Wednesday, January 25, 2017

How do hotels charge? (e.g., check-in is 1pm, check-out is 11am. If I am checking in at 3pm on Friday and leaving 10am Monday, how am I charged? Four days and three nights; or am I charged four full days?)

For your example, you get charged three nights.
To answer your question in a single sentence, if you don't want to know that much about it; your room, and any taxes that you pay on it, are applied at four a.m., give or take an hour, when we do the night audit. If you check out before the night audit, they will be manually applied. If you don't arrive until after the audit, they will be manually applied, and show up on the next day's revenue at the following night's night audit. (If the fact that you stayed four days, three nights, is a source of confusion, it's because we charge you per night, not per day.)
Still confused? Okay, Hotel Night Audit 101 coming up . . .
Each guest account (whether in-house, direct bill, or advance deposit), works just like your checking account at the bank.
Note the similarities between your check register (above) and a guest folio (below), that is, your 'bill' . . .


Now, imagine you have to stay on top of fifty to a hundred (or in some large hotels, many more) of those check registers (we call it a 'folio') simultaneously - one for each occupied room in your hotel. (Just so you can imagine the possibilities, the MGM Grand Las Vegas has 4734 rooms. For years, the Waldorf-Astoria in New York was the world's largest hotel at 1245 rooms. Now, it's #124 . . . List of largest hotels in the world )
On your check register, your checks, debit card and ATM withdrawals are posted as charges. Your deposits are posted as credits.
On a guest or house account folio, we charge for room, tax, pet fees, etc. We credit accounts for cash and credit card payments.
We can do it plain or fancy. For most hotel stays, it's just room charges and applicable state and local taxes that we have to collect (and later, pay). Depending upon the sort of hotel at which you're staying, it can also include:
These charges are posted to individual guest account folios, in very much the same manner as your posting of checks and deposits in the check register in your checkbook. Payments by you are entered in the other column. Your balance -- whether positive, negative or zero -- is what's left. Every guest in the hotel has one.
When you check in, if you pay in advance, your payment is posted to your account - your 'check register' - immediately, whether you pay by cash or credit card. On the other hand, if you stay several days and run up a bill, and pay with a credit card or by direct bill when you check out, final payment is applied when you leave. (We will preauthorize your credit card, and every week or so, insist that you pay us something, at least cover the nights that you've stayed already.)
(We may also credit an in-house folio for a direct bill payment, but this involves a transfer: we credit the in-house account – “Guest ledger” in anything but a Choice hotel - and post a direct bill charge to a city ledger account, to be paid later by a mailed check by the person or company that is responsible for the direct bill account. We'll come back to 'city ledger'.)
Each night, the total of all guest accounts equal your total receivables – “ending balance”.
This is true for any accrual accounting system – whether in a hotel, some other type of business; even in a bank. Previous balance + Total charges – Total credits – Adjustments = New balance.
If you're the night auditor, you always calculate both ways (total balance on each of the guests' accounts, one by one; and using the “previous balance + total charges – total credits – adjustments = new balance” formula); to check your math and to be sure your totals, when calculated each way, match. If they do, your ledger has a balance.
If they don’t, you’re “out of balance”, and you must go back and resolve the discrepancy. (That’s why they call it a balance, even though, run through the computer, it just shows up as a total.)
An ‘out of balance’ situation doesn’t go away by itself. It carries over through subsequent days (if you leave it out of balance by two cents tonight, it will be out of balance by two cents even if done perfectly tomorrow night, and so on the next night, etc.), until the error is found and corrected or adjusted.
The only thing you really have to worry about with a computerized front desk management system is that the totals (guest ledger, city ledger, advance deposits) on your daily form match up with those on the Ledger Activity Report. But still, if you’re off by two cents tonight, it’s going to carry over night by night . . .
The big green ‘Run Audit’ or 'One-Click Audit' button (depending upon which front desk management system is used in your hotel) is not altogether labeled accurately. It doesn’t do the audit.
(Yes, that’s what it’s for, just as they use a polygraph instrument for a lie-detector test, but contrary to popular belief, a polygraph doesn’t do lie detection - that's the polygraph operator's job, which he does by interpreting the data he gets back from it. Likewise, doing the audit is the auditor's job. A smart one will have the job done and all questions resolved before hitting the big 'One-Click Audit' button and setting the day's records in cement. And if you're not so smart, you're not going to last long working for me, because unlike most hotel operators, Beechmont considers night audit the entry-level management accountability [Michael Forrest Jones' answer to How do you get into hotel management? ]. At our smaller properties, the night auditor is the assistant general manager and vice versa. If you come to us hoping for a job as a hotel manager, that's where we're going to start you, regardless of your previous experience, education, credentials or 'qualifications'; unless you can show us that you have acquired the experience elsewhere.)
The big green 'Run Audit' button doesn't do the audit. That's the auditor's job.
All the big green button does when you click on it is print out what the system has, including any errors, and a balance based upon that. Garbage in, garbage out.
And it closes your books, officially, for today . . . so tomorrow, when your g.m. sees one or more figures that don't look right on the D-form, and checks your work, your stupid mistakes are laid bare for all to see . . . and have to be corrected on a subsequent audit. Some things are just not done. You don't pull on Superman's cape. You don't play kissy-face with a rattlesnake. If you're a soldier or Marine, you never drop your rifle: if you're a forklift driver, the ultimate disgrace is to drive your forklift off the edge of the loading dock. And you never, never, NEVER electronically close your books until the audit is complete!
Audit is the process of going through everything before you hit the big green button, looking to see if rates are correct, and payments have been posted properly; and noting any irregularities (big guest refunds, comps, or lowball rates – anything you don’t see every day) that you’ll want to inform management about.

