Managing Front Office Operations

1. Managing Front
Office
SQA I HOT 333

2. The Front Office Audit
Functions of the Front Office Audit
The Front Office Audit
System Update
Centralized Front Office Audits

3. Hotel Operations
24/7
Review and
Accuracy
Guest and
Non Guest
Account
Late
Evening/
Early
Morning
Revenue
Outlets
PMS
Updates
Creating &
Distribution
of reports

4. Front Office Audit Functions
Verify posted entries
to Guest & Non-
Guest accounts
Balance Front Office
accounts
Resolve room status
& rate discrepancies
Review guest credit
transactions against
established limits
Generate operational
& managerial reports

5. The Front Office Auditor
Tracks operating statistics
• Room revenues
• Occupancy percentages
• Other statistics
Summarizes daily
transactions
• Cash
• Credit Card
• Debit Card
• Other transactions

6. Establishing End of Day
Auditors compilations of
Balances
Stopping point for the
Business Day
Night Shift
Transactions incurred next
working day
Manual transactions/ Paper
work
Electronic Postings

7. Cross-Referencing
Departments generate
paperwork to document
transactions
Revenue center transaction
classifies type of transaction,
made with & monetary value
Review automated postings Revenue centers not interfaced
Transactional documentation
establish records & maintain
controls
Non-automated operation,
supporting provide cross-
reference information
A “bucket check” ensures that
accurate room rates have been
posted
The auditor’s review of daily
postings reconciles front office
accounts with revenue center
& departmental records

8. Account Integrity
Sound internal control ensure
accuracy, completeness &
Integrity of procedures
Internal control include cash
control & separation of duties
Front office staff post, verify &
collect sales transactions
No single individual should be
responsible for accounting for all
phases of a transaction
Front office auditor establishes
account integrity by cross-
referencing account postings with
departmental source
documentation

9. Account Integrity
Audit is complete with totals for guest,
non-guest, & departmental accounts
are “in balance”
Audit presents “out-of-balance”
position, audit is considered incomplete
An out-of-balance position exists when
charges (debits) & credits posted to
guest & non-guest accounts do not
match debits & credits posted to
departmental revenue sources
Out-of-balance condition may require
thorough review of all account
transactions, statements, vouchers, &
other support documents
Automated system, out-of-balance
positions are rare

10. Guest Credit Monitoring
Software responsible for monitoring credit
Establishing credit limits depends upon payment card floor limits, hotel’s house limit &
guest’s reputation
Front office auditor should identify accounts have reached or exceeded credit limits; called
“high-balance accounts
Report listing high balance accounts should be prepared for appropriate action by
management

11. Audit Posting Formula
Previous Balance
+ Debits - Credits
Net outstanding
Balance

12. Daily and Supplemental Transcripts
Daily transcript is detailed report of guest accounts that summarizes & updates
those guest accounts that had transactional activity on that particular day
Supplemental transcript may track day’s transactional activity for non-guest
accounts
Together, daily transcript & supplemental transcript detail all transactions
occurring on single hotel day

13. Daily and Supplemental Transcripts
Data appearing on system-produced daily transcript is typically detailed by
revenue center, transaction type & transaction total
Basis for consolidated report accounting transactions from which revenue
center totals can be checked
Daily & supplemental transcripts are spreadsheets to eliminate posting
discrepancies
Daily & supplemental transcripts can facilitate front office audit routine by
identifying out-of-balance figures in advance of detailed review

14. Front Office Automation
Front office software
modules can be
interfaced with
• Point-of-sale equipment
• Call accounting systems
• In-room entertainment devices
• Other revenue sources
Automated systems
helps auditor to spend
• Auditing transactions
• Analyzing front office activities
• Less time performing routine postings & bookkeeping entries
Front office automated
systems
• Organize
• Compile
• Print records faster than manually

15. Front Office Automation
During audit, automated system can process large quantity of data, perform
numerous computations, generate accurate account totals
Automated system updates are run daily to establish audited end of day & allow
for report production, file reorganization, & system maintenance
Front office automated systems offer rapid access to information, enabling front
office managers to more knowledgeably plan, organize, & direct operations

