Financial Management & Budgeting Flashcards

A 200-room hotel sold 150 rooms last night for total room revenue of $22,500. What was its RevPAR?

Answer: $112.50

RevPAR equals room revenue divided by rooms available: $22,500 / 200 = $112.50.

What is the primary purpose of the Uniform System of Accounts for the Lodging Industry (USALI)?

Answer: To standardize financial statement formats so properties can be compared

USALI provides a standardized chart of accounts and statement layout that allows benchmarking across hotels.

Total revenue rose $100,000 over last year while gross operating profit rose $45,000. What is the flow-through?

Answer: 45%

Flow-through is the change in GOP divided by the change in revenue: $45,000 / $100,000 = 45%.

Hotel management agreements and lenders commonly require an FF&E reserve funded at roughly what percentage of total revenue?

Answer: 4%

An FF&E reserve of about 4% of total revenue is the industry norm in management and loan agreements.

Which of the following is a fixed cost for a hotel regardless of occupancy?

Answer: Property insurance premiums

Insurance premiums stay the same no matter how many rooms are sold, so they are fixed.

Which budgeting approach requires managers to justify every expense from scratch each period instead of adjusting last year's figures?

Answer: Zero-based budgeting

Zero-based budgeting starts each line at zero, so every dollar has to be justified.

A GM wants expense targets that automatically adjust to actual occupancy levels. Which tool fits best?

Answer: Flexible budget

A flexible budget recalculates allowable variable expenses based on the actual volume of business.