Importance of the Night Audit in Hotels

The night audit is the control process whereby the financial activity of guests’ accounts is maintained and balanced. This process tracks charges and payments (debits and credits) and the departmental receipts and charges on a daily basis. This working definition en-compasses not only the mechanical proofing of totals of charges and payments but the further review of account activity by management.

The front office manager will be able to monitor the credit activity of guests, project daily cash flow from room sales, and monitor projected and actual sales for the various departments. Learning the process of the night audit can provide valuable information for someone who plans to continue in the hotel industry. It will also provide the necessary objective overview to evaluate the hotel’s financial activity.

The night audit allows a review of all the financial activity that takes places in a hotel in one day. Based on that review, the general manager must determine how it should be adapted to meet the expenses and profit goals for the accounting period. It also allows the general manager to see if marketing plans and operational activities have accomplished their stated profit goals.

The night audit provides insight into how each department must be monitored to produce an acceptable income statement. It pulls together the plans and operations of a hotel on a daily basis, not just at the end of an accounting period. Ultimately, the night audit allows general managers to make good financial decisions based on current and cumulative data.