CAPITAL AND OPERATIONAL BUDGET FOR FRONT OFFICE
The main objective of the cash budget is to determine the cash inflow, 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 flows. (room,fitness center/florist/laundry/business center etc.). Each of these sources may generate 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.
Typical rooms division expenses are payroll and related expenses: guestroom laundry (linen, guest towels), guest supplies (bath amenities, toilet tissue, matches), hotel merchandising (in-room guest directory, hotel brochure), travel agent commission and reservation expenses. When these costs are totaled and divided by the number of occupied rooms, the cost per occupied room is determined. The cost per occupied room is often expressed in rupees and as a percentage.
