BHM 228 – HOSPITALITY INFORMATION SYSTEM

1. INTRODUCTION TO HOSPITALITY
INFORMATION SYSTEM (HIS)
LEARNING COMPETENCIES
At the end of the module the student should be competent to:
 Identify the general automation applications available in Hospitality Industry
 Understand the basics of Property Management Systems (PMS), Interfaces with PMS,
Restaurant Management Systems, Sales and Catering Applications and Accounting
Applications

MODULE CONTENTS:
 Hospitality Software Modules
 PMS Front Office and Housekeeping Applications
 PMS Interfaces
 F & B Service Applications
 F & B Management Applications
 Accounting Applications
 Major brands in Hospitality software

Hospitality Software Modules

Recent technological developments in the management of computers in the lodging industry
have significantly affected both front and bock office procedures. Hoteliers are no longer
dependent upon an assortment of metal racks, a collection of mechanical equipment, or a set
of routine clerical tasks. From the moment potential guests contact a property for reservations
to the settlement of their accounts, a computer system is capable of monitoring, charting, and
recording all transactions between guests and the hotel. Likewise, computer systems
technology has also significantly affected food service and management activities in food and

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beverage operations. Restaurateurs are no longer dependent upon mechanical cash registers,
volumes of sales journals, and routine clerical procedures.

The dependence of the hospitality industry on computer processing is continuing to grow. In

fact, many hotels and restaurants employ comprehensive computer- based information
systems. These systems are briefly discussed in the following sections and in greater detail
throughout the remainder of the text.

Property Management Systems

A computer-based lodging information system is commonly called a Property Management
System (PMS). Although the components of a PMS may vary, the term PMS is generally used
to describe the set of computer programs that directly relate to front office and back office
activities. Applications software is the term for computer programs- the instructions of the
hardware of a computer system in what to do, when to do it, and how to do it.

Computerized Front Office Applications consist of a series of software programs (or modules)
including Reservations, Rooms Management, and Guest Accounting functions. A variety of
stand-alone applications may also be interfaced with an installed property management
system. Popular interfaces include microcomputers, point-of –sale systems, call accounting
systems, electronic locking systems, energy management systems, auxiliary guest service
devices, and guest –operated devices. Computerized back office applications typically included
in back office PMS packages contain modules covering accounting and internal control
functions. These hospitality accounting applications are discussed later in this chapter. The
following sections briefly describe some of the basic features of PMS front office applications
and PMS interfaces.

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PMS- Front Office and Housekeeping Applications

While hotel property management systems differ, many of them offer front office applications
software in relation to reservations, rooms management, and guest accounting functions.

Reservations Module: A Reservations Module enables a hotel to rapidly process room

requests and generate timely and accurate rooms, revenue, and forecasting reports.
Reservations received at a central reservations site can be processed, confirmed, and
communicated to the destination property before the reservationists finishes talking with the
caller on the telephone. When the destination property uses a property management system,
the reservations module receives data directly from the central reservation system, and in-
house reservations records, files, and revenue forecasts are immediately updated. In addition,
the reservations data can be automatically reformatted into pre-registration materials and an
updated expected arrivals list can be generated.

Rooms Management Module: A Rooms Management Module maintains up-to-date

information regarding the status of rooms, assists in the assignment of rooms during
registration, and helps coordinate many guest services. Since this module replaces most
traditional front office equipment, it often becomes a major determinant in the selection of one
PMS over another. This module alerts front desk employees of each room’s status just as
room and information racks do in no-automated environments. For example, with a room
rack, an upside-down card without a folio covering it may signify that the previous night’s
guest has checked out, but that the room has not yet been cleaned for resale. This status will
remain unchanged until housekeeping notifies the front desk that the room is clean and ready
for occupancy. In a computerized system, the front desk employee simply enters the room’s
number at a keyboard and the current status of the room appears immediately on a display
screen. Once the room becomes clean and ready for occupancy, housekeeping changes the
room’s status through a terminal in the housekeeping work area, and the information is
immediately communicated to the front desk.
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Guest Accounting Module: A Guest Accounting Module increases the hotel’s control over
guest accounts and significantly modifies the night audit routine. Guest accounts are
maintained electronically, thereby eliminating the need for folio cards, trays, or posting
machinery. The guest accounting module monitors predetermined guest credit limits and
provides flexibility through multiple folio formats. When revenue centers are connected to the
PMS, remote electronic cash registers or point-of-sale terminals communicate with the front
desk, and guest charges are automatically posted to the appropriate folios. At checkout,
outstanding account balances are transferred automatically to the city ledger (accounts
receivable) for collection.

