Problem 13 - Accounting

Question

Sleep-EZ Suites, Inc., operates a downtown hotel property that has 250 rooms. On average, \(72 \%\) of Sleep-EZ Suites' rooms are occupied on weekdays, and \(48 \%\) are occupied during the weekend. The manager has asked you to develop a direct labor budget for the housekeeping and restaurant staff for weekdays and weekends. You have determined that the housekeeping staff requires 40 minutes to clean each occupied room. The housekeeping staff is paid \(\$ 10\) per hour. The restaurant has five full-time staff (eighthour day) on duty, regardless of occupancy. However, for every 60 occupied rooms, an additional person is brought in to work in the restaurant for the eight-hour day. The restaurant staff is paid \(\$ 8\) per hour. Determine the estimated housekeeping, restaurant, and total direct labor cost for an average weekday and weekend day. Format the budget in two columns, labeled as weekday and weekend day.

Step-by-Step Solution

Answer

For weekdays, the total labor cost is $1712, and for weekends, it is $1248.

Step 1: Calculate the Occupied Rooms

First, we determine how many rooms are occupied on average during weekdays and weekends. On weekdays, with 72% occupancy: \[ 250 \times 0.72 = 180 \text{ rooms} \]On weekends, with 48% occupancy:\[ 250 \times 0.48 = 120 \text{ rooms} \]

Step 2: Calculate Housekeeping Hours and Cost

For housekeeping, each occupied room requires 40 minutes of cleaning. Convert this to hours for weekdays and weekends:- Weekdays: \[ \frac{40 \text{ minutes}}{60 \text{ minutes per hour}} \times 180 = 120 \text{ hours} \]- Weekends:\[ \frac{40 \text{ minutes}}{60 \text{ minutes per hour}} \times 120 = 80 \text{ hours} \]The cost for housekeeping at \(10 per hour is:- Weekdays: \[ 120 \times 10 = \\)1200 \]- Weekends:\[ 80 \times 10 = \$800 \]

Step 3: Determine Restaurant Staff Requirements and Cost

Each weekday and weekend day has 5 full-time staff for 8 hours, regardless of occupancy. For additional staff:- Weekdays (180 rooms): \[ \frac{180}{60} = 3 \text{ additional staff} \]- Weekends (120 rooms): \[ \frac{120}{60} = 2 \text{ additional staff} \]Calculate total hours and costs:- Weekdays: \[ (5 + 3) \times 8 \times 8 = \\(512 \]- Weekends: \[ (5 + 2) \times 8 \times 8 = \\)448 \]

Step 4: Calculate Total Direct Labor Cost

Add housekeeping and restaurant costs to get the total direct labor cost:- Weekdays: \[ 1200 + 512 = \\(1712 \]- Weekends: \[ 800 + 448 = \\)1248 \]

Step 5: Present the Budget Estimates

Organize the calculated costs into two columns labeled Weekend and Weekend: | | Weekday | Weekend | |------------------|---------|----------| | Housekeeping | $1200 | $800 | | Restaurant | $512 | $448 | | Total | $1712 | $1248 |

Key Concepts

Hospitality Industry

The hospitality industry is a vibrant sector focused on providing accommodations, food, and services to guests. It includes hotels, resorts, restaurants, and other service-oriented establishments. This industry is crucial for leisure as well as business travel, offering comfort and convenience to people away from their usual environment.
Operators within the hospitality industry, such as Sleep-EZ Suites, face numerous challenges from managing occupancy rates to ensuring excellent guest service.

• Variety of services: This sector offers a wide range of services, from lodging such as hotels and inns to food services in restaurants and cafes.
• Customer-centric: Success is largely dependent on customer satisfaction and word-of-mouth promoting positive experiences.
• Dynamic environment: With fluctuating demand affected by seasons, events, and even global occurrences, adaptability and keen market insights are vital.

By understanding the unique demands and expectations of guests, businesses in the hospitality industry can maintain high levels of service quality and customer loyalty.

Occupancy Rate

Occupancy rate is a crucial metric in the hospitality industry that reflects the percentage of available rooms or rental units occupied at any given time. For Sleep-EZ Suites, the occupancy rate helps determine labor needs and service offerings based on guest volumes. This percentage is calculated as the ratio of occupied rooms to total available rooms.
Calculating occupancy rate is straightforward:

• Determine the number of occupied rooms.
• Divide the number of occupied rooms by the total room count in the hotel.
• Multiply the result by 100 to convert it to a percentage.

For example, with 250 rooms at Sleep-EZ Suites, a weekday occupancy rate of 72% means approximately 180 rooms are filled. Regular monitoring of occupancy rates allows managers to adjust staffing requirements, predict peak periods, and enhance operational efficiency.

Labor Cost Calculation

Calculating labor costs accurately is essential for budget planning in the hospitality industry. It involves determining the expenses associated with employing staff for services such as cleaning and dining. In our example, calculating labor costs for Sleep-EZ Suites requires integrating both housekeeping and restaurant services.
Key steps include:

• Identify the number of occupied rooms to calculate the needed labor hours.
• For housekeeping: multiply the time taken to clean a room by the total occupied rooms then convert to hours.
• Multiply the total hours by the hourly wage to find the cost.
• For restaurant staff: calculate the required additional staff based on occupancy and wage them accordingly.

By breaking down these components, Sleep-EZ Suites can develop a comprehensive direct labor budget that helps in maintaining financial balance and ensuring service quality.

Workforce Management

Effective workforce management ensures the right number of staff is employed at the right time to meet business needs in the hospitality industry. It is integral to operations at Sleep-EZ Suites, where staff levels must match fluctuating occupancy rates.

• Accurate estimation: This involves forecasting demand and aligning staffing needs with guest occupancy trends.
• Flexibility: Be prepared to adjust staffing levels for peak and off-peak periods to maintain service quality without incurring unnecessary labor costs.
• Skills and training: Ensure that employees are well-trained to perform their duties effectively and interact positively with guests.

At Sleep-EZ Suites, workforce management is facilitated by analyzing occupancy data to optimize staff scheduling, which improves efficiency and customer service while reducing costs.