Budgeting set-up depends on the function of the hotel or facility. A hotel or facility can be smaller or larger scale operated. The larger they are the more complex it gets.
In a smaller scale hotel or facility usually there is Front Office, Housekeeping and Maintenance and the expenses are controlled mainly by the Owner through the General Manager. They were the key decision maker in preparing the yearly budget with the assistance of an accountant or accounting firm. The budgeted amount needed to operate for the whole year is based on the expenses incurred on the previous years and other related occasions that will affect the preparation of budget for the coming year.
In a larger scale hotel, expenses can be very complicated since the operation varies from the departments created for the smooth operation of the hotel. Some international hotels, the budget is being prepared by each department head through the assistance of the Financial Controller and General Manager then submitted to the owner/ corporation for approval. Once sanctioned, each department head is then held accountable in ensuring that the budget allocated is monitored and controlled based on the occupancy percentage. The General Manager gets a copy of the results of the budget every end of the month and discusses them with the department head.
Example of departments in a larger scale hotel are: Administration, Front Office, Housekeeping, Laundry, Engineering, Food & Beverage, Kitchen, Finance, Human Resources, Recreation and any other departments created to suit the function and smooth operation of the hotel. Each of these departments have sub-departments such as Front Office with Reservation and Bell Service/ Concierge; Housekeeping with Laundry, Uniform, Linen, Tailoring, Flower shop, Gardening and Landscaping, Upholstery shop (the latter can be assigned to Engineering as well); Engineering with Carpentry, Masonry, Electrical, Mechanical, Computer Technician etc.; Food & Beverage with Banqueting and Outside Catering; Kitchen with Pastry shop; Finance with Purchasing, Receiving & Storage; Recreation with Swimming Pool, Golf Course, Tennis Courts, Spa etc.; Human Resources with Training and Clinic.
Housekeeping and other departments in the hotel operate within two types of budget. The Operational Budget and the Capital Expenditure Budget.
1) Operational Budget is the allocation of expenses for each item/s required by the department in order to operate smoothly. In case of hotel operation, control of expenses are based on occupancy percentage. The budgeted amount for the month can be variable since there are certain period where occupancy forecasts in other areas or countries are unreliable or unpredictable.
The basic Housekeeping operational budget are as follows:
b) Linen & Towels
c) Guest Supplies & Amenities
d) Cleaning Supplies
e) Laundry Supplies
f) Machine, Tools & Equipment
i) Printing and stationeries
There are budgeted item/s or sections in Housekeeping that are usually divided between other departments such as follows:
1) Repairs and Maintenance
This type of operational budget is usually divided between housekeeping and Engineering
2) Uniform Budget
Uniform expenses is prepared by the Executive Housekeeper with all the elegance, comfort, durability, styles, colors and functionality of the uniform chosen for each department. Once a specific style of uniform has been chosen, it is then coordinated with the concern department and when the Executive Housekeeper gets the approval she then submits them to the General Manager for overall coordination of styles, colors, functionality etc. that reflects the proper image perception of the entire hotel in the eyes of the guests. The last step will be to endorse them to the Financial Controller for allocation of budgeted amount to each department.
Housekeeping is one of the department in the hotel which helps and assists in the beautification of the hotel inside and outside the building. Decoration can be flower arrangements, fresh and artificial depending on the policy of the hotel since there are hotels that prohibit the use of artificial flower arrangements for fire hazard issue, picture frames, statuary, carvings, tapestry, artifacts and many others are examples of decorations. Requests for flower arrangements seemed to be the most needed items in the hotel whether for the guestrooms, Food and Beverage functions, Outside Catering, Lobby of the hotel, Convention centers and other areas that requires flower arrangements.
4) Printing and Stationeries
Front Office and Housekeeping are the two departments that share this budget.
This type of budget can be charged between Housekeeping and any other department depending on what type of expenses is incurred.
The second type of Housekeeping budget is Capital Expenditure (CAPEX)
Capital Expenditure Budget is the allocation of funds for a specific project or items that will help and assist the operation of the hotel. In case of Housekeeping, projects can be something that require replacement or additional Housekeepers cart, Laundry washer & dryer, building a new Laundry Shop for outside customers, replacement of vacuum cleaners, replacement of worn out beds or furnitures which is usually done floor by floor or by segments. Usually the CAPEX fund is allocated same way as how the operational budget has been allocated for the coming year. Therefore on a yearly basis project/s is/are accomplished and completed especially if the item/s have specific life span where replacement are made specifically each year. This way the hotel or facility is well maintained, equipped and preserved like new. It is through CAPEX fund that maintenance of the hotel works best and at the same time avoiding depreciation of items in large quantities where it is difficult to resolve since they require huge amount to achieve.
Therefore in order to have a smooth operating and well maintained hotel or facility, it is important that allocation of funds for the operational needs and maintenance of the hotel should be handled and monitored effectively based on occupancy percentage where key department heads are knowledgeable on how to adjust their budget accordingly. Key Personnel responsible for the preparation of the budget should see to it that the allocated fund is spent specifically for what it is intended for. Side tracking the set goal will be an unending tasks that won’t have a definite or specific achievement accomplished. Not being able to monitor the operating budget effectively will lead to the demise of Capital Expenditure.
Capital Expenditure Budget is as important as Operating Budget when it comes to hotel business.