Reservation Rooms Management

Module Module
Availability / Forecasting Room Status
Reservation Records Registration
Reservation Confirmations Room Assignments

Guest Accounting
Module
Folio Management
Credit Monitoring

Transaction Tracking

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Property Management System Interfaces

PMS interface applications are stand-alone computer packages that may be linked to a hotel
computer system. Although the number and kinds of software packages that may be linked to
a hotel system are continuously growing, the most popular interfaces include those discussed
in the following sections.

Microcomputer Telephone Call

Interfaces Point-of-Sale Accounting
Systems Systems

Hotel Property Management System

Guest-
Operated
Devices

Electronic Energy Auxiliary Guest

Locking Management Service Devices
Systems Systems

Microcomputer Interfaces. Microcomputer Interfaces to larger hotel computer systems

have become a popular means of expanding data processing capabilities. Downloading
(transferring) data from the hotel systems to a microcomputer enables management to use
data contained in the hotel system’s software with software applications designed for the
microcomputer. For example, the lodging system may maintain all of a hotel’s accounting
data. When designing next year’s budget, management may wish to base projections on
actual transactions of the current accounting period. If management is able to download the
necessary accounting data from the PMS to the microcomputer, the data can be used by
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microcomputer software applications that may include word processing, electronic

spreadsheets, database management, and communications programs.

Point-of-Sale Systems: A Point –Of Sale System (POS), such as a network of electronic
cash registers, is capable of capturing data at point-of-sale (POS) locations and transferring
them to the system’s guest accounting and financial tracking modules. The ability to
communicate such data to both front and back office components can result in numerous
benefits derived through comprehensive reporting.

Telephone Call Accounting Systems: Few other interfaces have received more attention
than telephone call accounting has. A Telephone Call Accounting System (CAS) enables a
hotel to take control over local and long distance telephone services and to apply a markup to
switchboard operations. A call accounting system can place and price outgoing calls. When a
CAS is interfaced with a front office guest accounting module, telephone charges can
immediately be posted to the proper folios. The hotel’s telephone department, traditionally a
loss leader, can become a potential profit center.

Electronic Locking Systems: Many types of Electronic Locking Systems (ELS) are available
today. Often these systems interface with a front office computer system, thereby enabling
management to exercise important key control measures. One kind of Electronic Locking
System functions through a computer terminal at the front desk. The terminal selects a code,
which will permit entry and then produces a card for the guest to use. Once a code is entered
and a card produced, all previous codes are canceled, and cards issued to previous guests no
longer function.

Energy Management Systems: Interfacing Energy Management Systems (EMS) with a

hotel computer system links guestroom energy controls with the front office rooms
management package. An Energy Management System monitors guestroom temperature by
computer. This may lead to significant reductions in energy consumption and lower energy
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cost. For example, in the cold winter months, an unoccupied room may be maintained at a
temperature of 600 F (15.60C). When a guest checks in a is assigned a guestroom, the
computer can automatically turn up the room’s temperature to a more comfortable70 0F (21.10
C). By the time the guest reaches the room, the temperature will be acceptable, and the
hotel’s energy costs will have been reduced.

Auxiliary Guest Service Devices: Automation has simplified many Auxiliary Guest Services,
such as the placement of wake-up calls and the delivery of messaged to guest. These
functions are often performed by devices (such as electronic message-waiting systems and
voice mailbox systems) that are marketed as stand-alone systems that can be interfaced with
the rooms management module of a property management system.

