEMESTER
2. To provide management with long term and short term goals. These goals
can be used to plan future activities.
Types of budgets
∙ Long-term
∙ Short-term
∙ Capital
∙ Operating
∙ Department
∙ Master
29
Shriyesh Mane
the actual sales level differs from the budgets sales level, there is no plan
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 27
FRONT OFFICE MANAGEMENT – V SEMESTER
covering this possibility and expenses can only be then adjusted in the short
run buy guess work.
With a flexible budget, variable expenses will change with the volume of
sales revenue, but fixed expenses will remain the same. For example a
budget might be prepared for a restaurant based on a number of sales
revenue. Expenses are calculated based on each different revenue level.
Variable expenses might be expresses as a percentage of sales revenue or
as amount per unit sold. However advertising expenses might be a fixed
expense and will be left the same, regardless of the actual level of ales
revenue. In other words regardless of the volume of the sales revenue, a
definite fixed amount is budgeted for this expense. a truly flexible budget
will show all expenses that are in fact variable by their nature as
percentages for each sales revenue operation(such as restaurant sales
revenue and room ales revenue)fixed cost will be shown as an amount.
Capital budgets
30
Shriyesh Mane
Operating budgets
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 28
FRONT OFFICE MANAGEMENT – V SEMESTER
Department budgets
Master budgets
The budget planning process requires the closely coordinated efforts of all
management personnel. While the front office manager is responsible for
room revenue forecasts, the accounting division will be counted on to supply
department managers with statistical information essential to the budget
preparation process. The accounting division is also responsible for
31
Shriyesh Mane
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 29
FRONT OFFICE MANAGEMENT – V SEMESTER
The primary responsibility of the front office manager in budget planning are
forecasting rooms’ revenue & estimating related expenses. Rooms’ revenue
is forecasted with input from the reservations manager; expenses are
estimated with input from all department managers in the rooms division.
The hotels annual operation budget is a profit plans that addresses all
revenue sources & expense items. Budgets are important tools for managing
cash flow, controlling costs, and making effective management decisions.
The ability to accurately predict future profits requires a firm understanding
of operating costs.
When we talk about Front Office department, we mean the budgeting of the
various aspects of Front Office department. For the purpose of study, let us
say that the front office department of a large hotel has various sections such
as reservation, lobby and bell desk, although in a smaller capacity even the
telephones and cash & bills may also be come under this dept. now we talk
about the budgeting of front office, we mean the Departmental Master Budget
of Front Office, which include budgets for each section such as reservation,
lobby and bell individually. In other words, the FOM should get individual
budgets from each of these areas.
32
Shriyesh Mane
Let us say that reservation section shall give its budget which will mean the
budgeted figures of reservations for a specific period of time (no. of
bookings). This budget shall also include the cost of reservation system, that’s
to say, cost to be incurred on various equipment and stationary used in the
system, for e.g. , reservation racks, their replacement , new purchase,
maintenance etc., also the cost incurred on stationary like Guest registration
cards, reservation forms, etc. Similarly, other equipment like more filling
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 30
FRONT OFFICE MANAGEMENT – V SEMESTER
racks for the section, more telephone lines and such other equipment which
may be necessary for the efficient functioning of the section and ultimately in
achieving the budget/targeted figures. Further the reservation budget shall
also include the budget figure of labor, which means two things:-firstly, it
means that for the specific period for which the budget is being made, what
will be the requirement of staff, i.e., no. of people. Now this will depend on the
budgeted figure of reservation and if they are more the labor cost and labor
related cost for that period. The budget for reservation section will be
prepared by the Reservation Manager and he must take help and suggestions
of his juniors while preparing a draft budget. The budget can be classified
under various heads such as Fixed Budget and Operating Budget.
Finally, on the basis of the sub-division budgets, which are prepared by the
Reservation Manager and Lobby manager, the FOM prepares a front office
department budget for the hotel. The FOM takes the help and guidance from
lobby manager and reservation manger in doing so. Normally, the budgets for
front office department are prepared on quarterly basis. While preparing the
budget guidance is taken from past figures and information. The marketing
and sales dept. of the hotel also helps in preparing the final budget as they
can also forecast the future/expected business. Further, it’s also important
33
Shriyesh Mane
that the Lobby manager and Reservation manager be given this budget for
implementation once it’s approved by the FOM and then by the GM and
controller and they by the Board of Directors.
Once the budget has been approved and given for implementation, it the
duty of the operating section to ensure that the workers adhere to the
budget. Any deviations must be observed, recorded and notified. This
reasons why the deviations was there must be out and analyzed. From time
to time the refining of the budget should also be done (as per the need) by
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 31
FRONT OFFICE MANAGEMENT – V SEMESTER
the FOM and approval of higher authorities for the same must be taken and
further communicated to the concerned persons.
