TABLE OF CONTENTS

• Overview
• How the Adjusted Budget $ Is Calculated
• How the Adjusted Budget % Is Calculated
• Budget Methods in Detail
  • 1. Revenue Accounts
  • 2. Fixed Amount Method
  • 3. Per Occupied Room (POR) Method
  • 4. Hourly Wage – Minutes POR Method
  • 5. Percent Method
• Reading the Report Columns
• Frequently Asked Questions

Overview

When you run the P&L report Operating Statement for Owners in Inn-Flow, you will see three budget columns for each reporting period:

• Actual – What the property actually earned or spent.
• Adjusted Budget – A flexible budget that recalculates based on actual activity (the focus of this article).
• Original Budget – The static budget entered during the annual budgeting process.

The Adjusted Budget is designed to answer the question: “Given the occupancy we actually achieved, what should we have earned or spent?” This makes it a more meaningful comparison to actuals than the original static budget, especially when occupancy deviates from the forecast.

How the Adjusted Budget $ Is Calculated

The formula used to compute the Adjusted Budget $ depends on the budgeting method assigned to each account on the Operational Budgets page. 

Inn-Flow supports five budgeting methods:

1. Revenue Accounts - Actual Revenue replaces the budgeted number.    

Adjusted Budget $ = Actual Revenue

2. Fixed Amount - The original budget stays as-is, regardless of occupancy.    

Adjusted Budget $ = Original Budget Amount

3. Per Occupied Room (POR) - The budgeted rate per room is multiplied by actual rooms sold.    Adjusted Budget $ = Budget Rate Per Room × Actual Rooms Sold

4. Hourly Wage – Minutes POR - Labor cost per room is calculated using hourly rate, minutes per room, and actual rooms sold.    

Adjusted Budget $ = (Hourly Rate × Minutes Per Room × Actual Rooms Sold) ÷ 60

5. Percent Method - A set percentage is applied to the actual revenue of the linked account.    Adjusted Budget $ = Actual Revenue of Related Account × Budget % ÷ 100

How the Adjusted Budget % Is Calculated

The % columns on the report show each line item as a percentage of total departmental revenue. For the Adjusted Budget column, the formula is:

Adjusted Budget % = Actual $ ÷ Adjusted Budget $ × 100

⚠  Important Note

The Adjusted Budget % uses Actual $ in the numerator (not the Adjusted Budget $). This is intentional – it tells you what percentage of the adjusted target you actually achieved. A value over 100% for an expense line means you overspent relative to the flexible budget.

Budget Methods in Detail

1. Revenue Accounts

For all revenue accounts, the Adjusted Budget $ is simply replaced by the actual revenue figure. This means the Adjusted Budget column for revenue always equals the Actual column.

Why? The adjusted (flexible) budget uses real revenue as its baseline so that expense ratios can be measured against what was actually earned rather than what was forecasted.

2. Fixed Amount Method

Accounts budgeted with the Fixed Amount method retain their original budget value in the Adjusted Budget column. These are costs that do not change with occupancy.

Common examples: Loan interest, property taxes, insurance premiums, fixed management fees, cable TV, elevator maintenance contracts, and centralized accounting charges.

3. Per Occupied Room (POR) Method

The POR method is used for variable expenses that scale directly with the number of rooms sold. Inn-Flow multiplies the budgeted cost per room by the actual number of rooms sold during the period.

Adjusted Budget $ = Budgeted Rate Per Room × Actual Rooms Sold

Common examples: Room supplies, guest amenities, laundry chemicals, and certain utility expenses.

4. Hourly Wage – Minutes POR Method

This method is designed for hourly labor accounts where you budget the number of minutes each employee should spend per occupied room. Inn-Flow calculates the expected labor cost using:

Adjusted Budget $ = (Hourly Rate × Minutes Per Room × Actual Rooms Sold) ÷ 60

Common examples: Room attendant wages, laundry attendant wages, guest service agent wages, night auditor wages, and houseperson wages.

5. Percent Method

The Percent Method ties an expense account to a related revenue account. Inn-Flow applies the budgeted percentage to the actual revenue of the linked account.

Adjusted Budget $ = Actual Revenue of Related Account × Budget Percentage ÷ 100

Common examples: Franchise advertising fees, e-commerce charges, management fees, credit card fees, and payroll tax estimates.

✅ IF PRO Tip:

To identify which budget method is assigned to a specific account, navigate to the Operational Budgets page in Inn-Flow and review the Budget Method column. This will help you understand why a particular line item’s Adjusted Budget differs from the Original Budget.

Reading the Report Columns

Each section of the Operating Statement for Owners displays the following columns for both the Current Period and Year-To-Date:

• $ - Dollar amount for the line item.
• %  - Line item as a percentage of total departmental revenue.
• POR -  Per Occupied Room – the dollar amount divided by the number of occupied rooms.

Frequently Asked Questions

Q: Why does my Adjusted Budget for revenue match the Actual column exactly?

A: This is by design. Revenue accounts use the actual revenue as the Adjusted Budget baseline so that expense ratios are calculated against real performance.

Q: My Adjusted Budget % for an expense line is over 100%. What does that mean?

A: An Adjusted Budget % greater than 100% on an expense line means you spent more than the flexible budget allowed for the actual level of business. This signals an area to investigate.

Q: Why is my Adjusted Budget different from the Original Budget even though occupancy was close to forecast?

A: Even small occupancy variances will cause POR and Hourly Wage method accounts to flex. Percent Method accounts will also adjust if actual revenue differs from budget, even if room count is similar.

Q: Where can I see which budget method is assigned to each account?

A: In Inn-Flow, go to the Operational Budgets page. The Budget Method column shows the method assigned to each GL account.