Unique in its approach, 'Money Matters for Hospitality Managers' is unlike other heavy theoretical accounting texts, using real life scenarios to show managers how it's done. Backed up by a range of exercises and activities, it thus allows managers to put their learning straight into practice - and so to achieve immediate results! 'Money Matters' will actively help managers and employees in the industry to: · learn more about the control aspects in order to become more effective in their work · learn about the business and companies in the wider context · understand where their section of the organization fits in the 'bigger picture' · increase their knowledge and enhance career opportunitiesCovering an unprecedented range of sectors (including hotels, restaurants, contract catering, leisure tourism, cruise ships and theme parks), the book supplies useful advice for the whole hospitality industry. It is ideal for operational and first line management, for whom it provides a welcome, accessible and hands-on introduction to finance and accounting in their sector.
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Yes, you can access Money Matters for Hospitality Managers by Cathy Burgess in PDF and/or ePUB format, as well as other popular books in Business & Hospitality, Travel & Tourism Industry. We have over one million books available in our catalogue for you to explore.
In this chapter we will introduce the concept of ‘control' and hospitality in general. We'll also look at the function of the financial control office where some of the control processes take place. As you'll see as we work through further chapters, much of control happens in the operating departments – so control is a business-wide function, not just an accounting one.
By the end of this chapter you should be able to:
Understand the basic approach of this book
Define what a business is and the main reason for control
Describe the main features of the different sectors of the industry
Describe the various activities of the financial control office.
What's a business?
Now we need to look at the nature of business and the hospitality industry in particular. We use the word ‘business' here to mean any type of workplace, whether profit-making or not. Three definitions of a business are:
‘An industrial or commercial concern which exists to have dealings in the manufacture or purchase of goods for sale or the sale of a service'
‘A business invests in buildings and equipment and pays people to work in order to make more profit for the owners of the business'
As above but ‘makes money in order to fulfil some type of charitable purpose'.
These have been put together from a variety of sources but do give a broad outline of what a business is about. To decide which of these three is most appropriate to your area we need to look in more detail at the characteristics of the different sectors. But before that, let's look at the industry as a whole.
About hospitality and tourism
We have taken the broadest definition of hospitality – including not just hotels and catering but also tourism and leisure.
The hospitality and tourism industry is estimated to be worth about £6.4 billion pounds to the UK economy (Caterer & Hotelkeeper, 22 March 2001, p. 34). It employs 6.4% of the workforce which is about 1.9 million people. In terms of government we are ‘looked after' by the Department of Culture, Media and Sport (DCMS) although there's input from the Department of Trade and Industry (DTI) as well.
The HCIMA yearbook is a good source of industry statistics and sources, if you are a member. The 2001 edition (pages 21-32) says that there are about 300,000 outlets, about 70% of which are profit-making and 30% non-profit. This means about 9,000 million ‘meals' in a year! The industry is divided principally into hotels (61,000, though a lot more are thought to be unregistered – for instance small bed-and-breakfast establishments), catering in education (34,000), pubs (55,000) and restaurants, of which there are about 29,000 cafés and takeaways.
Some years are very good for the business although when we have a national economic crisis (or world recession, foot-and-mouth disease, very bad summer weather, for instance) this can have a widespread impact. In these circumstances people travel less in and to the UK and so don't spend money, which means businesses can afford fewer staff. This means unemployment or shortened hours which in turn makes staff less willing to spend their own money on meals, travel, entertainment and so on. The whole economy suffers if hospitality is down.
Overall features of the industry
Commercial versus non-commercial
The industry tends to be divided into commercial (hotels, restaurants, fast food, pubs, transport catering, clubs, cruise ships, outside catering, tour operators) and subsidized (hospitals, prisons, education, armed services). Commercial businesses need to persuade people to buy their products – and since this relies on disposable income customer make choices on whether or not they will spend their money on these.
On the other hand, where there is a captive market (prison, factory, airline or school meals, for instance) then you need to keep your customers happy for different reasons, whilst operating within imposed financial constraints.
Hours of operation
For many it's a 24-hour business which means that there are features and problems which don't affect many other types of industry, which may well operate on a five day, 39-hour week and be closed on public holidays.
Other industries (and government as well, perhaps) don't always recognize the particular problems that emerge here and the costs involved. For instance, they may see a motorway service area only in the middle of the day, forgetting it needs to be open all night to provide toilets, meals and petrol, or that nurses, hotel porters and crew on a ship are on duty all night and need to be fed.
Types of industry
There are different types of industry within hospitality too. There's production (like manufacturing – for instance in a kitchen), retail (a bar is like a shop) and service (restaurants, rooms).
Perishability
One principal feature is perishability – if the product isn't sold today then it can't be sold tomorrow. A room in a hotel, a cabin on a cruise ship, a place on a tour or a ride on a big-dipper are all examples. The raw materials may also be perishable (such as fresh food) which means that if they are not sold then they could be wasted. Businesses may be also very seasonal – a pub in a student area, a cruise line, a summer resort – may all have peaks and troughs in trade at different times of year, as well as on different days of the week.
Features of the different sectors
Here are some features listed for a number of different sectors – you may well be able to think of a lot more.
Hotels
Multi-unit and multi-product – rooms, food and beverage, leisure and subsidiary services. Food and beverage may be restaurants, cafés, carveries, banqueting, conferences, room service, lounge, club, vending. Hotels vary in size, in standard, in facilities offered and in length of stay. We also include in this sector simple bed-and breakfast or budget sector accommodation where few facilities are offered, and apart-hotels that are apartment blocks with hotel-style services available.
Here you see the multi-industry approach – production, retail and service all appear in one department or another. A restaurant may have all three. This complexity means that there will be many differently-skilled staff and systems.
‘Front of house' means the operating units (sales to customers) whereas ‘back of house' is all the support services the customer doesn't see, such as kitchens, maintenance and accounting.
Resorts
These are even more complex — like hotels but with extensive leisure facilities and services. Some of the staff, such as sports managers, may not even consider themselves as being part of ‘hospitality'. This can mean issues regarding conflict of interest or lack of awareness of guest needs.
You can often find inclusive packages being sold for resorts – the price you pay includes a room, meals, sports and perhaps beauty therapy as well.
Residential homes and hostels
These are similar to hotels in concept but provide long-stay accommodation and limited facilities, albeit with a ‘home-from-home' approach. Many have ...