Preparing an accurate budget requires the ability to forecast sales with a reasonable
amount of certainty, several different methods are used to predict future sales, but some
techniques are more accurate than others. The easiest technique is averaging-
calculating the average monthly sales in the past.
Sales averages
Past financial information is called historical data. The more recent the
historical date used, the more accurate the average. In most cases, sales
figures from more than three years in the past often are not reliable for
predicting future sales. To calculate an average, add the amounts and divide
the sum by the number of amounts.
However, room sales usually are not constant, but continually change in
response to economic conditions, social trends, and other factors. For
instance, leisure travel is seasonal, and the greatest share of resort sales
occur during the vacation and holiday seasons in summer and winter.
Projecting expenses
One key element in budget preparation is the estimating/projecting
expenses. Since expenses are categorized both in relation to operated
departments (direct/indirect) and how they react to changes in volume
(fixed and variable), the forecasting of expenses is similar to the approach
used in forecasting revenue. However, before department heads are able to
estimate expenses, they must be provided with information regarding the
following:
34
Shriyesh Mane
Expenses are of two types: fixed expenses and variable expenses. A fixed
expense remains constant and is not dependent on sales and these include
charges such as depreciation, insurance expense, property taxes, rent
expense, and similar expenses. A variable expense fluctuates as sales rise or
decline. Expenses such as stationery charges, room amenities
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 32
FRONT OFFICE MANAGEMENT – V SEMESTER
expense that varies as per the occupancy of the establishment are termed
as variable expenses.
3. Terrorist activities
4. Climate conditions
5. Events (sports, festival celebration, etc)
6. Importance of the city (climate, industries- IT, BPO,
Biotechnology)
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 33
FRONT OFFICE MANAGEMENT – V SEMESTER
cash credit sales. Cash sales constitute an immediate cash inflow. Credit
sales, however, take time to result in a cash inflow.
Most expenses for front office operations are direct expenses in that they
vary in direct proportion to room’s revenue. Historical data can be used to
calculate an approximate percentage of room’s revenue that each expense
item may represent. These percentage figures can then be applied to the
total amount category for the budget year.
a) Operating Budget
The method used in the preparation of hotel and catering budgets is. I now
fairly well established. The first step is to predetermine the volume of sales.
In order to do this it is essential to examine the following: (a) past sales; (b)
current trends; and (c) relevant economic and political aspects. .
The analysis of past sales is always the starting point in the preparation of
any sales budget. I t is necessary to establish the overall trend in the
volume of sales as well as the trends in the principal elements of the sales
mix. It is useful to calculate the percentage change in room, food and
36
Shriyesh Mane
The state of the national economy and political developments are sometimes
more critical than the internal environment of the business. Government
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 34
FRONT OFFICE MANAGEMENT – V SEMESTER
economic and fiscal policies have a powerful effect on the level of disposable
incomes of the population. Similarly government decisions have an
important effect on the state and prosperity of particular industries and
regions. Hotels and restaurants, which cater for foreign tourists, have to look
beyond their frontiers, and consider developments overseas and their effect
on the inflow of foreign tourists.
From the point of view of budgetary control two methods of approach are
37
Shriyesh Mane
possible here. In smaller units all such expenses may be predetermined for
the next budget year without attempting to allocate/apportion them to
departments. In larger units it is possible to analyze such expenses as
between those which are controllable and those which are not: and allocate
the controllable items to the respective non-revenue producing departments
such as: accounts; control; personnel and training and maintenance. The
uncontrollable expenses would then appear separately and be the
responsibility of top, rather than departmental, management. Which of these
two solutions is chosen depends on the size and the special circumstances of
each hotel. As far as the basic method is concerned there is no difference
between hotels and restaurants.
The operating budgets dealt with above may be of two kinds: fixed budgets
and flexible budgets. A fixed budget is one, which is not influenced by the
level of activity. Thus most of the budgets for the undistributed operating
expenses (e.g. administrative and general expenses, advertising and sales
promotion, repairs and maintenance, etc.) will be fixed budgets because
changes in hotel and restaurant occupancy will not have a direct influence on
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 35
FRONT OFFICE MANAGEMENT – V SEMESTER
b) Capital Budgets
Examples of capital budgets have already been given. The most important
capital budgets in the context of hotel and catering operations are cash
budgets and capital expenditure budgets.
