HOTEL ACCOUNTING

By Juan Carlos Ortega (MBA)

The hotel business has some particularities that differentiate you from the
rest of the industries. The activity is based on the provision of a set of
services that translate into a source of income for the business. Each source
you income has associated costs, as there are also joint costs that are
assignable to each type of activity, so any costing system is convenient to
apply for better information on the situation and financial results. Then, very
briefly, we present some accounting aspects of the hotel business.
Major accounts used in the hotel business
Debtor guests: This account is classified in assets as a debtor (in the field
of accounts by cash) account, and represents the sum of the number of
rooms occupied at a date of any court. This account will be charged the
following concepts: by room, by the sales tax (VAT), by the hotel insurance,
by consumption in the different environments of the hotel (restaurant, bar,
room service, bar room, banquets and events), fee services of Internet,
phone, fax etc., banqueting services, advances to guests (where is
contemplated within the policies of the hotel) by the sales of department
stores, hairdressing, taxis, transfers of nature services services debit,
charges for consumption in businesses with which the hotel keep trade
agreements. And shall be paid by: application of deposits of reserves, partial
fertilizers in cash, discounts and adjustments, transfers of credit nature,
reversal by erroneous accounts, cancellation of the account (cash, foreign
currency, credit cards, portfolio companies, travel agencies and individuals).
Debtor travel agencies: The balance of this account represents, amount
owed by the travel agency to the hotel, your balance comes from the
transfer from other debtor accounts (debtors guests) when the user of the
service is a customer who has reserved or acquired the hotel services
through an agency. The intermediary of the Agency in the majority of cases
generated an expense of commissions for the hotel, and an income by fees
for the travel agency.
Debtor companies: The balance of this account represents, amount owed
by the companies to the hotel, your balance comes from the transfer from
other debtor accounts (DEBTORS guests) when the user of the service is a
client that has been sent by a company or Corporation, which covers the
costs of your stay in the hotel, either wholly or partially; When the account
coverage is partial, user or guest must cancel directly in the hotel portion
corresponding assume.
DEBTORS of the Exchange: It refers to balances, generated by
agreements between hotels and companies (usually from the advertising
sector). In this order of ideas when the hotel ordering publications or
services, a credit balance is generated in favor of the advertising company,
and when it uses the services of the hotel, is generated a balance in favour
of the latter; debit balance that ends up being crossed with the credit
balance before
mentioned, because this is the business sense: to exchange a service for
another.

RENOVATIONS: Corresponds to the value of the investments made by the

Hotel, to remodel their rooms, bars, kitchens, administrative areas and
common areas. To these charges the tax rules allows to amortize over five
(5) years. Moreover the hotelier, can opt for "Exempt income" tax benefit for
investments in new or refurbished hotels.
Improvements to other properties: When hotelier, made improvements
on property owned by third parties, which explodes in attention to contracts
of lease, you have the opportunity to post the amount of those costs as
"Improvements in property of others" and amortize over five (5) years or
during the period of the lease contract, in the event that this is less than
five (5) years.
Fairs and exhibitions: It corresponds to the value invested by the Hotel
promotional activities related to national and international trade fairs. You
must pay in the estimated time to receive the benefit of attending such
fairs.
Advertising and promotion: corresponds to the value invested by the
Hotel in advertising, propaganda and promotion programs. You must pay in
the estimated time to receive the benefit after the disclosure of these
advertising programs.
Staffing and supply workers: Corresponds to the value invested by the
Hotel in uniforms, footwear and special costumes with target employees.
The amortization of this investment should be subject to the obligation to
provide endowments established the labour law of the country.
ROPERA items and lingerie: It corresponds to the value invested by the
Hotel in acquisition of assets of operation such as linen (sheets, pillowcases,
towels) and lingerie (blankets, covertors, curtains, tablecloths, aprons,
napkins etc). This investment should pay off at the estimated time of
replacement. There is a standard as whites suffered one larger decline in
beach hotels to hotels that are not; also has much to do with the
deterioration, the ability or decision of the hotel keep the par regulatory
stock (a garment dressing the bed, one in the laundry room and the other in
stock)
Earthenware and Glassware: it corresponds to the value invested by the
hotel in faience and glass to meet the needs of restaurants, bars and
banquet events. Because of their high risk of breakage and damage, it is an
asset that must be subject to the strict control of the Chief of stewards. Its
depreciation depends on the estimated time of historical service life
determined by the hotel, generally between twelve and eighteen months.
Silver: It corresponds to the value invested by the Hotel in articles of silver,
stainless steel such as coolers, champagne, samovars and others. Its
depreciation depends on the estimated time of historical service life
determined by the hotel.
Cutlery: It represents investment in knives, spoons, cutlery, and other
elements necessary for the service of food and beverages. Its depreciation