The total of all of your in-house accounts for the night is your 'guest ledger'. Nearly all except the smallest, simplest mom-and-pop motels (and back in the day, not even they were exempt) also has a 'city ledger'. These are open accounts held by anyone not currently registered in a guest room.
It gets balanced as well (think of it as three or four dozen more of those 'check registers', but in a separate box, balanced and maintained separately). Charges to a city ledger account (usually the total from the guest ledger account of a departing guest - which for a large corporate or group account, can be several in a single day, or one or two or more per day on nearly a daily basis -- transferred to a city ledger account as a charge, with a corresponding clearing of the guest ledger account; although sometimes it can be a big bill for the use of a banquet room or ballroom, or a large catering charge, if a convention, event or wedding was held at the hotel) are posted as charges; payments applied when the check comes in the mail are posted as payments.
Yesterday's balance consists of the balances of each account totaled together as of the audit last night; today's balance consists of the consists of the balances of each account totaled together as of the audit you're doing now. Yesterday's balance, plus charges, minus payments, minus adjustments and write-offs, equals today's balance. Today's balance, calculated each of those two ways, needs to be the same number: if it isn't, go back, find out why, and fix the mistake. Some things never change, no matter which ledger you're working on.
'City ledger' gets its name from a time when various businessmen, companies and groups from the hotel's surrounding city carried revolving accounts at the hotel, to use its restaurant, bar or other facilities, or to put up out-of-town guests.
But the term applies to any open account held by someone other than a presently-registered guest occupying a room in the hotel. For example, at several hotels, and for several years after I first started in this business, our biggest 'city ledger' account was American Express.
Back in the days before electronic funds processing, that's what you did with a room that the guest paid for with an American Express, or Discover, card when he or she checked out. These accounts would be cleared from the guest ledger, the total would be posted to the American Express or Discover folio in the city ledger as a single charge, and the accumulated AMEX or Discover slips would be bundled into a 'batch' each night, and mailed off to American Express or Discover for processing. We'd get a check for each 'batch' from the appropriate credit card issue, minus a commission, and post both the commission and the payment to the American Express or Discover folio in the city ledger as appropriate.

