Managing Financial Transactions in Hospitality Sectors: The Goring Case Study

This project report covers the management of financial transactions, HR life cycle, and the impact of legal considerations on business entities in the hospitality industry, using The Goring hotel in London as a case study.

Hospitality business
toolkit

INTRODUCTION
In the aspect of business entities, it is important to manage all activities and functions in
an effective manner (Benckendorff, 2015). Specially, the hospitality organisations operates in
providing a vital range of services to their customers. Thus, this essential for companies to
manage their operations and activities by help of different approaches. In the project report a
company is selected that is “The Goring” and located in London, United Kingdom. The company
operates in hotel industry which provides different services to customers. The project report
covers about way of managing of financial transactions in hospitality sectors as well as about HR
life cycle and impact of legal considerations on business entities is also mentioned in report.
TASK 1
(I) Preparation of Journal entries as per the given data :

(ii)Ledger account for above journal entries :

(IV) Calculation of ratios :
(a) Operating profit margin – Operating profit / net sales * 100
For year 2014 = 914 / 9482 * 100
= 9.64 %
For year 2015 = 1042 / 11365 * 100
= 9.17 %
(b) Return on capital employed – Operating profit / Capital employed * 100
For year 2014 = 914 / 11033 * 100
= 8.28 %
For year 2015 = 1042 / 13943 * 100
= 7.47 %

Working Note :
Calculation of capital employed = Total assets – Current liabilities
For year 2014 = 12541 – 1508
= 11033
For year 2015 = 19117 - 5174
= 13943
(c) Current ratio = Current assets / current liabilities
For year 2014 = 4926 / 1508
= 3.27 times
For year 2015 = 7700 / 5174
= 1.49 times
(d) Day's trade receivables = Account receivables / Credit sales * 365 days
For year 2014 = 2540 / 9482 * 365 days
= 97.77 or 98 days
For year 2015 = 4280 / 11365 * 365 days
= 137.45 or 137 days
(e) Sales revenue to capital employed ratio = Sales revenue / capital employed * 100
For year 2014 = 9482 / 11033 * 100
= 85.94 %
For year 2015 = 11365 / 13943 * 100
= 81.51 %
(v) Comment on the financial performance of Derby Enterprises Ltd :
On the basis of given financial statements of above company, this can be stated that their
revenue was of 9482 in year 2014 which raised in next year and became of 11365 in year 2015.
In addition their net profit is also higher in year 2015 as compare to year 2014. Apart from it, the

company has higher amount of total assets 19117 in year 2015 which is higher from previous
year 2014. Basically, the reason of this improved performance in year 2015 is increased sales
revenues. By assessing the given balance sheet of two year 2014-15, this can be find out that
their current assets are of £4926 in year 2014 that increased by 56.31% and became of £7700 in
year 2015. It is indicating that they are able to make payment of their short term debts in an
effective manner as they have enough amount of current assets. Though, herein it is important to
know that value of their current liabilities is also increasing in a significant manner such as in
year 2014 it was of £1220 which raised in next year and became of £3675. So overall, on the
basis of given financial statements this can be assessed that their monetary performance is better
in year 2014 as compare to year 2015.
As accordance of calculated ratios, this can be analysed that liquidity position of above
company is stronger in year 2014 as compare to year 2015. This is so because in year 2014, their
current ratio is of 3.27 times and in year 2015 it is of 1.49 times. As well as in year 2014, their
current ratio is meeting the criteria of ideal ratio that is of 2 : 1. Thus, it can be interpreted that
above company is able to make payment of their short term debts in year 2014 and in year 2015,
they are needed to enhance their current assets so that their ratio can be increased. Along with,
their efficiency to earn return on capital is higher in year 2014 that is of 8.28 % and in year 2015,
it is of 7.47 %. It indicates that investing in year 2014, was beneficial for investors because their
return on capital employed ratio was higher. On the other hand, in year 2015 their ratio has been
reduced because of lower return on invested capital in this year. As well as days' trade
receivables ratio is of 98 days in year 2014 and 137 days in year 2015, which means company is
taking more time in order to get back debt amount from debtors. Along with sales revenue to
capital employed ratio is of 85.94 % in year 2014 and 81.51 % in year 2015. The reason of this
variation in both of years is increasing in capital employed by huge criteria while operating profit
ratio is not increasing by large difference. So overall companies current financial position is
weaker in year 2015 as compare to year 2014. This is so because their most of the ratios are
higher in year 2014 and in year 2015, their performance is not increasing.