depends on the estimated time of historical service life determined by the

hotel.
Deposits for reservations: Reservation deposits, constitute advances
received from customers for future stays at the hotel, covered with
payments in cash, cheques, credit cards and foreign currency (guaranteed
reservation). It is a passive nature, which is reflected in the financial Hotel
States, obligations it has of providing their accommodation or food and
beverage to different customers who have made deposits of reserves.
Tips: Passive nature account, corresponds to the collection of the 10%,
according to the mercantile custom, give customers or guests on a
voluntary basis. This tip is registered in favour of the staff to provide the
service, and dispatched them periodically by a points system, according to
the policies of the hotel (weekly, bi-weekly, monthly). Some hotels set a
percentage of management on their behalf, to cover administrative
expenses as (stationery, man-hours of the liquidator or payor, cost of checks
or electronic management, as the case may be).
Income by hosting service: Account of results, credit nature, summarizes
the amount of sales made by the Hotel the service of accommodation or
rooms. The host pays a fee and acquires the right to use an asset, in this
case the room with all its endowment.
Revenue per restaurant service: Account of results, credit nature,
summarizes the amount of sales made by the Hotel in its restaurants. In
restaurants the client has the option of consuming food, alcoholic drinks and
non-alcoholic. The active generator of income is the inventory of matter
prima, transformed and served to the customer as finished product (dishes,
bottles, glasses, etc.).
Bars service income: Account of results, credit nature, summarizes the
amount of sales made by the Hotel by Bar service concept, in environments
such as bars, nightclu$, grills, pool bar, Beach Bar, etc
Laundry service income: Account of results, credit nature, summarizes
the amount of sales made by the Hotel in respect of laundry service, dry
cleaning, and ironing of clothing owned by guests and to private individuals.
In this case, the guest pays a price and in return is provided a service which
can be developed directly by the hotel or through a subcontract with a local
laundry.
Entry for phone service: Account of results, credit nature, summarizes
the amount of the income received by the hotel by guests supply phone
calls, local, national and international service. As in the previous case, the
guest pays a price and in Exchange is provided a service.
Entry for INTERNET Service: Account of results, credit nature,
summarizes the amount of the income received by the hotel to provide
broadband Internet service to its guests.
ROOMS FOR RENT INCOME (41409504)

Account of results, credit nature, summarizes the amount of the income

received by the hotel for renting halls, parties, meetings, seminars, events
etc.
INCOME FROM SALE OF CIGARETTES (41409505)
Account of results, credit nature, summarizes the amount of the income
received by the hotel for the sale of cigarettes, tobacco, pipes etc. It is
recommended to give effect to the law of "Smoking" in the pertinent point.
The host pays a price and puts at your disposal an inventory of finished
products.
INCOME FROM SALE IN SHOPS AND DRUGSTORE (41409506)
Account of results, credit nature, summarizes the amount of the income
received by the hotel for guests providing items such as drugs, newspapers,
magazines, beauty etc. The guest, in Exchange for the payment of the price
available inventory journals, drugstore and handicrafts.
SERVICE OF GYM, SAUNA AREAS INCOME SPORTS (41409507)
Account of results, credit nature, summarizes the amount of revenues
collected by the hotel for the right granted to the guest to use areas specific
hotel such as saunas, Turkish baths, spa, gym, sports areas. The sports
fields and gymnasia can be subcontracted with centres specialized in the
matter.
COSTS OF PAYROLL:
Under this heading, salaries, gather comprehensive salary, bonuses,
commissions, bonuses, social benefits, social security.
OTHER STAFF COSTS:
This category refers to concepts associated with the staff employed by the
company, within which are the food of employees, the benefits in kind of
housing and power granted to managers resent at the hotel or contracted
under the figure of 'Living In' uniforms and provided to employees, training
and others.
"COSTS OF TECHNICAL ASSISTANCE" (513515)
Technical assistance in hospitality refers to contracts executed between
owners of hotels and major hotel chains who engage themselves in
Exchange for a fee to transfer to the hotel operation technology, experience
and Know How in the administrative matter and hotel management. These
contracts generate delivery to their owners which is usually charged as a
percentage of revenues.
COST CENTERS
One of the main features of the hotel accounting is the use of cost center,
understood as the accounting grouping which is made of the business
centres of the hotel, both of the departments with the ability to generate
income, costs and expenses, as only generators of expenditure or support
departments. Hotel accounting is characterized by classified revenues, costs
and expenses under the concept of "Cost centers", in order to establish, and
assign responsibilities to managers of each business center, and evaluate
Returns or results of poor management as appropriate. Outflows are
concentrated in cost of sales, payroll and other expenses, that apply to the
entry, determine the departmental utility. To deduct from the departmental