Finally, most hotels maintain yet a third ledger: advance deposits, or ARD's.
These are a throwback to the days before common people had credit cards, before toll-free phones (never mind online booking), when, if you were planning a trip several weeks or months ahead, you made your reservation by mail - and sent a check to insure that your room would be held for you on the big night of your arrival. The hotel had the first night paid for, if your check were no good it had already had a few weeks to bounce and alert them to the problem, so there was no risk to the hotel.
Nowadays, advance deposit accounts are themselves declining in importance (some hotel recordkeeping systems have assimilated them into guest ledger); but they're still around for times and situations where a credit card guarantee just isn't enough to eliminate the risk to the hotel of someone not showing up for a reservation, or cancelling at the last minute.
We use them for upcoming weekends that we know are going to be high demand, with special event rates. This would include area events such as graduation or homecoming for the local college, or a big convention that we know will fill every hotel in the city. Requiring the first night to be paid in advance keeps non-cancellable reservations non-cancellable if the customer later finds cheaper accommodations elsewhere. (When higher, special event rates are going to be applied, they do look). They also disincentivize people making reservations for themselves and a half-dozen or so of their friends, only to cancel five or six of their seven reservations when the big night comes and their friends couldn't make it after all, leaving us stuck with a bunch of empty rooms on what should have been a very busy, profitable night for us.
Advance reservation deposits are here to stay because of another, old but recently rediscovered phenomenon that even hotel chains with the most unimaginative mass marketing have picked up on: cash is king (Michael Forrest Jones' answer to Is price discrimination good or bad? ). You can run a profitable business, but if you run out of cash before you yourself get paid, and can't pay your bills as they're due, then you're insolvent. On the other hand, you can be unprofitable, or even lose money, for a time, but if you're sitting on a pile of cash, you can ride it out. So, whether I'm running a hotel or any other business, I want to have as much cash in the bank at any given time as possible - and one way I will achieve that is to give you 15% to 20% off your rate if you book a room two or three weeks in advance and are willing to prepay for it. Your room, and rate, is assured; I've got your money (your reservation is non-cancellable) so I'm covered, and it works out for both of us.

And now, for the fun part, once you've got everything in balance and all the errors worked out and any questions or irregularities resolved: filling out the daily form. Some old-timers call it a 'D-sheet', or a 'D-form'. (It's a throwback to the days when nearly every hotel used a modified cash register into which was fed a form made on specially cut card stock to print out its reports. There were three shift reports corresponding to the day, evening, and night audit shift - an A form, B form and C form. The D form was the complete daily report.)
You're in for a treat if I find a copy of the old daily report form we used to use: it made the IRS 1040 form look simple by comparison, and provided as many opportunities to freshly make a mistake as there were numbers from your computer printouts (or back in the day, cash register Z-tape) to be carried over to it. Your balancing of it had to be done all over again, with a ten-key adding machine. Like a Sudoku puzzle, if you make a mistake, you could make lots of others around that same mistake before you noticed you made a mistake - and you could frequently be better off tossing it and starting from scratch as you would be by backtracking and trying to find it. A copying error of a few cents could throw the whole thing out of balance by that much.
And the one we made was actually pretty simple by contrast to those used in most hotels. (We made it a requirement: every entry had to be a figure copied directly off a printout or tape, without need for further calculation, and every total had to include only the numbers directly above it, or be done only with an obvious formula [e.g., Previous balance, plus charges, less credits, less adjustments, equals new balance . . .])
Nowadays, mercifully, every computer comes with a spreadsheet application (usually Microsoft Excel, but we don't use that) bundled, and we redesigned the form to make the best use of a spreadsheet . . .