TASK 2
P4.
Human resource life cycle is defined as the stages of staff time in specific firm as well as
shifting roles the HR function play in every stages. All stages are discussed below:
 Recruitment: This is beginning stage and in this effective candidates is recruited for job
position. “The Goring” HR manager can identify their staff needs within organisation and
as per that talented staff may be hire for food and beverage section. So, ahead hiring
anyone for post of manager of F&B their skills,and abilities are checked associated to job
role. Talented staff will safeguard the company from the possibilities of increasing staff
retention. Recruitment of effective F&B administrator perform by understanding its skills
associated with administration of food and beverage sections.
 Education: In this, message associated with function as well as accountabilities of firm
are facilitated to new staff (King and Lee, 2016). “The Goring” HR manage can provide
training to them so that they get familiar with hotel culture and F&B manager role.
Effective information is facilitated to F&B department to new candidates for
acknowledging them about their responsibilities at workplace.
 Motivation: In this, new staff of “The Goring” can motivate effectually so that they can
contribute in attaining goals of hotel. Respective hotel manager acknowledge their staff
as well as manager of food and beverage division to perform efficaciously. As it may
inspire staff for doing the work effectually as well as appraise them for its work within
Food and beverage section.
 Evaluation: Within it, staff action can analysed through senior authority of organisation
(Smith and Puczkó, 2014). After evaluation, measure for improvement may be facilitated
by head of food and beverage administrator into “The Goring”. In case the manager of
human resource can competent for measuring action expectedly thereafter good relation
among food and beverage administrator as well as their staff formed of that section
attained effectively.
 Celebration: In this, staff are appreciated with its performance and work as well as
additional advantage like gift cards, payment and others will be granted through manger
of “The Goring” for raising food and beverage administrator as well as their staff morale

( King, 2017). As it aids them to improve sense of belongingness to organisation as well
as section.
The importance of human resource life cycle to solve difficulty related to staff retention
and improving talent acquisition (Yavuz, 2014). Therefore, the effective usages of HR cycle will
aids in developing staff performance as well as morale and their personal goals will be attained
effectively. Thus, this will maximise sense of belongingness in respect of hotel as well as
occurrence of employee retention may be minimised as well as enhancing its talents through
facilitating training to its staff.
P5.
Performance management plan is defined as the negotiable techniques which is applied
to improve staff performance. This is called the plan of action. “The Goring” is facing the issues
that their waiters are not satisfied with work condition as an outcomes they do not want to
cooperate with manager. Respective hotel PMP are discussed below:
 Plan: It is the collection of several regulation, regulation which allows them for attaining
organisational objectives efficaciously (Kysilka and Csaba, 2013). In context of “The
Goring”, they have to make some standards and norms for delivering effective quality
services and foods in effective measure. By this, staff may obtain knowledge about task
as well as allows them to attain goals.
 Implement: Utilising plan that is decided through organisation is implemented. In respect
of “The Goring”, they must aim to place them into whole business function and assign
them to each staff so that work can be done accordingly. It aids its workers to work with
full potential towards assigned task.
 Evaluate: Subsequently implementing the plan, performance assessment of performed as
it allows them to develop efficacious decisions. In respect of “The Goring”, they have to
observe the staff work and improve its performance for obtaining competitive
advantages. Thus, it allows their employees to identify its ability and considered
appropriate action for developing its disadvantage.
 Feedback: Once assessment is performed thereafter in this stage organisation provides
services to guest for facilitating feedbacks regarding organisational performance
(Lordkipanidze, 2018). Within “The Goring”, chef undertake the guest feedbacks and