utility not distributed costs (Administration, advertising and promotion,

maintenance, human resources, systems, transportation, security and agualuz - force) is measured utility before fixed charges. To obtain the utility
before fixed charges "Gross operations utility" or utility of the House,
evaluates the control operation. The basic structure of the uniform system
of accounts is illustrated below. The practical utility of cost centers, is to
combine the statements of income (revenues, costs and expenses), for this
reason once grouped accounts cited in their respective responsibility centre,
it is very easy to obtain the State of results of each business center in
particular: for example, we permit ourselves to quote the following centers
of costs or liability.
-Accommodation (01)
-Restaurants (02)
-Bars (03)
-Mini bars (04)
-Room Service. (05)
-Banquets and events. (06)
-Kitchen (07)
-Phone (08)
-Laundry (09)
-Smaller departments (10)
-Administration (11)
-Marketing and sales (12)
-Maintenance (13)
-Security (14)
This grouping of cost centers, is closely related to the classification of hotels
operated and non-operated departments mentioned in the title of the hotel
terminology.
CASE STUDIES APPLIED TO THE HOTEL ACCOUNTING
Case No 1. The host Mr Luis Martnez, is recorded in the Hotel and the
following services are provided:
(a) accommodation fee of $.5.000.00 per night, this service is taxed with
Iva.
(b) restaurant service by value of $.3.000.00, service this taxed with iva and
gratuity of 10%.
(c) service laundry by $.2.000.00, taxed with iva. Let us look at the impact
on debtors guest account

Code

Case No 2.

Account
DEBTORS GUESTS
Accommodation service
Restaurant service
Laundry service
Gratuity payable
VAT (tax debits)

Nature

DC

Should
12,000

Havi

5,00
3,00
2,00
800
1,20

The Hotel La Universidad consisting of 100 rooms, during the month of

November of 2015, present a 75% occupancy. The average rate of the hotel
is $.2.000.00 plus VAT.
(a) we calculate income:
Available rooms = 100 rooms x 30 days in the month of September.
Total available rooms = 3000 rooms.
Rooms rented to guests = 3000 inhabitants. X 75% = 2,250 rooms.
Total income of accommodation rented rooms = x average rate = 2,250
rooms x $.2.000.00 = $.4.500.000.00
Determination of tax:
Income based Iva = $.4.500.000.00; 12% VAT rate.
Calculation of VAT = $.4.500.000 x 12% = $.540.000.00

Code

Account

Nature

DC

DEBTORS GUESTS

Should

Having

5.040.000

Accommodation service

4.500.00
0

VAT (tax debits)

540.000

Case 3: Jorge Ortega, traveled on behalf of the company, Savoy, C.A., who will cover
all costs of your stay in the hotel, costs are: three nights of $.5.000.00 room night plus
VAT, $.20.000.00 power plus VAT and 10% gratuity.
Code

Account
DEBTORS GUESTS
Debtor companies
Accommodation service
Restaurant service
Gratuities payable
VAT tax debits)
DEBTORS GUESTS

