Pearson New International Edition International pcl tp indd 1

FRONT OFFICE SEMANTICS
Credit manager:
Person responsible for establishing and enforcing the hotel’s credit policies. In smaller
properties, this role may be filled by the general manager, controller, or FOM. In larger hotels, credit
management policy may be the result of the joint efforts of several individuals.
Alternatively, the card could be charged to reduce Ms. Bardello’s folio balance.
Additional holds could then, if appropriate, be placed on the card.
When a card cannot be authorized for additional funds, the FOM faces a dilemma.
The extension of additional, nonsecured credit for guests who have exceeded their
preestablished limits increases the risk that the hotel will not collect all the money
it is owned. Denying credit to those who legitimately can pay, however, puts the
hotel at a significant risk of losing sales. There is no “best” credit limit policy. Each
credit manager must determine specific strategies for his or her hotel based on the
characteristics of the guests who exceed their credit limits.
When approaching these guests for payment, the FOM must be tactful.
Extending credit lines avoids potentially difficult situations but places the hotel at
risk from those who will not ultimately pay their bills. Cases differ and, in many sit-
uations, the credit limit strategies used should vary based on the guest about whom
the credit extension or denial decision will be made. The following factors are con-
sidered by FOMs who must make decisions about credit extension:
•
Credit extension amount. When guests exceed their credit limits by small
amounts, often the best action is none at all. The actual dollar amount required
to be considered significant will vary by hotel, and it is only these folio or city
ledger accounts that need the night auditor’s and FOM’s attention.
•
Potential cost. Not all hotel products and services are equally profitable. For
sleeping rooms, the actual cost to the hotel of lost revenue may represent only
20 percent to 25 percent of the hotel’s posted revenue. However, for food and
beverage purchases these same costs may be 80 percent to 90 percent of posted
revenue because of the higher costs to the hotel for supplying the products and
services. Credit extension terms often can be more liberal on products and serv-
ices of higher profit margins than on their less profitable counterparts.