Budget configuration depends on the function of the hotel or facility. A hotel or facility can be operated on a smaller or larger scale. The bigger they are, the more complex it becomes.
In a smaller-scale hotel or facility, there is usually front desk, housekeeping, and maintenance, and expenses are controlled primarily by the owner through the general manager. They were the main decision makers in preparing the annual budget with the help of an accountant or an accounting firm. The budgeted amount needed to operate throughout the year is based on the expenses incurred in previous years and other related occasions that will affect the preparation of the budget for the next year.
In a larger-scale hotel, the expenses can be very complicated since the operation varies from the departments created for the proper functioning of the hotel. In some international hotels, each department head prepares the budget with the help of the financial controller and general manager and then submits it to the owner or corporation for approval. Once sanctioned, each department head is responsible for ensuring that the allocated budget is monitored and controlled based on the occupancy rate. The General Manager receives a copy of the budget results each month end and discusses them with the department head.
Examples of departments in a larger scale hotel are: Administration, Reception, Housekeeping, Laundry, Engineering, Food and Beverage, Kitchen, Finance, Human Resources, Recreation and any other department created to suit the function and smooth running of the hotel. Each of these departments has sub-departments such as Reservations Front Desk and Bell/Concierge Service; Cleaning with Laundry, Uniform, Linens, Tailoring, Floristry, Gardening and Landscaping, Upholstery (the latter can also be assigned to Engineering); Engineering with Carpentry, Masonry, Electrical, Mechanical, IT, etc.; food and drinks with banquets and external catering; Kitchen with Pastry; Finance with Purchases, Reception and Storage; Recreation with Swimming Pool, Golf Course, Tennis Courts, Spa etc.; Human Resources with Training and Clinic.
Housekeeping and other hotel departments operate within two types of budget. The Operating Budget and the Capital Expenditure Budget.
1) Operating budget is the allocation of expenses for each item/s required by the department to be able to operate without problems. In the case of hotel operations, cost control is based on the percentage of occupancy. The amount budgeted for the month may be variable as there are certain periods when occupancy forecasts in other areas or countries are unreliable or unpredictable.
Housekeeping’s basic operating budget is as follows:
a) Staffing
b) Bedding and towels
c) Guest supplies and amenities
d) Cleaning supplies
e) Laundry supplies
f) Machinery, Tools and Equipment
g) Decoration
h) Miscellaneous
i) Printing and stationery
There are budgeted items or sections in Housekeeping that are usually divided among other departments, such as the following:
1) Repairs and Maintenance
This type of operating budget is usually divided between cleaning and engineering.
2) Uniform Budget
Uniform expenses are 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 coordinated with the concerns department and when the Executive Housekeeper gets approval, she sends it to the General Manager for general coordination of styles, colors, functionality, etc. that reflects the correct perception of the image of the entire hotel in the eyes of guests. The last step will be to endorse them to the Financial Controller for the allocation of the budgeted amount to each department.
3) Decoration
Housekeeping is one of the hotel departments that helps and assists in beautifying the hotel inside and outside the building. The 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 due to fire risk, picture frames, statues, carvings, tapestries, artifacts and many others are examples of decorations. Flower arrangement requests seemed to be the most needed items in the hotel, whether it be for guest rooms, food and beverage functions, outside catering, hotel lobby, convention centers, and other areas that require flower arrangements.
4) Printing and Stationery
Front Office and Housekeeping are the two departments that share this budget.
5) Various
This type of budget can be charged between Housekeeping and any other department, depending on the type of expenses incurred.
The second type of cleanup budget is capital expenditure (CAPEX)
The capital expenditure budget is the allocation of funds for a specific project or items that will help and aid the operation of the hotel. In the case of housekeeping, projects might be something that requires replacement or extra cart for housekeeping, clothes washer and dryer, construction of a new laundromat for outside customers, replacement of vacuum cleaners, replacement of beds or worn furniture , which is usually done floor by floor. or by segments. Generally, the CAPEX fund is allocated in the same way that the operating budget was allocated for the following year. Therefore, projects are done and completed annually, especially if the items have a specific useful life where replacement is done specifically every year. In this way the hotel or facility is well maintained, equipped and preserved as new. It is through the CAPEX fund that the hotel maintenance works better and at the same time avoids the depreciation of items in large quantities where it is difficult to solve since they require a large amount to achieve.
Therefore, in order to have a smoothly running and well-maintained hotel or facility, it is important that the allocation of funds for the operational needs and maintenance of the hotel is effectively managed and controlled based on the percentage of occupancy where key department heads are well informed on how to adjust their budget accordingly. Key staff responsible for budget preparation must ensure that the allocated fund is spent specifically for what it is intended. Lateral follow-up of the established goal will be a never-ending task that will not have a defined or specific achievement. Not being able to monitor the operating budget effectively will lead to the disappearance of capital expenditures.
Capital Expenditure Budget It is as important as operating budget when it comes to hotel business.