MANAGEMENT INFORMATION SYSTEM

Management Information is defined as raw data has been processed into a form ,which
provide relevant and meaningful information to the management .The information thus
processed aids management in business decision making .A statement that out of 70
room, guest occupied 42 is presentation of raw data .The current occupancy percentage
is seventy percent would be information . In hotel ,raw data is sources from customer
enquiries, booking, gust register, gust invoices, suppliers, bills, etc Most of these are
records supporting entries in various book of accounts or informal records maintained by
the operating personal ,for their own immediate use A hotel bar may to be closed by 112
midnight because of police order. the hotel management should be aware of the
consequences of this Government order on income from food and room service
outlet, on staffing patterns etc. To be able to represent to the government to
reconsider the decision, it must have data as regards impact thereof on tourism, foreign
gusts like to be turned away , labour employment and loss of income to the government
in the from of taxes
Why a formalized reporting system?
A formalized reporting system converts unstructured data into information useful to
managers This transformation process consists of a number of activities such as
recording, classifying, sorting, calculating summarizing ,comparing ,formatting, and
reporting in a manner, which will keep their managerial staff informed about events
,which have a bearing on their functional activities .
1)The size and range of activities is increasing .one can no longer depend upon personal
contacts for information transmission .
2)They have branched out in several multifarious and unrelated activities .one cannot
take for
granted future happenings.
3) Management has become complex, being subject to increasing state legislation
4)With more and more hotel forming part of multi-unit organization or hotel
chains,considerable decentralization at operational level has taken place .
TYPES OF INFORMATION
The information required by the hotel management is divided into two types 1) external
information and 2) internal information
1. External information: It is information outside the control of the organization
and deals with matters such as

a) Government decisions and policies affecting the economy in general and hospitality
industry in particular. This includes offer of tax concessions and foreign exchange on
special terms.
b) Industry wise operational details as regards manpower requirements, water
consumption use of power etc.
c) Basic information about potential users of hotel services their numbers, size, growth
rate, age, economic health, eating and entertainment habits. These users can be from
distant locations, who travel for business, holidays, sight seeing pilgrimage or for
personal reasons.
d) Facilities available in the area for tourists number of hotels, - their star status and
facilities offered, quality of service, nature of clientele, rate charged and occupancy
and activity level. This information is unlikely to be readily available unless specially
compiled through a market survey.
e) Further developments in the area current as well as future location of the new
industries and expansion of the existing industries, infrastructures in the form of
roads, telecommunications, education, health, tourism facilities.
The information is gathered through economic and commercial dailies and
periodicals, industry journals, government publications and special studies. The hotel
management has to continuously update and expand range of facilities provided by
them to match changing scenario of the external world.

2. Internal information
It consists of a) operational information and b) accounting information
Operational information: It is generally derived from the maintained by the
operational staff and managers of revenue generating and service departments such
as rooms and front office, Food and Beverage, laundry, health club etc. The reports
are circulated at all levels but contents of reports submitted at the top are considerably
abridged and hence frequency is also reduced.
Accounting information: It is derived from the documents and supporting records
used for preparing hotel accounts such as customers bill, expense vouchers, cost
analysis sheet, payroll sheets, statutary registers, ledgers etc. The primary documents
may need re formatting and inclusion of certain additional data. Financial reports
presume that accounting records are up to date, books are closed soon after the month
is over, balances are struck and trial balances is extracted. Once this is done, financial
reports can be prepared without significant clerical effort. The preparatory work that
is done to ensure that the reports are reasonably accurate and one is ready with
answers to explain every odd figure that is appearing in it improves the quality of
accounting. The financial statements- profit and loss statement, balance sheet, and
cash flow statement- are part of the statutory requirements. In professionally

managed organizations these documents and review of capital expenditure are

routinely prepared every month and are available to the top managers. Summarized
version of these statements is submitted to the Board of Directors every quarter.

ESSENTIAL FEATURES OF A GOOD MIS:

The essential features of a good MIS are as follows:
Clarity: The information that is supplied should be relevant to the needs of
the recipients. It should be presented in a manner which is easily understood
by the persons for whom it is meant. Before designing a management
information system , each managers function is analyzed, type of decision
made by him studied and his requirements for information established.
Details: The data presented must be sufficiently detailed to allow the
manager to analyze the causes of the variance. The reports should draw
attention to significant features, which require attention. Extensive use is
made of the principle of exception, so that the recipients of the reports do
not get lost in trivial details. List of employees who were paid overtime
during the previous month is not information. To be action oriented, the
report should analyze the overtime payment by departments, compared with
the budget/ previous years actual payment, and provide reasons in brief for
major variations, if any. Care has to be taken to make the system operational
and avoid cumbersome details. Unnecessary information leads to information
blackout. Information is impersonal. It presupposes logic. It provides
communication. With extensive use of computers and standard software
packages, a large number of information reports are prepared by way of by
products of periodical accounting statements.
Need based: Designing and implementing management information
reporting system involves considerable time and effort. It can be justified
only on the basis of end results. The MIS should reflect the structure of the
organization, so that the right people receive appropriate information. The
requirements of each level of management are different. The top
management is likely tio be more interested in total performance, as
reported in periodical financial reports such as Profit and Loss statement. The
management at the lower levels would like to have information regarding
area of their immediate responsibility, on a continuing basis and promptly.

Timeliness: The information to be useful has to be both relevant and useful.