Time was, night audit was the best job in the world -- and the worst job in the world. Nowadays, in most hotels, you could be a button-pusher and report printer who's okay with working third shift.
Back when I started, it required somewhat more skill.
You could acquire that skill within a few months, if you were intelligent enough to balance your checkbook using the form on the back of your paper bank statement - but you had to have at least that much accounting and bookkeeping know-how and aptitude. And you had to be of the right temperament. You had to be extroverted and personable enough to relate to hotel guests, yet introverted enough to tolerate the third-shift hours and the social isolation that comes with those. (After all, you're working when decent people are home in bed. You're off in the morning, when most people are working and there aren't many people about, unless you like to hang out with little old ladies who watch game shows and soaps on TV. And in the evening, when your friends are out, about and available . . . you have to sleep sometime.) That combination of characteristics made night auditors very difficult to replace if they left the job - which meant you had a great deal of negotiating leverage once you'd been at a particular hotel long enough to outlast a few clerks and a manager or two.
Night auditors crunch numbers, write reports, drink coffee, check late-arriving and early-departing guests in and out of the hotel as they must, maintain order at the property, and try to make the night pass as uneventfully as possible. Indeed, that’s the only redeeming quality about the job: at a quiet property, if you do the job well, there’s plenty of time left to relax with a paperback, surf the net, or watch TV; or if you‘re a student doing it to put yourself through college, to study.
Becoming a night auditor required some training, but they didn’t mind training you. It was, despite the skill level and unique temperament involved, an easy job to get if you wanted to be one, but then again, so is employment as a whore. In either case, when decent people are home in bed, you’re out at night in a hotel or cheap motel getting screwed: it’s just a matter of how so . . . and ‘independent escorts’ demand -- and get -- more respect, a lot more money, the opportunity to meet a nicer class of people if they’re more selective in who they do business with than many hotel managers and most hotel sales and marketing departments are about who their night auditors have to deal with, and (to hear some of them tell it) better sex with a variety of attractive partners. (Here again - some skill involved, most of which is enhancement of skills that most people already have - and the right temperament . . .)
The knowledge, skills and abilities required of a night auditor are the same as for a hotel manager, and will be called into play more frequently. But the night audit is not a management-track position in most hotels: quite the contrary, the night auditor is often considered one of the lower people in the hotel front-office hierarchy. (Many hotel managers actually believe that anyone with the intelligence to do that job who would actually accept such a job to be a real loser, a weakling to be taken advantage of, an underachiever well into adulthood).
It wouldn’t be so bad if it was a career-track position (that's part of the reason why, when I formed my own company, we made it one), but in most hotels and motels, the night audit is a dead-end job: employees working more normal hours are more visible to management when it comes time to fill a higher level job that comes open, and besides -- once again -- night auditors are hard to replace in their former position if they get promoted. And while night auditors and managers tend to have overlapping knowledge, skills and abilities, they tend to come from different backgrounds, to have acquired their knowledge, skills and abilities via a different route, in much the same way as people who pursue military careers as either officers or enlisted. To use the Navy as an analogy, if a hotel general manager were comparable to a Navy Commander or Captain, a night auditor who's been at the same hotel for a few years, knows it inside out, and knows where all the bodies are buried, would be the counterpart of an E-9 Master Chief or a Warrant Officer -- one that an ensign or lieutenant j.g. won't mess with, if he's good at what he does.
The job is not very well paid, the hours are crappy (11 p.m., to 7 a.m., every night, including weekends: while some night auditors can negotiate weekends off, not all do and generally your nights off are when they tell you your nights off are), and a night auditor gets no appreciation from management at all -- until he’s just about to walk out the door, leaving behind him a need for someone who is in a management position to work the night audit shift in his place until a replacement can be found.
Then, if you were smart, and good at what you do, you could apply some leverage. This is the point at which a night auditor can negotiate weekends off, and large pay increases. (One property, about 25 years ago, had a night auditor being paid $14.00 per hour. I know of very few hotels where a night auditor gets that much even now.)
Night auditors do put up with a lot, but mess with them just right, and they could push back. Hard. I’ve seen night auditors change jobs over as benign a dispute as the supply -- or denial -- of coffee available to him when an inexperienced new manager starts looking for ways to cut costs (I’ve done it in the past, and I have no apologies even now to make to the cheap so-and-so’s I’ve done it to . . . ); and I’ve seen a not-unattractive woman manager at a foundering property even offer sex – actually dangling the prospect of an ‘affair’ -- as an incentive to get a night auditor who was planning to leave for a motel that was in better financial shape, had more stable management, and was owned by people who knew what they were doing; to consider staying (She was probably kidding, but I really did like her; and had I thought that it was a serious offer, I would have been very, very tempted . . . ).
That was the only other redeeming quality about the job: you never again had to fear being unemployed for very long. You could tell your boss to stuff it anytime you feel the need and before your unemployment compensation is approved, some other hotel or motel across town would want to grab you if they found out you‘re available.
Most anywhere you went, the night auditor is either someone who’s been there less than six months (after which he or she has either proven to be completely unsuited for the job or just won‘t put up with any more of it), or someone who’s been there -- or will be there -- at the same hotel for ten years or more: sometimes a working mother for whom the hours are just perfect, but more often a ‘Boulevard Of Broken Dreams’, life-has-passed-him-by kind of guy: as often as not the kind who lives with his elderly mother and rides the bus. Except in areas where unemployment is really high, or where staffing agencies pig all of the good jobs in town and many of the bad ones; it isn’t that hard to find a day job in some factory somewhere making the same eight to ten bucks an hour.
Back then, you could acquire enough transferable skills in accounting and recordkeeping to get a daytime office job if it got to be too much. (Of course, back then, they used people for such jobs, not computers.)
Believe it or not, however, I know of very few who ever did.
Back then, night auditors were a breed apart.

Originally appeared on Quora

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