Cash budget
The main objective of the cash budget is to predetermine the cash inflows,
cash outflows, and the resulting cash balance over a future period.In order
to determine future cash inflows it is necessary to identify the sources of
cash inflows. These will normally be: room, food and beverage sales and
sales of the minor operated departments. Each of these sources may
generate cash and credit sales. Cash sales constitute an immediate cash
inflow. Credit sales, however, take time to result in a cash inflow. Thus credit
38
Shriyesh Mane
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 36
FRONT OFFICE MANAGEMENT – V SEMESTER
This particular budget will, to some extent, be affected by the cash budget
as, inevitably; any proposed capital expenditure must depend on the
availability of cash over the budget period. The cash budget will, therefore,
have to be consulted before a decision is made on the timing of each item of
capital expenditure. All new acquisitions of plant, furniture, etc. listed in the
capital expenditure budget will be incorporated in the budgeted balance
sheet.
Similarly, one does not often prepare a budget for food and beverage stocks.
Where a system of budgetary control is in operation a standard stock level
for food and beverages is fixed, and this is quite adequate for most
purposes, including the construction of the budgeted balance sheet.
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 37
FRONT OFFICE MANAGEMENT – V SEMESTER
and percentage difference are noted and the amount of rooms’ revenue for
the budget year is predicted.
Advantages of budgeting
Disadvantages of budgeting
to spend the money still in the budget as the end of the budget period
arrives. This tendency can be provoked by a desire to demonstrate
that the budget forecast was correct to begin with and to protect the
budget from being cut for the next period.
Factors to be considered:
1. Limiting factors (for e.g. a hotel cannot achieve more than 100%)
2. Lack of skilled labour and supervisory personnel
3. shortage of capital
4. management policies
41
Shriyesh Mane
3. Comparing actual results with those planned and analyzing the differences
Departmental budgets
The procedure:
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 39
FRONT OFFICE MANAGEMENT – V SEMESTER
∙ income taxes
Budgetary Control
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 40
FRONT OFFICE MANAGEMENT – V SEMESTER
of the policy and the continuous comparison of actual with the budgetary
results either to secure by individual action the objective of that policy or
provide a basis in the budget.”
The most important aspect of budgetary control is the planning which goes
into the making of budget and its effectiveness in the control of Hotel
operations.
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 41
FRONT OFFICE MANAGEMENT – V SEMESTER
44
Shriyesh Mane
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 42
FRONT OFFICE MANAGEMENT – V SEMESTER
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 43
FRONT OFFICE MANAGEMENT – V SEMESTER
Limitations of budgeting
∙ Budgets estimates and can never be hundred percent accurate. They are
as good as the data and forecasts on which they are based. Inflation
and rapid changes in business environment tend to distort budget data
before they are put to operations.
∙ The budget is simply a tool to efficient system of budgeting can achieve
nothing without effective planning and control.
∙ Budgets cannot guide as to what action should be taken. Similarly, its
not on outlives program that must be adhered to under all conditions ∙
Sound system of effective supervision is necessary and the lack of it
would make the budget ineffective.
∙ Budgeting entails the danger of infelicity as everybody becomes
conscious that they adhere to the projected budget, otherwise they
46
Shriyesh Mane
may be called inefficient. The budget is not a strait jacket thing but a
measure of performance and a guide which should be adjusted to
meet new situations.
∙ Budget may be misused by the bosses to find faults in employee and
restrict performance rather than improve it.
∙ The initiative and creativity in an employee may be hampered if the
supervisor and bosses stick to budget strictly.
∙ Budgeting is a time-consuming process and involves expenses. There is
a tendency of going into excess details which restricts freedom of
action.
∙ Budgeting goals may lead people to supersede the enterprise goals.
Budgeting may be used to hide inefficiencies as past practices become
evidence for the present. The fact that certain expenditure was made
in the past becomes evidence of its irresponsibleness in the present.
There is the need of safeguard against over-emphasis on factor that
happens to be easier to observe.
∙ Success of budgeting depends on the motivation of people who are to
install and use budgets. People can’t change their habits and attitude
overnight. To be effective, budgeting should be gradual and
cooperative exercise.
∙ Budget making is a tempting exercise. It provides an opportunity to
grapple with situations that are yet to arise. But sometimes in their
desire to indulge in “shadow boxing” the hotel management may
overlook the cost thereof. Budget making can be effective only when
there is some correlation between the cost of the system and the
benefits to be derived from it.(lack of cost benefits analysis)
∙ Budgeting is but a means to an end, then end being successful attaining
of budgetary targets into actual results. However, there is
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 44
FRONT OFFICE MANAGEMENT – V SEMESTER
not always the case. It’s too often assumed that introduction of a
budget program by itself is not enough to guarantee its successful
execution.(lack of matching efforts)
∙ Although budgeting is a big help in arriving at proper decisions, yet very
often it’s seen as a substitute rather than as a tool of management,
whose job is to choose the best amongst the alternative courses of
action, turns a blind eye to its responsibility of decision making, then
the situation may lead to harmful consequences for the business.
