Treasury policy framework for hotels

Use this as a skeleton for drafting your policy. Insert your company's name, and check it against the law, your loan agreements and your HMA/franchise agreements before putting it into use.

1. Purpose

• Maintain liquidity throughout the year, including low season and abnormal events.
• Protect room deposits, MICE/wedding deposits and staff service charge.
• Manage counterparty risk, interest rates, exchange rates and OTA concentration risk.
• Build internal controls for high transaction volumes and multiple cash collection points.
• Manage the FF&E reserve in line with the contract or the owner's standards.
• Comply with Covenants, HMA/franchise agreements, the Hotel Act 2004, the local fee charged to hotel guests (if any) and BOI conditions, if applicable.
• Support decision-making with KPIs and cash flow that are accurate, complete and timely.

2. Scope

Applies to the company, SPV subsidiaries that hold or operate hotels, and joint ventures controlled by the company. It covers directors, executives, staff and advisers involved in receiving or paying money, including front office, cashiers, night auditors and income auditors.

• Cash and cash equivalents at corporate and property level.
• Hotel accounts, operator accounts, the FF&E reserve and service charge.
• Project loans, revolving facilities and drawdown conditions.
• Receipts from the front desk, F&B, spa, OTAs, GDS, travel agents, corporate clients, MICE and gift vouchers.
• Guest deposits, MICE deposits and revenue recognition under TFRS 15.
• Service charge, foreign exchange risk and investment of surplus cash.

3. Key definitions

4. Roles and responsibilities

5. Cash and liquidity

5.1 Minimum cash

• Corporate: not less than 3 months of corporate overhead
• Property: equivalent to 2 months of average OpEx over the past 12 months
• Undrawn facility: at least 1.5 months of total OpEx
• When below the threshold, report to the CFO within 1 business day and propose a plan within 5 business days.

5.2 Cash flow forecasting

• Corporate 13-week rolling forecast, weekly; property 12-month rolling forecast, monthly
• Include booking pace, on-the-books, pickup, channel and all expenditure.
• Prepare Base, Best and Worst Cases; the Worst Case must assume, at a minimum, occupancy down 20 points and ADR down 10%.
• Test a pandemic-like scenario, with occupancy below 20% for 6 months, at least once a year.
• If the Worst Case turns negative within 6 months, report immediately and propose a plan within 7 business days.

5.3 Account structure

5.4 Transfers and sweep

• No sweeping of service charge or the FF&E reserve.
• Guest deposits may be transferred once the service has been provided and supporting evidence exists.
• Surplus in the Hotel Operating account goes to a money market fund, the DSRA or a cash pool, as approved.
• Cash pool and intercompany arrangements require an agreement, arm's length interest and approval per the schedule.
• Every transfer must be documented and recorded on the same day.

5.5 Petty cash and cash float

• Example petty cash limit: corporate and back office not more than THB 50,000 per location.
• Cash float not more than THB 30,000 per location, with each withdrawal not more than THB 5,000.
• Transactions must not be split to avoid thresholds.
• Surprise counts at least once a month per location, and quarterly by Internal Audit.

5.6 FX and interest

• No derivatives for speculation.
• Manage foreign-currency bookings, royalty/marketing fees, FF&E orders and foreign-currency loans.
• Hedge at least 70% of payment obligations within 12 months when the net exposure exceeds THB 5 million equivalent.
• No leverage or exotic options.
• Report FX exposure monthly.
• For debt longer than 3 years, keep at least 50% at fixed interest rates; any swap must have an underlying debt.

5.7 Short-term investments

• Permitted: deposits maturing within 12 months; government and Bank of Thailand (BOT) bonds with remaining maturity of up to 12 months; AAA(mf) or equivalent money market funds; and notes of approved banks maturing within 6 months.
• Prohibited: ordinary shares, private bonds rated below A-, speculative derivatives, digital assets and unhedged foreign instruments.
• Not more than 25% with a single issuer, except government bonds.
• FF&E, service charge and guest deposits must not be invested in instruments with maturities over 3 months.