Daily occupancy report circulated three days later are unlikely to interest
their recipients. Frequency of information must be related to the users need.
If the management is to take action then the results must be made known in
time. The reporting must be prompt and reliable. A balance must be struck
between the need for accuracy, extent of details to be provided and speed
on one hand with the cost and effort required to achieve these objectives on
the other.
Appropriately focused: The systems objectives must be clearly defined.
The recipients must be made aware of what action is expected from them on
the basis of the reports. Operational staff tends to adopt a negative stance,
presuming that they are meant more to bring out their failings and
shortcomings. Their responses can be made positive by using the reports
more for planning and coordination.
(f) Comprehensive : The MIS should adopt total approach .information should flow vertical
between superiors and subordinates as well as horizontally between departments
(g) Consistency : The period for which data is presented is presented should be standardized, so
that the recipients know where to look for what information .
(h) Cost effective : MIS should be regularly monitored and evaluated for its utility and cost
(I) Reasonably accurate and unbiased : To develop necessary confidence in the system, the
information contained therein should be reasonably accurate and presented without bias. When
making payment to a supplier, one is expected to know the exact amount due to him However,
when analyzing receivables, what one is looking for is information that is approximately
correct .many time, information is submitted in decimals, which create an aura of accuracy ,
which is not necessary . Every effort should be made to make the information as complete as
possible If there are significant gaps in the information generated ,this fact should be brought to
the notice of the user of the information and the impact thereof on accuracy of overall picture
should be indicated.
(J) Involvement of top management : The top management should show interest .Review
procedures need to be formalized. Meeting should be held at regular interval, and the time
between occurrence of the event , its reporting, and decision thereon and follow up action is
minimized corrective action should be initiated before the data becomes stale.
SOME F&B RELATED INFORMATION GENERATED BY THE MIS:
Restaurant occupancy: Restaurant occupancy measures the relationship between seating
capacity and the number of covers served. The formula is ;

Restaurant Occupancy Percentage = Number of covers served x 100

Seating capacity
Restaurant occupancy as number of turns;
Number of covers served
Seating capacity
The restaurant occupancy may be calculated on a daily basis and or
separately for lunch and dinner.
The higher the percentage of restaurant occupancy or number of turns, the
fuller the use of the facilities of the restaurant. Different types of restaurants
tend to produce different type of occupancies. There are restaurants which
may produce occupancies of 400 percent.
Average check or average per cover: It is a device to measure the
relationship between food and beverage sales and number of covers sold.
The average check is: Total Food and Beverage revenue generated
Number of covers served
A restaurant may calculate a single daily figure of check average or it may
work out separately for lunch and dinner. In big restaurant the separate
check figures for lunch and dinner are further analyzed as between food and
beverage sales.
Seat turnover: It is expressed either in the form of ratio or percentage.
Seat turnover ratio denotes the number of times the seat in a restaurant are
sold. It is arrived at by dividing the total number of seats in the restaurant by
the total number of seats sold for a given meal period. It is pointer to
efficiency.
The formula is: Total number of covers sold
Number of covers in the restaurant
It is always expressed as number of times,.

Departmental profit ratio: Departmental profit may be explained

as departmental sales less all departmental expense. So departmental
profit = Departmental sales ( cost of sales + labour cost + other
departmental expenses )

In the case of room department there is no deduction for the cost of sales.
The ratio of departmental profit is usually expressed as percentage of
departmental sales.
In the case of food and beverage department where there is a departmental
accounting in operation, this ratio is very useful for the purpose of budgetary
control and decision making.In this case the ratio will be
Departmental profit
F&B sales

Departmental gross profit ratio: In case of a restaurant, the gross profit

is the net sales less the cost of food and after making an appropriate
allowance for the cost of employees meals which is regarded as cost of
labour. This ratio varies between 50 to 70 percent. The higher the average
check the higher the gross profit margin.
The banquet food sales attract higher gross profit margin than a la carte
sales. Similarly a la carte sales make higher gross profit margin than the tdh
sales.

Gross profit on beverage sale is generally higher than on food

sales. The percentage of bar profit depends on the level of price
charge as well as sales mix.
Beverage Gross Profit Ratio = Beverage Gross Profit
Beverage Sale
Sales mix in hotel business
The terms sales-mix refers to the percentage composition of
total sales in a hotel. Sales-mix in case of a hotel usually
comprises the following:

Sales/Mix
Room sales
Food sales
Beverage sales
Others

Percentage
48%
37%
10%
5%
100%

Each elements of sales-mix produces a different contribution

margin ratio, as such it is essential in a hotel business to control it
at frequent intervals. The various hotel companies indicate that
room sales invariably show a higher contribution margin ratio
than do food and beverage sales, and the latter a higher
contribution margin ratio then sales in the minor operated
departments. As a result when total sales of the hotel are
constant but there is change in the sales-mix, there may be
important changes in the total net profit in the hotel. For example,
increase in the sales of tobacco of Rs. 10,000 may result an
increase in total net profit of Rs. 2,000. The same increase in
room sales may well increase net profit by Rs. 850.
Like the sales-mix of the hotel, the sales-mix of each
department could be calculated. For example, the sales-mix of
f&b sales will have a composition as:
Food cost & beverage cost ratio
The cost of food sales is the total cost of sales less the cost
of meals consumed free of charge by employees. The food cost
and beverage cost are measured against the respective revenue.
A low food or beverage cost ratio is indicative of the following:
1. Low selling price of the food and beverage items
2. High price being paid for the ingredients purchased
3. Waste in the preparation process
4. An improper balance of menus
5. Inadequate control which may resulting to stealing and
offering free drinks and meals
6. Theft in the kitchen, bars, store rooms etc.