From Accounting and Financial Analysis in the Hospitality Industry
Wage Forecasting and Scheduling
Wage Forecasting Fundamentals
Managing and controlling wage costs are the biggest responsibility of hospitality managers in maintaining productivities and profit margins. The reasons for this are as follows:
Wages are the largest expense of each revenue department in hospitality operations. The only exception is retail, where cost of goods sold is generally higher. Total wage costs in a full-service hotel will be in the 30% to 35% range.
Hourly wages are variable, and therefore hourly wage schedules can be prepared and adjusted based on the volume levels of current revenue forecasts.
Each wage dollar produces an associated benefit cost, generally in the 25% to 40% range. Controlling wage expenses also results in controlling benefit expenses.
Managers in revenue departments spend a great deal of time reviewing revenue forecasts and then preparing wage schedules that appropriately reflect volume levels. This is the primary way that labor productivities and profit margins are maintained.
Labor Standards, Forecasting, and Ratios
Many ratios and forecasts can be used in preparing wage schedules that maintain expected productivities. The primary methods used in a hotel relate to the rooms department and food and beverage departments.
The Rooms Department
Housekeeper labor hours based on rooms cleaned per eight-hour shift, or numbers of housekeeper room credits per shift. Front desk clerk labor hours based on check-ins per eight-hour shift. Front desk cashier labor hours based on check-outs per eight-hour shift.
Server labor hours based on number of tables per shift or number of...
Products & Services
Topics of Interest
Summary Forecasting is an important management tool for any business. It is the process of reviewing past performance and combining it with present trends and market conditions to project business...
Key Terms Fixed Expenses Expenses that are relatively constant and that do not change with different business levels and volumes. Secretaries in sales and accounting clerks are examples of...
Review Questions Name two ways that weekly forecasts are different from monthly or quarterly forecasts. Why is volume so important in forecasting? Define fixed and variable wage expenses...
Hospitality Manager Takeaways Weekly forecasting of revenues and wages for the next week is a critical factor in maximizing revenues, controlling expenses, and maintaining productivities.
Problems Revenue Forecasting Problem Sets This section involves the revenue forecasting process for the rooms, restaurant, and room service departments. These forecasts are prepared weekly and...