REFINING BUDGET
The term refining can also be called as amending the budget, or adjusting the
budget or modifying the budget. As the term days, this means to change,
47
Shriyesh Mane
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 45
FRONT OFFICE MANAGEMENT – V SEMESTER
48
Shriyesh Mane
Zero bases budgeting (ZBB) is a useful technique for controlling costs. As its
name implies, no expenses can be budgeted for or incurred unless they are
justified in advance. ZBB requires each department head to justify in
advance the entire annual budget from a zero base.
Since most costs (food, beverage, labour, supplies and others) are linked to
sales revenue levels in a fairly direct way, budgeting for them is relatively
easy. However there are several expenses in the hospitality industry not
related as directly to sales revenue levels. These indirect or undistributed
expenses include the following:
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 46
FRONT OFFICE MANAGEMENT – V SEMESTER
With ZBB each category of cost is broken don into decision units that are
then analyzed. The department head responsible for the cost prepares the
analysis. After each decision unit is analyzed, management ranks all decision
units, and the final budget is allocated according to this ranking.
49
Shriyesh Mane
Decision units
Each decision units is competing for the same limited resources. Once
decision units have been established, next step for each department head is
to prepare an analysis of each separate decision unit of his or her
responsibility. This analysis is carried out each year before the new budget
period begins. For each decision unit, the department head will document
the following:
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 47
FRONT OFFICE MANAGEMENT – V SEMESTER
Ranking process
Once the decision units’ activities have been documented, the general
manager begins the review process. To determine how much money will be
spent, and in what areas of departments, the general manager must rank all
activities in order of importance to the organization. Once this order is
established, the activities would be accepted up to the total predetermined
budget for all activities.
50
Shriyesh Mane
The major difficulty in ranking is to determine the order of propriety for all
the operation’s activity under review. In small organization, with the aid of a
committee if necessary this might not be too difficult. In larger operations,
each department head might be asked to rank all activities that come within
his or her authority. The procedure can then continue through successive
levels of middle management until they reach the general manager.
Advantages of ZBB
Disadvantages of ZBB
∙ It implies that the budgeting method in use is not adequate. this may or
may not be true
∙ It requires a great deal more time, effort, paperwork, and cost that
traditional budgeting methods
∙ It may be unfair to some department heads that, even though they may
be very cost effective in managing their departments, are not as
capable of others in documentation and defense of their budgets. They
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 48
FRONT OFFICE MANAGEMENT – V SEMESTER
might thus find themselves outranked by other more vocal, but less
cost effective, department heads.
Variance analysis
51
Shriyesh Mane
Advantages of budgeting
Disadvantages of budgeting
Suggested reading
Principles of hotel front office operation – Sue Baker, Jeremy Huyton, Pam
Bradley
Hotel front office management: James A. Bardi
Managing front office operations: Michael L. Kasavana, Richard M.
Brooks Back office operations and administration: Dennis L. Foster
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 49
FRONT OFFICE MANAGEMENT – V SEMESTER
52
Shriyesh Mane
The computer will be serving top management more directly and it will,
therefore, be used to formulate strategic decisions. The differences between
the strategic and tactical levels will be noticed in many ways. Firstly, there
will be a great expansion in the use of external data sources. An outer circle
of activities might be added to the network of information processing
facilities that will underpin society and business as a whole. There will be
much more integration between these and between the information services
of the hotel itself. And finally, most of these procedures will completely
automatic, using self-regulatory control system.
This is not an original work, compilations from various sources including books, publications,
53
Shriyesh Mane
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 50
FRONT OFFICE MANAGEMENT – V SEMESTER
Reservation
The reservations system handles all reservation and related activities within
the hotel. This subsystem allows for individual (F.I.T.). Tour group,
conference and miscellaneous group bookings to be made for any data in the
future. The reservation accounting function allows for advance deposit
handling and transfer of charges to future reservations. Room availability is
also checked for every reservation request, depending on room type and the
number of rooms requested. It handles room-wise, type-of-room-wise
enquiry, makes the accept/refuse decisions and may also prepares letters for
conformation, refusal, etc. the reservation system handles deposits and
generates necessary reports.
Guest history
The guest history system provides for a personal, thoughtful, and efficient
guest service and hospitality. Personal histories on each individual; guest
compiled, maintained and updated automatically. This information is
available for review by the front office staff.
