Invoicing a travel agency for its guests’ consumption without disputes

A travel agency sends you twelve guests for three nights with breakfast and dinner included. The hotel restaurant serves them well, the guests leave happy, and twenty days later the agency receives a food invoice its accounts payable department does not understand. It returns the invoice, asks for detail, and the hotel spends a week hunting for tickets. The problem was not born at invoicing time. It was born when an agreement was signed that did not say how it would be backed up.

Why the hotel and the agency fight

The agency sells its client a package: room with breakfast, or with breakfast and dinner, at a closed price. The hotel receives the guest and serves whatever they order. When the two concepts do not match, the dispute appears: the agency expected to pay one dinner per guest per night and the hotel invoices three dinners for two, a room service order and a bottle of wine the guest believed was included.

On the guest’s side there is confusion too. They were told the package included meals and nobody explained up to how much or of what kind. They order freely, sign to the room, and find out on check-out that there is a personal balance. If the front desk does not have the detail at that moment, it forgives the balance, and the hotel tries to collect it from the agency, which rejects it because it never sold it.

All three parties are right from where they stand, and that is why the conflict repeats every month. The only way out is for the agreement to state, precisely, which consumption belongs to whom, and for the hotel system to apply it at the moment the guest orders, not at month end.

What the agreement with the agency must say

An agency agreement is a company account (Master accounts and agreements) with one particularity: the payer is not the guest’s employer but an intermediary that resold the stay. That is why the agreement must describe the meal plan with the same detail the agency used to sell it to its client. At minimum, these five things.

• The plan: breakfast only, breakfast and dinner, or all three meals, and in which hotel revenue center each one is served.
• The cap per guest per day for each meal, before or after tax, and what happens with the excess.
• What is expressly excluded: alcoholic drinks, room service, minibar, pool bar, or whatever the agency did not sell.
• The validity and rates of the plan, with start and end dates, so a season change is not applied to old bookings.
• The form of backup: the per-guest, per-day report that will accompany every invoice, and the time the agency has to review it.

That last point is the one almost nobody writes down, and it is the one that prevents the dispute. If the agency knows from the start what document it will receive and how many days it has to object, the invoice stops being a surprise.

The per-guest cap, in practice

The cap is the mechanism that protects both sides. The agency knows it will never pay more than a certain amount per guest per day. The hotel knows it can serve whatever the guest orders, because anything above the cap goes to the guest’s personal folio and is collected at the front desk. And the guest, if the front desk explained it on arrival, knows how far the package goes.

For the cap to work it has to be applied at the moment the check is closed against the folio. The server rings up the full dinner, the guest says "To my room, please." and signs once. The system reads the folio, finds the agency agreement, applies the cap for that dinner and splits: up to the cap goes to the agency account, the rest goes to the personal account. How that folio is verified in real time is described on the room charge page (Room charge).

A cap applied afterwards, by reviewing tickets at month end, protects nobody: the guest is gone, the agency does not recognize the excess, and the hotel absorbs it.

When the guest exceeds the cap or orders what is excluded

Let us follow a case with invented figures to show the calculation. The agreement covers dinner up to 280 per guest per day and excludes alcohol. A couple has dinner at the hotel restaurant: two main courses at 240 each, a dessert for 70 to share and a bottle of wine for 350. The check adds up to 900.

Had they ordered two desserts at 70 instead of one, each guest would have reached 310, ten above the cap. The agency pays 280 for each, 560, and the remaining 20 go to the personal folio together with the wine. Nobody at the table did that math; the agreement rule did it on closing.

At the front desk, on check-out, the couple sees a personal balance of 350 with their signed ticket and the reason: drink excluded from the agency plan. If they ask, the answer is not an opinion; it is what their agency contracted. The front desk page (Front desk) explains how that folio looks from the counter.

The report that backs up the invoice

The invoice to the agency must arrive with a report that anyone in accounts payable can read without calling the hotel. One line per guest per day, with these columns: guest name, booking reference or agency voucher, date, meal, revenue center, amount covered by the plan and, in a separate column that is not added to the invoice, the excess collected directly from the guest.

With invented figures: twelve guests, three nights, breakfast and dinner plan. Breakfast is valued at 150 per guest per day and dinner is covered up to 280. If everyone had breakfast and dinner every day, the report adds up to 12 × 3 × 150 = 5,400 in breakfasts and 12 × 3 × 280 = 10,080 in dinners, provided every dinner reached the cap. If a total of 1,350 in excess and alcohol was collected from the guests at the front desk, that figure appears in the informational column, and the invoice to the agency reads 15,480, not a cent more.

That report is not assembled at month end: it comes out of the same record the server made when closing each check against the folio. The reports page (Reports) shows how agreement consumption is separated from direct consumption, which is the same thing the hospitality accounting standard asks for to tell sales apart by segment.

Voucher against folio

The agency works with vouchers: a document that states what it sold to each client. The hotel works with folios: a record of what happened during the stay. The invoice is beyond dispute when every line of the report can be matched against a voucher. That is why the agency booking reference must travel with the folio from check-in, and why every restaurant charge must be tied to that folio, not to a room number typed by hand.

When the voucher says breakfast and dinner and the folio shows breakfast and dinner within the cap, there is nothing to argue. When the voucher says breakfast only and the folio shows a dinner, the dinner goes to the guest, and the report shows it in the informational column. The agency sees that the hotel did not try to charge it for something it never sold, and that trust is worth more than any dinner.

How to close the month with the agency

1. On the first business day of the month, the system generates the per-guest, per-day report for every agency stay that checked out the previous month.
2. The hotel sends the report before the invoice, with a review period agreed in the agreement, for example five business days.
3. The agency objects to specific lines, if any, and the hotel replies with the ticket signed by the guest and the agreement rule it applied.
4. With the lines agreed, the invoice is issued for the report amount, with no last-minute changes.
5. Excess and excluded consumption were already collected from each guest on check-out, so nothing is pending on that side.
6. Any adjustment to the plan or the cap is applied to the agreement with a start date, so the following month does not mix two rules.

Mistakes that trigger the dispute

• Invoicing the agency for the full total of its guests’ tickets without applying the cap, and expecting the agency to sort it out.
• Not recording the agency booking reference on the folio, so the report cannot be matched against the vouchers.
• Forgiving excess at the front desk because the guest said everything was included, and then trying to collect it from the agency.
• Changing the cap mid-month without a start date, and invoicing the month with two rules mixed together.
• Sending the invoice without the report, or the report without an excluded column, and answering the agency’s questions by digging through boxes of tickets.

What to do this week

1. Take the last invoice to an agency and check whether it carried a per-guest, per-day report, and how many lines were objected to.
2. Write the meal plan, the cap and the exclusions of every active agency on a single sheet.
3. Verify that the agency booking reference is recorded on the folio from the guest’s check-in.
4. Configure one agency agreement in the system and run a test dinner with a fictitious folio that exceeds the cap.
5. Agree with the agency on the report review period before the next invoice.

Inn Restaurant applies the agency plan and cap when each check is closed against the guest folio, and generates the per-guest, per-day report that accompanies the invoice. If you want to see what the report would look like for one of the agencies working with your hotel, the 15-minute demo is booked on the contact page (contact).