Guest- Operated Devices: Guest-operated devices can be located in public area of the
hotel or in private guestrooms. In –room guest –operated devices are designed as user-
friendly systems. An assortment of devices provides concierge-level service with in –room
convenience. Guest-Operated Devices include self-check-in / check –out systems, in-room
movie systems, in-room beverage service systems, and information service systems.

F & B Applications
Food and Beverage Service applications vary considerable depending upon the type of
operation (quick service, table service, or institutional service), kinds of meals offered
(breakfast, lunch, dinner, banquets, etc.), and the degree of autonomy given to restaurant
management officials (independent, franchise, or corporate).

Computerized Restaurant Management Systems

While a computer-based hotel Property Management System consists of modules, a computer
–based Restaurant Management System (RMS) functions through specific hardware
components and a wide variety of applications software packages. This text uses the term
service applications to refer to software programs used by restaurant management systems to process

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data related to front-of-the-house food service activities. Service-oriented applications of a

computer-based restaurant management system rely upon Electronic Cash Register (ECR) and
Point-Of Sale (POS) technology to monitor service area transactions through cashier terminal,
precheck terminals, remote workstation printers, and network controllers.

The term Electronic Cash Register refers to an independent (standalone) computer system.
The cash register frame houses the necessary three components of a computer system: an
input/ output device, a central processing unit, and storage (memory) capacity, but does not
contain its own central processing unit. In order for POS transactions to be processed, the
terminal must be interfaced with (connected to) a central processing unit that is located
outside of the terminal’s housing. Some food service properties may reduce the cost of
automation by interfacing several POS terminals with a large central processing unit. Other
operations may find a series of ECRs to be more effective.

ECRs and POS terminals are hardware components. The physical layout and interconnection
of hardware components within an automated system is called a configuration. Like all
computer hardware components, ECRs and POS terminals require software programs that tell
them what to do, how to do it, and when to do it. Service-related applications software
programs include pre-checking, check tracking, sales analysis, and limited attendance and
inventory control packages.

The term Management Applications refers to applications software used by computer-based

restaurant management systems to process data management applications that cover a broad
range of functions such as recipe management, sales analysis, and menu management.

Sales and Catering Applications

Hotel sales office staff and food service catering managers spend a great part of each day
processing paperwork related to information collected through prospecting, selling, booking,
and reporting. Today, at many properties, much of this time-consuming and costly effort is
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handled with computers. Chapter 9 describes computer applications in relation to hotel sales
office functions and yield management strategies, as well as off-premises and home-delivery
food service catering operation.

In a fully automated sales office, every salesperson with a computer terminal has immediate
access to guestroom control information. Bookings and cancellations can be quickly processed
as they occur-even as the sales-person is on the telephone with the client. This helps ensure
that every salesperson has access to exactly the same information, and that ‘’ definite’’ and
‘’tentative’’ bookings area clearly identified to prevent error. Also, an automated sales office
system can produce reports that provide information on accounts bookings, market segments,
sales staff productivity, average room rates, occupancy, revenue, service history, lost
business, and important marketing data. Many of these reports would take several hours to
produce manually.

Yield Management, sometimes called revenue management, is a set of demand-forecasting

techniques used to determine whether prices should be raised or lowered and whether a
reservation request should be accepted or refuted in order to maximize revenue. Yield
management is based on supply and demand. Prices tend to rise when demand exceeds
supply; prices tend to fall when supply exceeds demand. One of the principal computations
involved in yield management is yield, which is the ratio of actual revenue to potential
revenue. Actual revenue is the revenue generated by the number of rooms sold. Potential
revenue is the amount of money the property would receive if all of its rooms were sold at full
rack rates.

There are many formulas used to implement yield management strategies. Although the
individual computations involving yield management can be performed manually, doing so is
very difficult and time – consuming. The most efficient means of handling data and
generating yield statistics is through a computer. Sophisticated yield management software

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can integrate room demand and room price statistics, and project the highest revenue-
generating product mix.