54
Shriyesh Mane
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 51
FRONT OFFICE MANAGEMENT – V SEMESTER
Registrations
The registration system is linked by information transfer from the
reservation system. Pre-registration, guest room assignment, and on-line
room status inquiry facilities faster check-in. it has very powerful features
for inquiry on in-house guest information. It handles group registration key
cards & electronic keys and handles walk-in arrival.
Housekeeping
The housekeeping system consists of constant updating of room status
within the hotel. An interface with EPABX is also there. There is lot of other
functions like updating status of renovation VIP status, Discrepancy etc
Telephone operator
The telephone operator system enables operator to have ease of access to
information about all in-house guests, expected arrivals and departures. An
optional interface EPABX system should allow for automatic posting of
telephone charges to the guest folios.
Banquets
The banquet system is a unique system that caters to banquet reservations.
The extensive inquiry capability of the banquet system gives information on
booking positions for any particular hall, function, day or time. Billing and
posting of transactions to the sales ledger also should be handled by this
module.
Point-of-sale
The points-of-sale system is designed for the complete order taking and
55
Shriyesh Mane
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 52
FRONT OFFICE MANAGEMENT – V SEMESTER
posting to the guest ledger. The system incorporates all the functions of
cash, register and is particularly effective in room service.
Night auditing
The night auditing system is the most important function in the daily
operations of the hotel. It posts room tariff automatically, performs the final
balance of the entire day’s transactions and closes the day’s business. A
comprehensive audit trail and accounting reports help reconcile all
transactions in a short span of time.
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 53
FRONT OFFICE MANAGEMENT – V SEMESTER
57
Shriyesh Mane
Hotel industry in India felt the need of computerization way back in 1982
when Asian Games was held with an underlying idea of providing more
personalized service to the guest. If you have to be on the top in this line
you have to offer more to your guest then others i.e. ultimate in service i.e.
personalization. Fortunately we have today a willing slave called “computer’
as a means of providing a more complete personal service, which is
prepared to wok endlessly at very little cost on the most mundane, tedious,
boring, and repetitive tasks. A computer will change the efficiency of a
procedure but will not fundamentally affect its value to the guest. Rather, it
would make it more reliable, economical and faster. As a part of effective
services, guests are pre- registered to save time, and individual attention
can be given to them. Advance information, especially about VIP’s, help in
providing exactly what they need without their asking for it. More
personalized touch can be given as the operator identifies the guest be name
and his/her room no. and their needs are attended to immediately.
Information is dispatched more effectively, interdepartmental communication
is quick and information can be transmitted from one terminal to another
terminal. Also, the guest accounting is accurate. The guest doesn’t have to
wait for the bill to be produced. Last minute meal charges, mini bar charges
or telephone call bills are updated immediately and have no late charges.
Pneumatic tube used for transmission of the information and no more used.
At any given moment the status of room can be verified and a report can be
prepared. The back office can be used for all the accounting, cash trial
balance, payroll, stock control, etc. another important function, forecasting,
58
Shriyesh Mane
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 55
FRONT OFFICE MANAGEMENT – V SEMESTER
system. Its uniform and user friendly interface means that hotel employees
can learn this system quickly. It’s a completely integrated package designed
to manage and maximize the efficiency of hotel operations. It has a special
training module which enables the user to work and learn in a real-like
environment.
Fidelio is a highly user-friendly with pull down menus which help and assist
the user at every step and only short term training to staff is required.
Fidelio software is one of the most advanced hotel management software.
It’s a Munich based software company. Fidelio has its own special file and in
case a virus gets into it. Fidelio catches it and leads it into a non-usable file
from a data base file and locks it. Additional software called “Red Alert
Software” for extra protection is used. Total hardware i.e. net serve, vectra
nodes and printer are provided by Hewlett and Packard. Serves are Pentium
based.
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 56
FRONT OFFICE MANAGEMENT – V SEMESTER
1. Screen painter
2. Report generator
60
Shriyesh Mane
Reservation Module
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 57
FRONT OFFICE MANAGEMENT – V SEMESTER
This module includes the various types of reservations. For e.g., individual,
company, group, airlines, travel agents, and also by any combination and
wait-listed reservation.
Creates rooms block, search view and modify a block, create a block header.
After changing the status of a block to open for pick up rooms, the rooms
can be picked up from group reservation or individually. Block can be rigid or
elastic (overbooking possible or not possible). Block any combination of
room’s type with various room codes and rates. Enter a cutoff date; create a
61
Shriyesh Mane
group master and multiple paymasters. Series group apply changes to all
group guest. One guest only or all guests (same arrival date). Pick up room
from an existing block, create a rooming list.