16. The Front Office Audit Process
Complete
outstanding postings
Reconcile room
status discrepancies
Verify room rates
Balance departmental
accounts
Verify no-show
reservations
Post room rates &
taxes
Prepare reports
Prepare cash receipts
for deposit
Perform system back-
up routine
Distribute reports

17. The Front Office Audit
Process
 One of primary functions of front office audit is
to ensure that all transactions affecting guest &
non-guest accounts have been posted to
appropriate folios
 It is important that all transactions be accurately
posted & accounted for
 Posting errors lead to discrepancies & delays at
check-out
 Front office auditor must confirm that all
transactions have been posted before starting
audit routine
 Auditor must verify that all vouchers for revenue
center transactions have been posted
 Outstanding telephone charges may require
manual posting
 With automated systems, revenue center totals
can be compared to totals reported by front
office accounting system; if figures are identical,
systems are in balance
 If figures are not identical, auditor must look for
transactions that have been omitted or
improperly posted
Complete outstanding postings

18. The Front Office Audit
Process
 Room status discrepancies must be resolved quickly
to avoid confusion at front desk & lost business
 Front office system must maintain current &
accurate room status information to determine
number & types of rooms still available for sale
 Housekeeping department typically requires staff to
record perceived status of guestrooms as they are
serviced
 Auditor must review front office & housekeeping
reports to reconcile and finalize the occupancy
status of all guestrooms on given night
 If housekeeping reports room as vacant, but front
office considers it occupied, auditor should search
for an active guestroom folio & registration record,
& verify that guest has indeed left hotel
 If guest has left hotel, auditor should process check-
out & set folio aside for front office management
review & follow-up. Room should then be recorded
as vacant in system
 Auditor should check guest folios, housekeeping
reports, & room status reports to make sure that all
three are consistent
Reconcile room status discrepancies

19. The Front Office Audit
Process
 Verifying room rates is usually done at
same time as reconciling room status
 Front office auditor will review system-
generated room report to check
guestroom rack rates (standard rates)
against actual rates (what rooms actually
were rented for) & analyze room
revenues
 Guestroom rate verification is usually
performed by comparing room rate in
the registration record with the room
rate in front office system
 During room revenue analysis, actual
room revenue posted in the system is
compared with the rack rate of rooms
occupied for night
Verify Room Rates

20. The Front Office Audit
Process
 It is considered more efficient to balance all departmental
accounts first, then determine individual posting errors
within an out-of-balance department
 Front office auditor typically balances all revenue center
departments using source documents that originated in
revenue center
 Auditor seeks to balance all front office accounts against
departmental transaction information
 Vouchers received electronically or manually at front desk
are totaled & compared with revenue center summaries
 When system is out of balance, correctness &
thoroughness of account postings must be investigated.
Detailed department audit (by shift or cashier) may be
conducted & individual postings reviewed until error or
errors are detected & corrected
 Process used to balance revenue center departments is
often called “trial balance.” Trial balance is a test of the
front office accounts to confirm proper balancing before
the final audit
 Front office system will normally generate a trial balance
before initiating final audit reports. Trial balance usually
uncovers corrections or adjustments that must be made
during audit process
 Mathematical balance in guest & non-guest accounts
against departmental totals does not necessarily mean that
proper accounts were selected for posting
Balance All Departmental Accounts

21. The Front Office Audit
Process
 Front office auditor may also be responsible for
clearing reservation file or filing & posting
charges to no-show accounts
 When initiating front office system posting of
no-show charges, auditor must verify that
reservation was guaranteed & guest failed to
register with hotel
 Auditor must check that a duplicate reservation
was not made for “no-show” guest, or that
guest’s name was not misspelled
 No-show billings must be handled with extreme
care. Front desk agent who does not record
cancellations properly may cause guests to be
billed incorrectly
 Incorrect billings may cause payment card
companies to reevaluate their legal agreement &
relationship with hotel
 Incorrectly billed guest may not return to hotel,
travel agency or other intermediary was involved
in reservation
Verify No-Show Reservations