Catering Software monitors and controls the activities associated with each stage of off-
premises catering service. Many of the files created through the use of catering software
packages perform functions similar to computer-based restaurant management applications.
In addition to containing data on all purchased food and beverage products, catering files
include data on such non-food items as labor, serving utensils, production equipment, rental
equipment, disposable items, and entertainment options. The more complete this file, the
easier it becomes for the caterer to assemble an entire catering service package. Special
applications for home-delivery systems are also discussed later.

Accounting Applications
The number of accounting software modules provided by a back office PMS or RMS may vary
widely. A typical back office system contains application software designed to monitor and
process accounts receivable and accounts payable transactions, payroll accounting, and
financial reporting. Additional back office programs include inventory control and valuation,
purchasing, and budgeting. The following sections present an overview of the applications
typically included in a PMS back office package:

Accounts Receivable Module: An Accounts Receivable Module monitors outstanding

balances of guest accounts. An account receivable is a dollar amount representing charged
purchases made by a guest who has deferred payment for the products and services rendered
by the hotel. Accounts receivable balances can be automatically transferred from front office
software applications, or they can be manually posted directly into an accounts receivable
program. Once entered into the back office system, account collection begins. Account
billings and the aging of accounts receivable can also be monitored by this back office
software.

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Accounts Payable Module: The Accounts Payable Module tracks purchases, creditor
positions, and the hotel’s banking status. Accounts payable activities normally consist of
posting purveyor invoices, determining amounts due, and printing checks for payment. Three
major files maintained by an accounts payable module are:
 Vendor master file
 Invoice register file
 Check register file

The vendor master file contains an index of vendor names, addresses, telephone numbers,
vendor code numbers, standard discount terms (time and percentage), and space for
additional information. An invoice register file is a complete list of outstanding invoices
cataloged by vendor, invoice date, invoice number, or invoice due date. This file becomes
especially important when management wishes to take advantage of vendor discount rates.
The calculation and printing of bank checks for payment to vendors is monitored through the
check register file. Check production and distribution is summarized into a payables report
and reconciled with bank statements.

Payroll Module: A Payroll Accounting Module is an important part of a back office package
because of the complexities involved in properly processing time and attendance records,
unique employee benefits, pay rates, withholdings, deductions, and required payroll reports.
The payroll accounting module must be capable of handling job codes, employee meals,
uniform credits, tips, taxes, and other data that affect the net pay of employees. The unique
nature of payroll data dictates that special care be taken to maintain an accurate payroll
register, to closely control the issuing of payroll checks, and to protect the confidentiality and
propriety of payroll data.

Inventory module: A back office Inventory Module automates several internal control and
accounting functions. Internal control is essential to efficient hospitality industry operations.
By accessing inventory module is generally able to address three of the most common
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inventory concern: inventory status, inventory variance, and inventory valuation. Inventory
status refers to an account of how much of each item is in storage; inventory variance refers
to differences between a physical count of an item and the balance maintained by the
perpetual inventory system; and inventory valuation refers to the value of items in inventory.

Purchasing Module: A back office-Purchasing Module maintains a purchase order file and a
bid specification file. This module enhances management’s control over purchasing, ordering,
and receiving practices. Using minimum/ maximum inventory level data transferred from the
inventory module, the purchasing module generates purchase orders based on a order point
established through usage rate and lead-time factors. A purchasing module may also use a
zero-based inventory system and generate purchase orders based on projected sales volume.

Financial Reporting Module: The use of a Financial Reporting Module, also called a
general ledger module, involves the specification of a chart of accounts (a list of financial
statement accounts and their account numbers) and a systematic approach to recording
transaction. The design of the general ledger module is often crucial to an effective back
office system. The financial reporting module is generally capable of tracking accounts
receivable, accounts payable, cash, and adjusting entries. In addition, most financial reporting
modules are capable, cash and adjusting entries. In addition, most financial reporting
modules are capable of accessing data from front office and back office modules to prepare
financial statements, which include the balance sheet, the statement of income (and
supporting departmental schedules), and a variety of reports for use by management.

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Major Brands in Hospitality Software

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