Billing discrepancy · Service charge
Check hotel event service charges against your contract.
A service charge looks like one line, but it depends on three things: the percentage, the base it's applied to, and which department's rules apply. Any of the three can drift between the contract and the final bill.
The short answer
A hotel event service charge is usually a fixed percentage applied to a defined base, most often food and beverage. To verify it, confirm the percentage in the agreement, check whether a later BEO or addendum changed it, identify which charges the agreement says it applies to, and recalculate it on each banquet check.
Differences usually come from the wrong percentage, the charge being applied to room rental, AV or labor the agreement excludes, or a different department's rate being used.
What to check
Work through one banquet check by hand before looking at totals. One recalculated check tells you whether the method is right.
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Contracted percentage
Find the exact figure in the agreement's F&B or billing section. Note whether it says "subject to change" and whether it was locked at signing.
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BEO wording
BEO footers often restate the percentage. If a revised BEO shows a different figure, check whether you signed it and whether it amends the contract.
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The base
List what the agreement says the charge applies to: food, beverage, rental, AV, labor. Anything outside that list shouldn't carry it.
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Department differences
Some hotels apply one percentage to banquets and another to AV or outlets. Check each department's line against its own term.
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Taxable or not
Some jurisdictions tax service charges. Check whether tax on the service charge matches the contract's statement of taxable status.
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Excluded items
Look for service charge on bartender fees, attendant fees, room rental or third-party items the agreement names as exempt.
How FolioMatch checks it
FolioMatch reads the service-charge term from the agreement, then looks for anything later that changes it: a signed addendum, or a percentage restated on a BEO. Where two documents disagree and it isn't clear which governs, the finding is marked needs review rather than choosing one.
It then recalculates the charge on each billed function using the agreed percentage and base, and compares it with the line on the invoice. The calculation, the inputs and the source pages are stored with the finding.
- 01
Hotel or event agreement
The signed contract and its schedules set the base terms: rates, percentages, minimums, formulas and concessions.
- 02
Amendments and signed changes
A signed addendum or change order replaces the contract term it amends, and only that term.
- 03
BEOs and revised BEOs
Banquet event orders set the operational detail: counts, times, staffing and menus. The latest approved revision is used, and earlier revisions are kept for comparison.
- 04
Supporting documents
Rooming lists, pickup reports, AV orders, staffing sheets and invoice exports, where you supply them.
- 05
Final invoice or master bill
Each billed line is compared with the terms above. Where the documents don't explain a charge, it becomes a finding with the pages behind it.
Findings are labelled as a possible discrepancy, needs review, matches the agreement or insufficient evidence. FolioMatch doesn't make legal determinations; it shows what the supplied documents do and don't support.
Sample finding: service charge applied to room rental
Illustrative example — sample data
Agreement
- 22% service charge
- Applies to food and beverage
- Meeting-room rental not subject to service charge
Final BEO
- Awards dinner, rev. 2
- F&B total $18,400
- Ballroom rental $2,500
Final bill
- F&B $18,400
- Room rental $2,500
- Service charge $4,598
FolioMatch finding
Possible $550 discrepancy
The supplied agreement limits the 22% service charge to food and beverage. On the billed F&B of $18,400 that is $4,048.
The invoiced $4,598 equals 22% of $20,900, which suggests the charge was also applied to the $2,500 ballroom rental. Review recommended.
- 22% × $18,400 F&B
- $4,048.00
- Service charge billed
- $4,598.00
- Difference (22% × $2,500 rental)
- $550.00
Evidence
- Agreement · Food & Beverage · page 9
- Final BEO rev. 2 · Awards Dinner · page 2
- Final Invoice · Banquet check 3317 · page 5
Service charge is not a gratuity
In most US hotels the service charge is a house charge. It may or may not be distributed to staff, and it is often taxable. That matters when checking the bill: a gratuity line added on top of a service charge is a separate question, and the agreement is the place to see whether both were agreed.
If the invoice also carries an administrative fee, read administrative fees. They are often confused with service charges and occasionally both apply to the same base.
Why the order of operations changes the total
Service charge on F&B, then tax on F&B and on the service charge, gives a different total than tax first. The difference on a single dinner is small; across a three-day conference it adds up. The contract or the hotel's billing policy usually states the order. If it doesn't, ask the hotel for their method in writing before arguing the amount.
Questions
The BEO shows 24% but my contract says 22%. Which applies?
Usually the contract, unless the BEO was signed as an amendment or the contract says BEO terms prevail. FolioMatch flags the conflict as needs review and shows both pages so you can decide.
Should service charge apply to bartender fees?
It depends on the agreement. Many contracts apply it to F&B only, which would exclude labor fees. Check the wording and see bartender overtime charges.
Can a hotel raise the service charge after signing?
Some contracts allow it with notice. If yours locks the percentage, a higher figure on the bill is worth raising.
Is a service charge difference always an error?
No. The hotel may be following a term in a document you didn't supply. That's why findings are framed as possible discrepancies for review.
Related
Administrative fees
Fees that appear on the bill without a clear basis in the agreement.
Food and beverage minimum
Qualifying spend, the shortfall calculation and rental waivers tied to the minimum.
Bartender overtime charges
Bartender count, included hours, overtime rates and BEO timing.
Back to all hotel billing discrepancies or the hotel master bill audit guide.
You negotiated the deal. Make sure you got it.
Upload the agreement, BEOs and final bill. FolioMatch checks what you negotiated against what you were charged and shows the evidence behind every finding.