6. Banks, loans and FF&E

6.1 Approved Bank List

• Must be a Thai commercial bank or a foreign bank branch licensed by the Bank of Thailand (BOT).
• Minimum credit rating of A- or equivalent.
• Must be a member of the deposit protection institution for the relevant deposit types.
• Supports card acquiring and PCI DSS.
• Has experience in hotel lending.
• Use at least 2 banks, and do not place more than 50% of deposits with any one bank.

6.2 Borrowing policy

Permitted types of debt are hotel mortgage/term loans, working capital facilities, trade finance and bank guarantees. Borrowing from informal sources is prohibited. Loans from directors or shareholders require approval, an agreement and arm's length interest.

6.3 Covenant Monitoring

• Report Covenants quarterly.
• If headroom falls to 10% or less, notify the CFO within 1 business day.
• On a breach, the CFO must notify the bank as required by the contract and propose a plan to the board within 7 business days.

6.4 LG and LC

Issue under the approval authority; give guarantees only for group companies, with an agreement and arm's length fees; and maintain a Guarantee Register, updated quarterly.

6.5 Refinance

Compare the prepayment fee, interest saved and liquidity. Refinancing above the existing facility must be approved by the board, and the cost of debt reviewed every 6 months.

6.6 Card Acquiring

• Select the acquirer from the Approved Bank List.
• POS/PMS systems must comply with PCI DSS.
• Reconcile settlements daily.
• Chargebacks over THB 50,000: report to the CFO within 3 business days.

6.7 FF&E Reserve

Rates per the HMA or the owner's standards. Example for self-managed hotels: years 1–2 at 1–2%, year 3 onwards at 3–4%, and resort/luxury at 4–5% of total revenue. Transfer monthly within 15 days after month-end. The reserve must not be used for salaries, interest, principal, owner's distribution or operator fees, and must be topped up in full within 30 days if it falls below the threshold.

7. Daily revenue and payment collection

7.1 Cashiering

• Record in the PMS/POS immediately and issue a receipt every time
• Log in with a personal user ID only
• Voids/adjustments must be approved by someone other than the cashier
• Discounts above 30% are approved by the DOF/GM, and complimentary rooms by the GM, with a log

7.2 Shift closing and handover

• Count the cash, compare it with the system, close the shift and make the drop before the end of the shift
• Open the drop box in front of a witness
• Differences above THB 500 per shift must be investigated; three repeat occurrences go to the disciplinary process
• Deposit at the bank every business day

7.3 Night audit and 7.4 income audit

• Close the figures and send the Daily Revenue Report before 9:00
• The night auditor and income auditor must be different people
• The income auditor reviews the source documents for rate overrides, comps/house use, voids, adjustments, discounts and refunds

7.5 Channel Mix

No single OTA should exceed 35% of total room revenue. If it does so for 3 consecutive months, a channel diversification plan must be proposed. Commission must be reviewed monthly, with any disputes raised within 60 days

7.6 City Ledger

• Open credit through a credit application and check creditworthiness
• Credit terms are generally no more than 30 days; new customers are limited to THB 100,000 in the first 6 months
• Review AR aging every week
• Suspend credit when balances are overdue by more than 60 days; consider making a provision under accounting standards when overdue by more than 90 days

8. Service charge, deposits and money held on behalf of others

8.1 Service Charge

• Set the rate and the distribution in line with the policy and agreements with employees
• Keep in a separate account; do not use for other purposes
• Disclose a report every month and keep the documents for at least 5 years
• Internal audit reviews at least twice a year

8.2 Guest Advance Deposit

• Record as a liability until the service is provided
• Reconcile the PMS with the GL at the end of every month
• Refund in accordance with the booking terms; approve under the same authority table as in section 10

8.3 MICE and wedding deposits

Example terms: 30% confirmation deposit, rising to a total of 70–80% 30 days before the event, with the balance paid within 7–14 days after the event. Record as a customer deposit until the event date

