Financial vs Operational Revenue: Practical Examples Explained
 

Overview

This article demonstrates how Financial Revenue and Operational Revenue are reported in RMS across common scenarios. It covers reservations using Total Rate and Nightly Rate creation methods, as well as cases where rates are voided and re-applied, and where Sundry Charges classified as Accommodation Revenue are posted before or after the reservation stay. The final example explains how Repeat Charges are distributed operationally.

Definitions

• Financial Revenue: Reported on the accounting date when the transaction is posted to the reservation account.
• Operational Revenue: Reported across the accommodation dates (the stay period) and may project revenue from the Quoted Total Rate or Quoted Nightly Rate when actual transactions are not yet posted.

Example 1: Total Rate Created on Reservation Arrival

Scenario: Rate Creation Method of Total Rate on Reservation Arrival.

Explanation

• Financial Revenue: Accommodation Revenue would be reported as a total of $300 on the accounting date the transaction was posted to the reservation account.
  • Day 1 shows $300.
  • Day 2 and Day 3 show $0 (no financial transactions posted).
• Operational Revenue: Accommodation Revenue would be reported as the Total Rate divided by the transaction's accommodation dates.
  • Day 1, Day 2, and Day 3 each show $100.

Projection Rule (Total Rate not yet applied):
If the Total Rate has not been applied to the reservation account, the report will project Accommodation Revenue using the Quoted Total Rate.

Example 2: Voiding and Reapplying the Total Rate at a Different Amount

Scenario: Void the Total Rate and reapply at a lower amount.

Explanation

• Financial Revenue: Accommodation Revenue is reported against each accounting date a transaction is applied to the account.
  • Day 1: $300 (initial posting).
  • Day 2: - $300 (void of the original Total Rate).
  • Day 3: $270 (re-posted at a lower amount).
• Operational Revenue: Accommodation Revenue is reported as $90 per reservation night by dividing the Total Rate of $270 across the transaction's accommodation dates.

Example 3: Nightly Rate Created on Arrival and Each Reservation Night

Scenario: Rate Creation Method of Nightly Rate on Reservation Arrival and Each Reservation Night.

Explanation

• Financial Revenue: Accommodation Revenue would be reported as $100 on each accounting date where a Nightly Rate is applied to the reservation account
• Operational Revenue: Accommodation Revenue would be reported as $100 per reservation night.

Example 4: Voiding a Nightly Rate and Reapplying at a Different Amount

Scenario: Day 1 rate is voided on Day 2, then re-posted at $90, and the Day 2 rate is created at $90 on Day 2.

Explanation

• Financial Revenue: Accommodation Revenue would be reported as the sum of transactions applied to the reservation account for the date reported.
  • Day 1: $100.
  • Day 2: $80 (calculated as - $100 + $90 + $90).
  • Day 3: $90.
• Operational Revenue: Accommodation Revenue would be reported as $90 per reservation night.
  • The Day 1 Rate re-posted on Day 2 is assigned to Day 1 operationally by referencing the transaction’s accommodation date.

Example 5: Sundry Charge Applied Before the Arrival Date

Scenario: A Sundry Charge with the G/L Code (General Ledger Code) set as Accommodation Revenue is applied 4 days before arrival.

Explanation

• Financial Revenue: Accommodation Revenue would be reported against each accounting date a transaction was applied to the account.
  • 4 Days Before Arrival: $20 (Sundry).
  • Day 1–3: $100 per night (rate).
• Operational Revenue: Any Accommodation Revenue charges applied prior to the reservation's Arrival Date would be assigned to the revenue for the Arrival Date if the transaction did not include an accommodation date.
  • Day 1: $120 ($100 Rate + $20 Sundry).
  • Day 2–3: $100 per night.

Example 6: Sundry Charge Applied After the Departure Date

Scenario: A Sundry Charge with the G/L Code set as Accommodation Revenue is applied 4 days after departure.

Explanation

• Financial Revenue: Accommodation Revenue would be reported against each accounting date a transaction was applied to the account.
  • Day 1–3: $100 per night.
  • 4 Days After Departure: $20 (Sundry).
• Operational Revenue: Any Accommodation Revenue charges applied after the reservation's Departure Date would be assigned to the revenue for the Departure Date if the transaction did not include an accommodation date.
  • Day 4: $20 from the Sundry Charge.

Example 7: Repeat Charge for Accommodation Applied on Arrival

Scenario: A Repeat Charge is applied on Day 1 and distributed across the stay.

Explanation

• Financial Revenue: Accommodation Revenue would be reported as the Repeat Charge value on the accounting date it was applied to the reservation account.
  • Day 1: $100.
• Operational Revenue: Accommodation Revenue would be reported as a portion of the Repeat Charge value divided across the Repeat Charge date range, with any leftover amount assigned to the final date in the date range.
  • Day 1: $33.33
  • Day 2: $33.33
  • Day 3: $33.34 (includes the remaining $0.01 that cannot be evenly divided).

Key Takeaways

• Financial Revenue follows posting dates (accounting dates).

• Operational Revenue follows stay dates (accommodation dates) and may project values from Quoted Rates where actual postings have not yet occurred.

• Voids and re‑posts affect Financial Revenue on the date they occur; Operational Revenue references the accommodation date of the re‑posted transaction.

• Sundry Charges classified as Accommodation Revenue are operationally assigned to Arrival (if posted before the stay) or Departure (if posted after the stay) when no accommodation date is present.

• Repeat Charges are distributed operationally across the stay, with rounding handled on the final date.