Hotel Front Office Management, 3rd Edition

FINANCIAL CONSIDERATIONS 107by computer dealers. Battery-powered temporary energy units are used when power islost or cut, to ensure that operational data are not lost. Hotel managers who have experiencedpower losses are well versed in maintaining communication among the variousdepartments and posting charges as required. Once the power returns in full, the staffcan catch up on posting to the electronic folio.Maintenance AgreementOne final consideration in adopting a PMS is the maintenance agreement, whichshould spell out the related costs of repair and replacement of hardware and software.Allowance for emergency service and times available for general service should also belisted. When loaner or backup equipment is available, it enhances the attractiveness ofthe agreement.Financial ConsiderationsPurchasing or leasing a PMS for hotel use is a major financial decision. Such an investmentcan tie up cash flow. If the costs and benefits are not realistically projected, profits maybe in jeopardy. The first part of this chapter stressed the importance of performing a needsanalysis. Hotel properties that match needs with computer applications by going throughthis process will achieve the most realistic assessment of costs versus benefits when adoptingcomputers.The controller of a lodging property has usually prepared a budget in consultationwith the general manager. Sales of room nights, food and beverages, and other productsand services are projected. Considered with these projections are the related costs ofproducing those goods and services. The controller is usually aware of the specific costsin each department—the amount of overtime pay required at the end of the month toproduce the monthly inventory in the food and beverage department, the extra part-timehelp required to staff the front desk for a busy checkout or check-in, the cost to producea direct-mail piece for the marketing and sales office, and the fee charged by the outsideaccountant to produce a monthly profit-and-loss statement. This knowledge is very helpfulin determining how much money can be saved if a PMS were to be introduced. Theamount of money that can be saved (along with tax depreciation advantages) must beequal to or greater than the amount spent on the computer system. Sometimes managementmay feel that less tangible benefits, such as greater service to the guest or improvedmorale among employees, justify the cost even when dollar savings are not quite equal.The decision about whether to purchase or lease must also be made. The outright costof purchase, related finance charges (if applicable), discount for cash, and depreciationare only a few of the points to review if the hotel decides to purchase. These considerationshave to be weighed against continuance of cash flow, application of lease payments tothe purchase price, and tax advantages of leasing.TLFeBOOK