It also includes, creation of rooming list, fixed or flexible no. of persons
sharing a room, rate showing options, different length of stay for each
member individually, cancel and modify reservation for one or all members
of the group, perform automatic room assignment and viewing of group
statistics etc. further functions such as check-in of whole group
automatically , individually billing for all group members or consolidated
billing in master folio and group check or individual check out etc. are also
included in the module. Handles all reservation from a complex convention
to airlines allotments.
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 58
FRONT OFFICE MANAGEMENT – V SEMESTER
62
Shriyesh Mane
Packages
A package refers to a deal in which the guest is given other services also
along with room in the rate, e.g. a trekking package, a golf packages etc.
(which in addition to room includes rounds of golf). Americans breakfast,
welcome drink, etc. for may be 3 nights and 4 days. Fidelio module offers
two ways of handling packages:-
∙ Basic package module
∙ Advanced package module
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 59
FRONT OFFICE MANAGEMENT – V SEMESTER
Basic package module: - for basic package Fidelio module can configure:-
Print package on guest folio.Package price can added or included to the rate
Multiple posing possibilities such as every night, certain nights of the week
on first night or last night or a combination of above.
send messages to
∙ All guest in-house
∙ All arriving /departure guest
∙ All VIP guests
∙ All guests of a particular group
∙ Any combination of the above
Guest history
This module of Fidelio has an ability to create profiles for individuals, guests,
companies, agents and sources, assign a no. to the guest, enter special
room features for a guest, possibility to put the guest on all payment cash
basis, override the overbooking parameters for VIP, enter a special
commission for a client, agent or source, on-line company statistics displays
revenue for last three yrs. Statistics of past stays, future reservation and
turn ways, automatic transfer of reservation data into guest history, purge
guest programmer in order to remove inactive guests and statistics by
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 60
FRONT OFFICE MANAGEMENT – V SEMESTER
Guest accounting
Guest accounting module has nearly 800 department codes and approx.
10,000 articles code, it has also paid out new rooms, non-revenue accounts
and payment (credit card, currencies, and bank transfer etc ) accounts,
automatic transfer of specific posting, grouped posting or all charges to
∙ Guest folio
∙ Another room
∙ Company/ travel agent account
Check out
64
Shriyesh Mane
This module covers the following functions: - user definable folio format in
various languages, ability to enter individual and additional text for each
folio, automatic printing of folio with department code text. In addition, to
ordinary and regular folio it can print advance folio, information folio and
interim folio, ability to consolidate folios, early departure with reposting of
room tax, check-out time feature allows detection of late departure , folio
spelling and re – grouping facility , possibility of enabling or disenabling
printing of phone nos. on folio, modify any previous billing instructions at
check out, ability to post additional charges, total or partial transfer of folio
to and from another room, ability to change guest data, view messages for
guest, unlimited combination of payment mode as cash, debit card and
credit card etc. and ability to previous folio on screen
Cashier function
This is an important Fidelio module and includes various cashiering functions
such as user definable cashier set up
∙ User identification
∙ Only one user per cashier at a time
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 61
FRONT OFFICE MANAGEMENT – V SEMESTER
And credit card and check report, city ledger report, currency report,
exchange from foreign to local currency and vice versa, daily modification of
exchange rate, possibility to enter a buy rate, sell rate, etc. for currency
automatic calculation of payment balances and cash book printout, handling
of paid outs, possibility to print out batch folios for guests departing
tomorrow, today, for all guests (batch folios can be printed while night audit
is running)
Deposit accounting
This covers accounting of reservation deposits, list of outstanding deposits,
list of transfers and refunds, deposit reminder report, automatic transfer of
deposit to guest folio at check-in and daily trial balance deposit ledger in the
night audit, master billing, split rate, staggered arrival, package plan , room
type control, block forecast and traces, etc.. All of these are taken care by
group and management functions.
65
Shriyesh Mane
This Fidelio module covers all the features of city ledger such as automatic
transfer of city ledger bills to city ledger accounting at the check-out,
authorization of city ledger check out can be made dependent on users
special right, grouping of several folio into one, partial payment and credit
card commission and various other options to :-
∙ Enter payment
∙ Delete accounts
∙ Transfer charges
∙ Correct amount of city ledger charges and compress charges etc.
Room’s management
This Fidelio module has the ability to change room’s status through
telephone interface, displays room status at any time with function keys
floor plan option which helps in graphically designing the layout of the floor,
room, or all of the entire property. This system displays the status of each
room, and guest information through a function key. It has the ability to
check from clean, dirty, and out of order, out of service, assigned rooms, and
discrepancies by various such as
∙ All rooms
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 62
FRONT OFFICE MANAGEMENT – V SEMESTER
∙ Guest history
∙ Financial
∙ Night audit
∙ Statistics
∙ Shift report etc...
Also various other reports a statistics and comparison with last year (date,
month, and year) and budget.
