Hotel Management Colleges & Career

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Budgeting in Hotels

by abhijeet


Budget: "A plan by which resources required to generate revenue is recorded."

The management committee takes care of the budgeting in the hotel. All the department heads are responsible for creating the budget for their respective departments and send it to the financial controller for final approval. Budgeting is one of the main planning activities within the hotels.

The budget provides an pportunity for taking a critical look on the cost incurred by the department, reviewing past planning and then taking appropriate steps to accomplish better outcomes in the next financial year.

The executive housekeeper has to be involved in the planning process that leads to formulation of the budget and has to ensure that the department’s actual expenses are in line with budgeted cost and occupancy level.

Why is Budget Required?

The budgets act as a guide that provides the manager with the standards, by which they can measure the success of operation. A budget provides a financial framework within which all the department operates. The budget also act as a guide as to which things need repair or replacement it also help to determine what valuable pieces of equipment may be purchased and to pinpoint the areas which needs to be emphasized for the coming year.

It can be said that a budget is an instrument used by management for controlling and directing activities especially purchasing activities.

Types of Budgets:

Budget may be of different kinds, based on type of expenses involved, the departments, and the flexibility of expenses.



  1. Categorization by Type of Expenditure: Based on the type of expense and assets involved, budget may be categorized into:

  • Capital Budget: These allocate the use of capital assets that life span considerably in access of one year; these are assets that are not normally used up in day to day operation. Example: furniture and fixture. Capital expenditure may include vacuum cleaners, machines. The hotel building itself also comes under capital assets.

  • Operating Budget: Operating expenditures are those costs that are incurred in order to generate revenue in normal course of doing business. The cost of all non recycled inventory items, such as cleaning and guest supply is also operation cost.

  • Pre Opening Budget: These budgets allocate resource for opening parties, advertising, generating of initial goodwill. Pre opening budget also include the initial cost of employee salaries, crockery, cutlery and other item.

2. Categorization by Department Involved: Based on departmental involved, budget may be categorized into:


  • Master Budget: These represent the forecasted targets set for the whole organization and incorporate all income and expenditure estimated for the organization.

  • Departmental Budget: Each department of the hotel forwards a budget for its estimated expenses and revenue to the financial controller. For instance there would be housekeeping budget etc.
3. Categorization by Flexibility of Expenditure: Budget may be classified on the basis of Flexibility of expenditure:


  • Fixed Budget: These budgets remain unchanged over a period of times and are not related to the level of revenues. Such budget include resource allocation for advertising and administration.

  • Flexible Budget: These budgets are predetermined expenditure based on the expected revenue and differ with different volumes of sale.

16 Comments
    angi123
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    angi123Thu, 15 Aug 2013 22:41:35 -0000

    i just like to know , when my accommodation manager decided to pay me overtime or even just a weekly pay.. is she be control by someone and can be refused it or it just her decision how she devides her budget??

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    Dalie
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    DalieSun, 07 Oct 2012 06:59:26 -0000

    Very helpful

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    danmiloniya
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    danmiloniyaWed, 22 Aug 2012 16:14:48 -0000

    this is academically good

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    Nur chairi
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    Nur chairiFri, 21 Oct 2011 15:30:05 -0000

    i agree with the above statement…Housekeeping is very important department that serve the physically cleanliness of a hotel..has a large scope of area…manage a lot of people and variety of job inside….by the way i am a housekeeper.

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    Phil Elliott
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    Phil ElliottFri, 03 Jun 2011 14:00:44 -0000

    I don't know if I missed something but being a CE myself this sounds like BS to me.

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    hotels
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    hotelsWed, 08 Dec 2010 07:09:31 -0000

    thanks alot for a great information on budgeting and the steps to be taken by the major departments……………..

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    anthony_wild
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    anthony duitesSun, 05 Jul 2009 05:44:43 -0000

    wala na bang ibang department ang isang hotel

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    shreyashri
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    shreya shrivastavaFri, 06 Feb 2009 17:13:05 -0000

    Budget is among the most important part of ny business….it has to be handled with care. Same is the case here…Thanx 4 d information….

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    deepesh_karnik
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    Deepesh karnikWed, 04 Feb 2009 11:51:34 -0000

    its gud…!

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    vickyR
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    Vicky ROYWed, 04 Feb 2009 11:11:03 -0000

    its very informative…!

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    PINKCHAWLA
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    PRIYANKA CHAWLATue, 03 Feb 2009 12:50:02 -0000

    very nice information for those working in this industry and even for those who r in any financial affairs relate to this industry..

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    PCHAWLA
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    PANKUL CHAWLAFri, 30 Jan 2009 11:25:57 -0000

    quite interesting..limelight given to unnoticed sectors..

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    aki_kumar
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    akhil kumarWed, 28 Jan 2009 13:01:31 -0000

    intresting…..!

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    abhijeet_3256
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    abhijeetMon, 26 Jan 2009 18:53:46 -0000

    Thanks a lot :) i hope this lesson helped you all in understanding the concept of a budget, if there is any confusion please let me know.

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    shabul_md
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    Shabul Hassan MohammadTue, 21 Apr 2009 08:59:59 -0000

    Hey this is quite useful and interesting thing man…..Thanx 2u…4 the initiative taken…..

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    krishnarules
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    Krishan RaiSun, 25 Jan 2009 11:54:50 -0000

    GUD INFORMATION….!

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    tappy
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    tappySun, 25 Jan 2009 10:59:41 -0000

    its quite intresting!!!

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    EHURISI
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    EHURISIFri, 23 Mar 2012 09:40:57 -0000

    EXCELLENT STUFF .IT IS AMAZING.

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abhijeet_3256
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About: I am a management student from IHM bhopal,

Last Updated At Dec 07, 2012
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