Nature

DC

Should
42,700
42,700

Havin

15,000
20,000
3,500
4,200
42,700

If the customer is a travel agency, then the accounting register of Jorge

Ortega will be:
Code

Account
DEBTORS GUESTS
Debtors travel agencies
Accommodation service
Restaurant service
Gratuities payable
VAT tax debits)
DEBTORS GUESTS

Nature

DC

Should
42,700
42,700

Havin

15,000
20,000
3,500
4,200
42,700

Another variant would be, the guest travel on behalf of a company that
maintains existing Exchange of services with the Hotel, for example Mr
Ortega travels on behalf of Radio orbit, the seat would be:
Code

Account
DEBTORS GUESTS
Debtors of the Exchange

Nature

DC

Should

Having

42,700
42,700

Accommodation service

15,000

Restaurant service

20,000

Gratuities payable

3,500

VAT tax debits)

4,200

DEBTORS GUESTS

42,700

Case No 4.
Income from housing, according to conventions that have hotel in the
management of its distribution channels, generates costs by concept of
commissions paid to travel agents. Suppose that for the case of
accommodation of Mr. Jorge Gutirrez, the Mangobajito travel agency
receives a Commission of 10% on all the
sales. The basis of the Commission will be as follows:

Accommodation $.45.000.00 service income

Restaurant $.20.000.00 service income
TOTAL income $.65.000.00

In this case we exclude the value of VAT and the tip, which are not based on
the Commission, because in strict sense this kind of compensation always
must be satisfied on the income. Thus it has been accepted among our
merchant customs. Thus establishing the basis, we have the commitment in
favor of the Agency will, i.e., $.650.000.00 x 10% = $.65.000.00.
Code

Account
Commissions expenses

Nature

DC

Should

Having

65,000

VAT tax credits

7.800

Retained income

1950

Suppliers services

70.850

Case No 5.
When the sale of the hotel product is in the form of tourist packages, which
includes among other services accommodation and food and drinks, the
expenditure of commissions, usually affects the cost of accommodation, in
some hotels, Center this expenditure is prorated between accommodation
and food & beverage, another custom widespread in medium hotelier, is
being crossed accounted for the amount owed by the hotel to the Agency by
Commission , so travel agency, owe you by hotel services that were
provided to your passenger.
In the case that concerns us, the ledger will be:
Code

Account
Suppliers services

Nature

DC

Should

Having

70.850

Accounts receivable travel agencies

70.850

Case No 6.
In the event that the Agency does not record debts with the hotel, it must be
the payment of the Commission. It is important to maintain this passive,
because failing to timely payments, travel agencies, can begin to channel
their reserves to other hotels. Registration of payment of Commission to the
travel agency.
Code

Account
Suppliers services
Banks

Nature

DC

Should

Having

70.850
70.850

Case No 7.
Other Debtors charges guests: In the relationship of the guest with the
Hotel, event of the destruction or breaking of doors, furniture, mattresses,
electronics, by action may occur in or omission of guests drunk or under the
influence of hallucinogenic substances, in these cases, the policy of some
properties, is the charge the guest damages, because they have obeyed to
a fraudulent conduct of the customer. In practice, what I do is evaluate the
damage, according to replacement of the affected asset prices and proceed
to the corresponding charge. For example the guest of the room 1001,
during your stay and under the influence of alcohol, broke a color TV 32 '',
whose replacement cost is $.1.000.000.00 plus VAT. Registration office
accountant DEBTORS guests.
Code

Account
DEBTORS GUESTS

Nature

DC

Should

Having

11,200

VAT tax debits

1,200

Recovery damages

10,000

Case No 8.
There are also situations in favor of the customer, as it is the losses suffered
by the guest in your room inside for registered goods upon arrival in the
hotel, normally these losses are presented by third parties accessing the
room with violence. Established methodology is that it values damage and
will pay the affected customer. If equipped with the coverage of a policy of
liability insurance or insurance of guests, you can proceed to make a
respective claim to the insurance company. Attaching all brackets case claim
of the guest list, photographs related to the stage of damage or loss, proofs
of payment the guest etc.
Code

Account
Compensation to guests

Nature

DC

Should

Having

40,000

Banks

40,000

Case No 9.
The second alternative is available for these cases, is the crossing value of
the damage to the value of the services provided to the guest. Register
accounting damage crossing guests with services provided.
Code