22. The Front Office Audit
Process
 Automatic posting of guestroom rates &
room taxes to guest folios typically occurs
at hotel’s end of day
 Once guestroom rates & taxes are posted,
rate & tax report may be generated for
front office management review
 Ability to electronically post room rates &
room taxes is one of most frequently cited
advantages of automated front office
system
 Once front office initiates guestroom rate
postings, system auto-posts rates & taxes
to appropriate electronic folios
 Some hotels pre-set their front office
systems to post daily recurring charges,
such as occupancy taxes (in those
communities who impose them), valet
parking fees, or mandatory gratuities
 Auto-posting charges saves front office
audit time & improves accuracy
Post Room Rates and Taxes

23. The Front Office Audit
Process
 Front office auditor typically prepares
reports for management review, such as
final department detail & summary reports,
daily operations report, high balance
report, & other reports specific to property
 Final department detail and summary
reports help prove that transactions were
properly posed & accounted for
 Daily operations report summarizes day’s
business & is considered most important
product of front office audit
 High balance report identifies guests whose
charges are approaching their credit limits
 Front office system may be programmed to
produce variety of other management
reports on demand: daily summary reports
or flash reports, group sales reports,
frequent guest reports, VIP reports, & so on
Prepare Reports

24. The Front Office Audit
Process
 The front office auditor frequently prepares a
cash deposit voucher as part of the audit process
 If front office cash receipts have not yet been
deposited, the front office auditor compares the
postings of cash payments and paid-outs (net
cash receipts) with actual cash on hand
 A copy of the front office cashier shift report
may be included in the cash deposit envelope to
support any overage, shortage, or due back
balances
 The hotel may require the front desk cashier to
deposit cash at the end of each shift without
knowing the value of cash receipts the system
has recorded (that is, make a “blind drop”)
 Blind drops are used when management is
concerned that employees may not be reporting
all cash received
 When a blind drop is used, the auditor compares
system totals per cashier with the cashier drop
document; variances are reported to
management
Prepare Cash Receipts for Deposit

25. The Front Office Audit
Process
 System back-up routines are performed in
hotels that have automated systems
 Normally, at least two guest lists are
printed for back-up and emergency use:
one for front desk staff and one for the
telephone switchboard operator. A guest
list may be printed for other hotel
departments as well (such as the security
department)
 Other reports that may be printed: a room
status report, guest ledger report, front
office activity report, next day’s registration
report, and disabled guest report
 System-generated front office information
should also be backed up onto a DVD or
other media
 A system back-up should be conducted
after each audit and stored in a safe place
 Many front office systems have two types
of back-ups: a daily back-up and system
back-up
Perform System Back-Up Routine

26. The Front Office Audit
Process
 Due to sensitive & confidential nature of
front office information, front office
auditor must promptly deliver front office
reports to authorized individuals
 Distribution of front office audit reports
is final step in front office audit routine
 Front office managers can make more
informed decisions if front office audit
reports are completed accurately &
delivered on timely basis
Distribute Reports

27. System Update
System update in front office
accounting system accomplishes
many of functions in audit routine
System updates are performed daily
to enable system file reorganization,
system maintenance, & report
production, as well as to provide
end-of-day closure
Since front office systems audit
transactional postings as they occur,
there may be little or no need for
front office auditor to perform
account postings
Front office system may be
connected to revenue centers for
automatic postings, enabling the
system to monitor charges made at
revenue outlets throughout hotel

28. System Update
Auditor should routinely review system
interface procedures to ensure proper
handling of automatically posted
transactions from revenue outlets
Room status discrepancies are rare in
automated front office environment;
system can be programmed to
automatically flag discrepancies when
they occur so that they can be quickly
dealt with
In some front office systems, the
balancing of front office & department
accounts is continuously monitored in
real time
Front office systems can be programmed
to produce a variety of reports for
management

29. Centralized Front Office Audits
Front office automation significantly simplifies front
office audit process & allows multiple audit tests to be
performed simultaneously
Centralization of multiple audits reduces staffing
requirements for participating properties & provides
basis for consolidated reporting
Centralized front office audits usually work best in
limited-service hotels where there are few revenue
outlets & operating departments are closed before
start of audit process
At central location, auditor can obtain all information
necessary to complete audit routine over secure data
lines connecting participating hotels
Auditor can post corrective entries, back up system, &
produce reports for distribution to each hotel
Being able to quickly produce aggregate or
consolidated reports for a group of hotels is especially
beneficial to managers of chain properties

30. ?
Any Questions