Packages are, on the one hand, straightforward. They are a well-established offering in most hotels, customers love them, and they are not going away.
NB: This is an article from Hotel Financial Coach
On the other hand, most hoteliers are at a loss to properly set up and manage the transactions so that they do not end up with a mess in their books and systems. That is what this piece is about: How to properly administer these seemingly complicated and unruly devices.
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First: Pricing aspect
A hotel package is a combination of a room and at least one other component, like a bed and breakfast package. They can also combine many items like we see in a romance package: room, meals, room drop, massage, etc.
Because it is a package there is almost always a discount from say the rack rate. That is what makes it attractive along with the components.
The critical aspect of the pricing is that every item should be discounted the same amount, i.e., percentage. The discount percentage must go up and down based on the sell level and that applies to all the individual parts of the package. This can make it an administrative hassle – the software will help but I am not going there with this article, I am just explaining the concept.
Second: How package is set up in property management system
The package should be built and posted nightly with all the components, and this is where it gets tricky.
Let’s use the B&B package: $250 is the “base” package price and that is based on a full rack rate of $200 for the room and $50 for breakfast for two. At night we run the end-of-day process and we post the package – $200 for room revenue, $20 for the room tax, $50 to the food package account, and $5 to the same food package account for the food tax. I am using a straight 10 percent tax across the board. What I just laid out takes care of the room revenue – plus tax – full stop, but not the other parts of the package. This is where you need to pay attention.
Third: Use and posting of food
The following morning the customers have their two breakfasts, and the charge is posted either by the system knowing that the room is on a package with $50 for breakfast, or the restaurant/waiter has a manual process to do the same. Either way, the charge for breakfast finds its way back to the “food package account” and not the customer’s room account.
If it were to be posted to the room account, the customer would be charged twice. This is the critical sidestep of the packaging process.
The important aspect of revenue recognition
We recognized the room revenue last night with the end-of-day process and the food revenue today – only when the restaurant created the breakfast bill – and even more importantly, when the guest consumes the food.