Programmed reports
Fidelio system covers the following programmed reports : arrival report,
arrival report with remarks from guest history and reservation, vacant rooms
with selection criteria on clean, dirty or all rooms, forecast of occupancy for
a given time period, type and booking type, package forecast report, market
forecast with exact overview of rooms sold at which rate for the upcoming
month, market segment forecast by day, departures of all regular guests
and groups, week plan displays, print out of room plan for 15 days of
entered date. Company statistics for sources, agents and companies with the
possibility to select by name, master account , country code etc. the module
covers nationality statistics with number of guest per country per day a well
as per month, outstanding debts report and commission report etc. and
many others useful reports.
Night audit
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 63
FRONT OFFICE MANAGEMENT – V SEMESTER
Its user definable night audit, handling of no shows, balance control and
audit trial report for back office, automatic posting of all fixed charges and
room rates, country code, control for currency code statistics, transaction log
for all activities, posting of telephone charges by telephone interface, rooms
and room type statistics, market code statistics, allotment control, night
auditor’s comment for cover page. A very special is that during night audit,
queries and reporting are possible on other work stations.
Concierge program
It includes following, query , guest history and registration data, all standard
function key available , housekeeping module with all the functions as in
67
Shriyesh Mane
front office, change of room status, lining change, lock room etc., messages,
information of the day: arrival , departures, stopovers, posting, wake calls,
print call details and most importantly , lock / unlock telephone.
Its built in the share files accounts and user interface, control of direct billing
at reservation or check-in, creation of accounts receivable accounts, in front
office or A/R module (Accounts Receivable module), unlimited no of accounts
types, reminder cycles based on account type , ageing reports, reminder
letters in different languages, ability to view and modify original front office
folio from within A/R module, searches can be by account name or
alphanumeric automatic reminder printing program ; reminder letter history
features shows exactly what letters were sent and when; ability to search for
changes by name, account no, date, amount range, payment no or front
office folio no, prevention of check out unless guest is attached to a valid
A/R account, security and user setup from front office, integrated credit card
facility for hotels not using electronic draft capture, similar functions keys as
in front office, no separate A/R night audit required and ability to use same
cashier no as in front office revenue etc.
Interfaces
The Fidelio system has the capability of interfacing with the
following: 1. Point of sale
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 64
FRONT OFFICE MANAGEMENT – V SEMESTER
2. CRS
3. Lock software
4. Credit card interface
5. Energy management
6. Call accounting systems
IDS covers 11 main modules, each of the modules has sub modules:
2. Point of sale
3. Accounts Receivables
4. Sales and marketing
5. Banquets and conferencing
6. Telephone management system
7. Financial management system
8. Materials management systems
9. Food and beverages costing
10. Human resources and payroll
11. Engineering and maintenance management
Internet
It’s one of the most modern and upcoming technology of the day. Following
are its features and benefits.
1. Opening international market
2. Making business information available
3. Selling product and services
4. Business round the clock
5. Quick information updates
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 65
FRONT OFFICE MANAGEMENT – V SEMESTER
6. Receiving feedback
7. Public relations and enhancing customer services.
TV interactivity
Through this concept, various guests can have access to same movie at
different times according to their own convenience. The movie will start from
the beginning for each guest regardless of the time switch on their TV sets.
Another major use is that the guest can at any time refer to their TV sets for
looking at their bills, charges, credit limits and amount spent etc.
Electronic concierge
The E-concierge redefines the concept of the concierge. Like an ever present
personal assistant, this facility empowers the guest to take a “Multimedia
graphic and sound assisted tour “ of the hotel, the city, shopping complex,
etc.. all at the convenience of sitting in his room. This facility is further going
to include, making reservation at restaurant, buying of cinema tickets etc...
New technologies
Objectives
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 66
FRONT OFFICE MANAGEMENT – V SEMESTER
70
Shriyesh Mane
Role of GDS
∙ Transaction processing
∙ Maintaining ,controlling and reporting room inventory levels and hotel
rates
∙ Yield management
-setting rates
-allocating rooms
-communicate this information to all points of distribution
∙ Data repository and a learning system for guest history, preferences,
profiles and buying patterns
∙ Primary collection points of valuable guest related information and
preferences
∙ Helps in developing, positioning and marketing all products and
services
Communication vehicle
Source of revenue
Strategic Weapon
HISTORY OF GDS
In 1940 airline routes and fares were limited and information of these were
published in a volume entitled the Official Airline Guide, from which travel
agents or consumers could construct an itinerary, then call or telex airline
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 68
FRONT OFFICE MANAGEMENT – V SEMESTER
agents who would mark the reservation on a card and file it. As the demand
for and complexity of air travel expanded, however, this process soon
became onerous and costly.
