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BHM 320

Front Office Management

TU BHM · Semester 4 · Recent BHM syllabus series

Requirement
required
Credits
3
Study Guide
11 units available

Chapter notes

Authoritative study guide across 11 syllabus units

Open a unit to read its study notes.

Unit 1: The property management system (PMS)· 4 LHs· ~5 marks

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Pass path: Memorize must-know definitions, operational roles, and core terminology of Property Management System, Folio, and Guest Ledger. Top path: Master advanced exam requirements: diagram and execute the Architecture of Hotel Front Office Accounting Flow and accurately contrast Guest Ledger (Transient Ledger) vs City Ledger (Non-Resident Ledger), resolving TU board problem scenarios with complete working steps.

Part 1: Core Concepts (2 Marks)

  • Property Management System (PMS): A comprehensive hotel operating enterprise software (e.g., Opera Cloud, Fidelio, IDS Next) that centralizes reservations, check-in/out, folio accounting, housekeeping room status, and POS revenue posting into an automated database.
  • Folio: A statement of all financial transactions (debits and credits) that affect the balance of a single guest account, organized chronologically from registration to final settlement.
  • Guest Ledger (Transient Ledger): The set of active folios belonging to registered guests currently resident in the hotel, tracking immediate room, beverage, and service debits.
  • City Ledger (Non-Guest Ledger): The collection of non-resident accounts maintained by the back-office accounting department, including credit card companies, corporate direct billing, travel agents, and banquet accounts.
  • Allowance Voucher: An internal accounting document authorized by a manager to credit a guest’s account to correct an overcharge, post a discount, or compensate for substandard service.

Part 2: Structural Frameworks (10 Marks)

Architecture of Hotel Front Office Accounting Flow

GUEST CYCLE ACCOUNTING ARCHITECTURE

1. CREATION Registration -> Guest Folio opened with pre-authorized credit card or advance cash deposit.
2. POSTING DEBITS Point of Sale (POS) -> Food & Beverage, Spa, Laundry, Telephone, Room Charge automatically posted via PMS.
3. INTERNAL VOUCHER Supported by signed vouchers: Charge Voucher, Cash Paid- Out (PO), Transfer Voucher, Allowance Voucher.
4. NIGHT AUDIT Daily closing: Balances Guest Ledger against department sales totals; applies room rate & taxes automatically.
5. SETTLEMENT Check-out settlement: Zero balance achieved via cash, card, or transfer to City Ledger (Direct Billing).

Part 3: Distinction Tables

Basis of Comparison Guest Ledger (Transient Ledger) City Ledger (Non-Resident Ledger)
Account Holder In-house guests actively occupying hotel rooms. Corporate clients, travel agencies, airlines, and departed guests.
Location of Custody Front Office Cashier / Front Desk PMS module. Back-office Financial Accounts / Credit Department.
Billing Cycle Continuous real-time postings closed upon guest departure. Monthly billing statements or periodic credit terms (30/60 days).
Payment Risk Immediate (mitigated by pre-authorization/deposit). Credit risk (mitigated by credit limits, vetting, and contracts).
Zeroing Mechanism Full settlement at check-out or transfer to city ledger. Bank transfer, corporate cheque, or credit card merchant clearing.

Part 4: Worked Problems & Exam Traps

Accounting Entry & Folio Balance Formula

Net Outstanding Balance=Previous Balance+Debits (Charges)−Credits (Payments + Allowances)\text{Net Outstanding Balance} = \text{Previous Balance} + \text{Debits (Charges)} - \text{Credits (Payments + Allowances)}

Archetype Problem:

A guest in Room 402 has an opening balance of NPR 12,500. During the day:

  1. Room service charge of NPR 3,200 (+ 10% Service Charge and 13% VAT) is posted.
  2. An allowance of NPR 500 is granted due to cold food.
  3. The guest pays NPR 10,000 cash at the cashier desk. Calculate the closing folio balance.
F&B Subtotal=3,200×1.10=3,520 NPR\text{F\&B Subtotal} = 3,200 \times 1.10 = 3,520 \text{ NPR}
F&B Total with VAT=3,520×1.13=3,977.60 NPR\text{F\&B Total with VAT} = 3,520 \times 1.13 = 3,977.60 \text{ NPR}
Closing Balance=12,500+3,977.60−(500+10,000)=12,500+3,977.60−10,500=5,977.60 NPR\text{Closing Balance} = 12,500 + 3,977.60 - (500 + 10,000) = 12,500 + 3,977.60 - 10,500 = 5,977.60 \text{ NPR}

TU Exam Trap: Students frequently confuse Paid-Outs (PO) with Allowances. A Paid-Out is hotel cash advanced to a third party on behalf of a guest (e.g., taxi fare), which represents a debit (charge) to the guest’s folio. An Allowance is a price reduction or correction which represents a credit reducing the guest’s balance. Never debit an allowance!

Students lose marks here because they overlook key operational criteria: Paid-Outs (PO) with Allowances. A Paid-Out is hotel cash advanced to a third party on behalf of a guest (e.g., taxi fare), which represents a debit (charge) to the guest’s folio. An Allowance is a price reduction or correction which represents a credit reducing the guest’s balance. Never debit an allowance.