Account
Compensation guests

Nature

DC

Should

Having

40,000

DEBTORS GUESTS

40,000

Case No 10.
In the event that the insurance company cancels you Hotel claimed
damages, the accounting register, shall be as follows: registration
accountant of compensation from the insurance company.
Code

Account
Banks
Compensation insurance

Nature

DC

Should

Having

65,000
65,000

Case No 11.
Other complementary service that lends itself to the host, is by local
currency foreign currency exchange. In these cases a charge to the guest
account, is not generated because the situation that arises, is the change in
an asset expressed in local currency, by assets expressed in foreign
currency. For reasons of control, must be recorded the amount of change,
room number, the name of the host, exchange rate, all of the above in order
to make an appropriate follow-up to the operation by the internal audit of
the Hotel.
Case No 12.
Customer Jaime Korr, reserved in the hotel room for three nights starting on
December 3, 2009, to ensure such reserve deposited the sum of
$.500.000.00 to the account of the hotel, once the tank sends copy of the
entry to the hotel reservations department.
Code

Account
Banks

Nature

DC

Should

Having

50,000

Reservation deposits

50,000

Case No 13.
From the realization of this deposit with Jaime Nio customer: presented to
the hotel on the scheduled date, in this case would be making use of your
reservation and accounting records shall be as follows.
Code

Account
Reservation deposits
DEBTORS GUESTS

Nature

DC

Should

Having

50,000
50,000

HOTEL ACCOUNTING EXERCISE

"Summer Hotel", Inc company has hired you as an external counter, it has
75 rooms (20 single, 20 doubles, 20 triples, 10 suites junior and 5 suites). It
has bar-restaurant, swimming pool, room for events and conferences, lobby,
shop, travel agency, ballroom and hairdresser. Management provides us
with the following information:
Cash and banks cash
Debtor guests
Debtor companies
Debtors travel agencies
Employees debtors
Several debtors
Stock
Marketable securities
VAT tax credit
Prepaid expenses
Land
Buildings
Machinery and equipment
Furniture and belongings of operation
Furniture and office equipment
Vehicles
Deposits in guarantee
Investment in securities long term
Organization costs
Commercial providers
Accounts payable staf
Other accounts payable
VAT tax debit
Taxes payable
Mortgage payable
Social capital
Reservations
Profits retained

50,000
100,000
320,000
500.500
25,000
5,000
300,000
100,000
30,000
12,000
1,000,000
10,000,000
40,000,000
40,000,000
1,000,000
10,000
500
1,000,000
500

94.453.500

708.500
141.700
3.002.500
60,000
25,000
8.800.000
21.200.000
3.012.000
57.503.800
94.453.500

1 occupation of the past period was 80%, the rates are as follows:
Type of room
SIMPLE
DOUBLE
TRIPLE
JUNIOR SUITE
SUITE

Daily prices
3,000
3,500
4,000
5,500
7,000

General aliquot ex VAT

2 restaurant consumption was 2/3 of the amount of accommodation;
other income was by leasing: shop, $.25.000; hair salon, $.20.000;
Pool, $.100.000; Events, 250,000 room; Festivities room, $.150.000;
and, Lobby, $.25.000.
3 of the total occupation of the month, 25% was agreements with
companies; 30% was contracts of packages with the travel agency
"Dreams", C.A., which charges us a fee of 10% more VAT; 5% were
exchanges with Enterprise Services everything, C.A.; the rest went to
private individuals.
4 accommodation and restaurant services originated a 10% tip. The Hotel
is the income retention agent, therefore apply the rate as the case
may be.
5 was canceled payroll of the hotel:

Direct labor $.375.000

Indirect labor $.225.000
Salaries of Office $.125.000

Apply withholdings and contributions of law (SSO, INCE, FAOV)

6 calculate the charges for depreciation and amortization of the month:
Prepaid expenses (one year)
Buildings (50 years)
Machinery and equipment (20 years)
Furniture and belongings of operation (10 years)
Furniture and office equipment (10 years)
Vehicles (5 years)
Organization costs (25 years)
You are asked to draw up the seats of the respective, develop the
balance of checking at the end of the month.