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 fixed-wage positions.
Forecast: A type of report that updates the budget.
Monthly Forecast: A forecast of revenues for the next month including average rates and volumes for specific market segments, departments, or meal periods.
Quarterly Forecast: A forecast that projects revenues over a longer time period and is completed by adding together the forecasts for each month of the quarter.
Rate: The part of the revenue equation that provides the dollar price that guests or customers are willing to pay to secure a room or meal. Typically, average room rates and average guest checks are used to calculate total room or restaurant revenues. It also provides the hourly rate of pay for wage forecasting and scheduling.
Ratios: Formulas that are used to calculate appropriate expense levels in relation to different revenue levels.
Variable Expenses: Expenses that fluctuate or change directly with the change in business levels and volumes. Housekeepers, bellmen, and servers are examples of variable wage positions.
Volume: The part of the revenue equation that provides the quantity of products or services consumed by the guest. Typically, rooms sold or occupied and customer counts are used to calculate total room or restaurant revenues. Volume is also used to determine the labor hours required for wage forecasting and scheduling.
Weekly Forecast: The forecast for the upcoming week that includes revenues and...

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Accounting and Financial Analysis in the Hospitality Industry

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