consequently take effective actions for achieving pre determine goals. Therefore, it
improve optimistic behaviour among staff towards hotel which develop their brand image
and reduce staff turnover.
TASK 3
P6.
Legislation is defined as the formulation of regulations through governing body by its
low making procedures. Some legislation that “ The Goring” can abide by as well as correspond
to are discussed below:
 Employment act, 2002: It is the legislation which involves new laws on time off as well
as remuneration adoption, paternity as well as modification to the tribunal system in UK.
Moreover, it enable “ The Goring”to treat their staff fairly to reduce conflicts (Lynch and
Mac Whannell, 2013). This is adopted through respective Hotel as this assists their
manager to develop positive relation with employees for obtaining more profit.
 Food and safety Act, 1990: The primary purpose of respective law is to ensure that food
have to be facilitated at effective quality to keep guest hygiene as well as increase
productivity an profit of “ The Goring”. Moreover, it allows them in promoting their
services ethically which improve guest satisfaction and its morale. However, respective
hotel adopt this legislation as this aids them to provide qualitative services at effective
cost in order to accomplish goals effectively.
P7.
Many laws govern governance fro effective business functioning. These play crucial
function to attain the success (Nayyar, 2018). Company law are considered as the governance
assemblage that explain corporation bodies. Employment laws is defined as the legislation into
areas that explain the relation among employer and staff. All this impact the decision making of
company. Few specific illustration are discussed below:
 Warburtons was charged penalty of £2m to violate the provision as well as manage
machinery within regulation act 1998 (Penalty for Warburtons, 2019). performing the
work progress, the employer employed a minor candidates near machinery area (Penalty
for Warburtons, 2019).

So, in context of hospitality industry several laws are governed that are essential for
whole hotel to comply. “The Goring” develops staff enthusiasm through executing many
legislation for enhancing brand image and staff satisfaction. Through considering appropriate
decisions for intent for obtaining competing advantages.
TASK 4
P8.
In hospitality sectors, there are several functions so some interrelation among various
functions are discussed below:
House keeping and front office section:
the front office as well as house keeping section were crucial aspects of hospitality
industry. As house keeping department is concentrated towards guest room cleaning and also the
public areas (Nwakanma, and Nwokonkwo, 2014). On another side, front office department
convey housekeeping to keep the rooms clean and ready for other clients. Within “ The Goring”
front office section communicate messages to house keeping department regarding customers
leaving and coming, this permit hotel for keeping the rooms neat and fresh for upcoming
visitors because it enhance their reputation.
Food production and F&B service department:
Both the functions plays significant role into hospitality sector. As food and beverage
function is concentrated towards facilitating prepared dish to guest where as food production
department prepare dish as per clients demand. In “ The Goring” both functions are interrelated
as food production section make food and F&B division serve that to guest appropriately.
P9.
Several communication methods that is used in “ The Goring” are discussed below:
 Conference: this type of communication method which is generally utilised during
meeting with higher authority as well as boards members. With the help of it, strategies
associated to functioning of food and beverage department can be developed as well as
efficacious decision may be developed. This can also be done with the assistances of
video conferencing.
 Email: This is considered as formal method for communicating significant information
into organisation (O'Fallon, 2016). Effective information is communicated through mails

within company. The manager of F&B can deliver crucial information with the aids of
this particular communication method.
Significance of methods to strengthen value chain
With the aids of this method “ The Goring” will able to formulate policies for further
course of action. Because of this, crucial information can be communicated in systematic way.
Problems and errors within communication procedures can be reduced as well as targets can be
attained in desired way (Pizam, Shapova and Ellis, 2016). Thus, “ The Goring”management will
motivate its staff for enhancing productivity. The goals of firm will be accomplished in simple
manner as value chain will be managed and co-ordinated effectively. In value chain, higher
authority can guide its subordinates by developing efficacious plans for section and firm as well.
CONCLUSION
As per the above mentioned project, this has been summarised that within hospitality
sector, there are several aspects which impact business operation positively and negatively. All
have few principles and rules which allows them to view their financial performance. Moreover,
PMP aids organisation for developing efficacious plan of action and develop efficacious work
atmospheres. Also, several manner of communication as well as observing have been utilised for
satisfying staff of various departments.

REFERENCES
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Online:
Penalty for Warburtons. 2019. [Online]. Available
Through:<https://www.ioshmagazine.com/article/ps19m-fine-marks-second-major-2017-
penalty-warburtons>