8.4 Money held on behalf of others

• Tips belong to employees, in line with the guest's intention and the agreement
• Pass-through charges are not recognised as company revenue
• Vouchers and gift cards sold in advance are recorded as deferred revenue, with a reviewable breakage policy

9. HMA, franchise and owner distribution

9.2 Fees

These generally comprise the base fee, incentive fee, marketing & brand fee, reservation/loyalty fee and centralised service fee. The CFO must review the formulas every month and dispute any discrepancies within the contractual deadline. For fees paid abroad, consider WHT and double taxation agreements based on the facts

9.3 Owner's Distribution

The sample waterfall should follow the order in the actual contract

1. Operating Expenses
2. Base Management Fee
3. Marketing, reservation and centralised service fees
4. Property tax, local fees, insurance and working capital
5. FF&E Reserve
6. Debt service, if provided for in the contract
7. Incentive Management Fee
8. Owner's Distribution

Must be reviewed every month, and the operator challenged if it fails to remit funds or withdraws more than it is entitled to

9.4 Operator Account

• The owner retains its audit rights and the control mechanisms under the contract
• Items above the limit require a co-signature from an owner's representative
• Bank statements, reconciliations and USALI reports submitted by the deadline
• Audit the operator's accounts at least once a year

9.5 Budget and 9.6 Changing operator

The operator submits the annual plan and CAPEX plan by the deadline, and the owner has the right to object under the contract. Terminating the HMA requires board approval, and liquidity for 6 months before and after the transition must be prepared

10. Internal control and approval authority

10.1 Segregation of Duties

Separate the preparer, the approver and the person who records the accounts. The cashier must not be the person who records the accounts or performs the reconciliation. The night auditor and income auditor must be different people, and the person who reconciles must have no authority to make payments

10.2 Sample payment approval authority table

For medium to large hotels; adjust according to size and board resolution

10.3 Specific authorities

10.4 Dual Signatory

• Transactions of THB 300,000 or more require 2 co-signatories
• e-Banking uses maker-checker
• Do not hold another person's password or token

10.5 Reporting Cadence

10.6–10.8 IT, fraud and BCP

• User access according to role, reviewed every 6 months and revoked within 1 business day when the person leaves the role
• 2FA on every e-Banking account and daily data backups
• Changing a supplier's account number requires a call-back to the registered number and CFO approval
• New accounts of THB 200,000 or more require a call-back confirmation before the transfer
• Train on skimming, phishing and card-not-present fraud at least once a year
• Report suspected fraud to the CFO and internal audit within 24 hours
• If e-Banking is unavailable for more than 4 hours, use the backup account; have manual backup procedures and backup signatories, and test the BCP once a year

11. Compliance and penalties

The policy must be strictly followed. Report suspicions through the whistleblowing channel. Penalties range from a warning to dismissal and legal action, good-faith reporters are protected, and where anti-money laundering law applies, report following the procedures required by law

12. Policy review

Review at least once a year and whenever there is a brand change, a new hotel opening, a system change or a change in law. Amendments must be approved by the board and communicated within 14 days, and the version history kept for at least 10 years

Appendix A: 13-week hotel cash flow

Appendix B: Hotel bank reconciliation checklist

• Pull the statement for every account at month-end
• Check the balances against the daily income journal
• Identify pending credit card settlements and compare with the acquirer statement
• Identify outstanding OTA settlements by platform
• Identify outstanding cheques
• Identify banquet/MICE deposits not yet recorded as deferred revenue
• Identify MDR, interest and bank charges
• Check forex conversion differences
• Adjust the accounts to agree with the statement
• Prepare the report with supporting documents
• Preparer and reviewer sign off
• Keep the documents for at least 5 years

Appendix C: Detailed approval authority table (example)

Appendix D: KPIs and early warnings

Report in the monthly dashboard, and report urgently to the CFO within 1 business day when entering the Amber or Red zone