72
Shriyesh Mane
In 1940 airline routes and fares were limited and information of these were
published in a volume entitled the Official Airline Guide, from which travel
agents or consumers could construct an itinerary, then call or telex airline
agents who would mark the reservation on a card and file it. As the demand
for and complexity of air travel expanded, however, this process soon
became onerous and costly.
Ferranti Canada became involved in the project and suggested a new system
using punch cards and a transistorized computer in place of the unreliable
tube-based Mark I. The resulting system, ReserVec started operation in
1962, and took over all booking operations in January 1963. Terminals were
placed in all ticketing offices, where queries and bookings took about one
second to complete with no remote operators needed.
European airlines also began to invest in the field in the 1980s, propelled by
growth in demand for travel as well as technological advances which allowed
the GDS to offer ever-increasing services and searching power. In 1987, a
consortium led by Air France and West Germany's Lufthansa developed
Amadeus, modeled on Eastern's System One.
In 1990, Delta, Northwest Airlines, and Trans World Airlines formed World
span, and in 1993, another consortium including British Airways, KLM, and
United Airlines among others formed competing company, Galileo
International, based on United's Apollo network. Numerous smaller
companies have also been formed, aimed at geographic, industry, or
language niches inadequately served by the "big four."
73
Shriyesh Mane
Reservations systems are used in travel agencies. Prior to this, travel agents
spent an inordinate amount of time manually entering reservations. The
airlines realized that by automating the reservation process for travel
agents, they could make the travel agents more productive and essentially
turn into an extension of the airline’s sales force. It is these original, legacy
GDSs that today provide the backbone to the Internet travel distribution
system.
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 70
FRONT OFFICE MANAGEMENT – V SEMESTER
74
Shriyesh Mane
• More than 69,000 hotel properties around the world use GDS • A system
entry allow hotel suppliers to view statistics for competing hotel
companies as well as their own
• GDS is responsible for the recent growth and exposure of the Hotel and
Tourism industry
• GDS is used by almost all corporate and travel agencies and has
changed the way people look at traveling
1. Amadeus
2. Galileo
3. Sabre
4. Worldspan
75
Shriyesh Mane
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 71
FRONT OFFICE MANAGEMENT – V SEMESTER
Amadeus
Founded in 1987 by Air France, Iberia, Lufthansa, and SAS, Amadeus is the
youngest of the four GDS companies. Amadeus is a leading global
distribution system and technology provider serving the marketing, sales,
and distribution needs of the world’s travel and tourism industries. Its
comprehensive data network and database, among the largest of their kind
in Europe, serve more than 57,000 travel agency locations and more than
10,500 airline sales offices in some 200 markets worldwide. The system can
also provide access to approximately 58,000 hotels and 50 car rental
companies serving some 24,000 locations, as well as other provider groups,
including ferry, rail, and cruise, insurance, and tour operators.
Upon its inception, Air France, Iberia, Lufthansa and SAS held equal shares
of Amadeus Global Travel Distribution S.A. Shortly after the formation of the
company, however, SAS sold its shares to Amadeus Data Processing.
As the youngest of the four GDS companies, Amadeus has done remarkably
well during its short tenure. Yet, in many ways, the company remains an
anomaly. Amadeus has the greatest number of travel agency locations with
the highest productivity per terminal in the world, yet its booking share is
Number 3, and its revenues are dwarfed by Sabre and, to a lesser degree,
by Galileo. While the company is Number 1 in locations worldwide, serving
the greatest number of countries, it provides the fewest U.S. destinations of
the top four GDSs. As with its competitors, the future for Amadeus will
continue to be linked to the technological and structural changes that are
revolutionizing the travel industry. Amadeus appears to be adapting well
(albeit cautiously) to the shift of business to the Internet. Having acquired e
Travel, Inc. from Oracle Corporation in July of 2001, Amadeus now has a
new business unit dedicated to delivering solutions to e-commerce players
worldwide. The e-Travel solutions integrate all components of a managed
76
Shriyesh Mane
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 72
FRONT OFFICE MANAGEMENT – V SEMESTER
Best-in-class reporting
Achieve greater understanding of your business with over 250 distinct and
customizable reports:
Enhanced forecasting
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 73
FRONT OFFICE MANAGEMENT – V SEMESTER
Cutting-edge optimization
Maximize total revenue and capacity through optimal group, series and
contract placement:
Recommend the most profitable alternative dates for each group and build
the right mix of business on any given day.
78
Shriyesh Mane
This is not an original work, compilations from various sources including books, publications,
documents, webpages etc. for facilitating curriculum at IHM Bangalore only. Page 74
79