Management Accounting: Analysis of Two Options for Expansion

This report analyzes two options for expansion in the Grant Hotels and applies management accounting processes to make the right decision. The options include a city center budget hotel and expanding the existing boutique hotel. The report concludes that the second option of expanding the boutique hotel is more favorable for long-term success, despite taking longer to complete the project. Different budgets are recommended to manage the project effectively.

Management Accounting

Contents
INTRODUCTION.......................................................................................................................................3
MAIN BODY..............................................................................................................................................3
CONCLUSION...........................................................................................................................................5
REFERENCES............................................................................................................................................6

INTRODUCTION
Management accounting is a discipline that includes participating in decision-making in
management, developing processes for management and performance executives, and offering
economic monitoring and analysis services to enable governance in formulating and executing
the strategy of a company (Abba, 2018). This report based on the Grant hotels which is operated
hotel chains in historic towns and cities in United Kingdom. The hotel wants to expand their
operations and analyzing two options for the investments. In this report analysis of two options
apply the management process to take right decision.
MAIN BODY
The Grant Hotels have two options to expand their operation of adding extra one room
space. Firstly analysis the first option which is a city center budget hotel. The hotel provides 80
compact rooms and less extra services. It is a new venture which is established to fulfill the
demand of the customers and situated at the center where attract customers in low budget. The
group also provides another building or the rental basis and could be re-fitted. It will take about 6
months for re-fit along with the group provides the features of the self check in gym, high speed
internet facility, café services, digital booking and ensuite shower rooms. The variable cost to
stay in this hotel for overnight 12.50, monthly maintenance & cleaning cost 6500, other annual
overhead 3134000 and monthly group overhead costs 150000. As per the cost analysis it is
estimated that only high profile people can book room in this hotel and cost charges is more as
compare of other hotels. After the market research it is getting that at the time of weekends and
some peak time hotel might be full but other time people not take interest hotel that provide
lesser outcomes whenever hotel charges are competition. Due to increase competition other
hotels are provided accommodations services in lesser amount with lesser charges. The Garnet
hotel wants to generate effective annual profit to get growth & success (Choi and Byun, 2018).
The second option related to expand of the existing boutique hotel that is located at the
busy up market suburb. The hotel has more space to adding more 40 large bedrooms and already
available about 90 bedrooms on site. It is well situated hotel in this sector and designed as per
customer demand for luxury small hotel. It is situated at the center of city and beneficial for the

business travelers, short and long stay guests. To complete this project require about the 18
months which is considering long time. Moreover, it provides services of large ensuite
bedrooms, online reservation and booking by call, 24 hours services by the reception staff and
also provide room services. Along with provide the services of full dining options to their
customers, spa and treatment rooms and gym facilities, meeting rooms, conference facilities and
events venue.
After the analysis both options select second option that helps to Grant hotel to increase
their operational activities of extra space of room and get success. In first option it is new venture
so people do not aware about the hotel so for this require more promotion and do not provide
effective facilities to customers for dining. On the other side in Boutique hotel provide extra
services that attract customers to organize their meeting and provide dining to guests. Before the
investment require to proper planning and controlling. As per the planning if Grant hotel go with
first option so customer face the problem of higher charges and do not conduct meetings in hotel
and do not have restaurant for lunch and dinner. On the other side if Grant hotel go with second
option get more benefits because it is well established famous hotel and people already aware
about it. It is providing good services to customers and meetings rooms for business travelers and
has facility of restaurant services (Gnawali, 2017).
The fixed and variable cost analysis in both options so it is analyzed that in first option
require more fixed and variable cost like advertisement expenses, maintenance expenses and
many others. The fixed expenses are remaining fixed and outstanding delivery services are
increase expenses. With the first option Grant hotel has many expenses and every type of
customer is not booking book here and most of the people not aware for the new venture. Thus
with this option Grant hotel face many problems because company have less opportunity cost
that impact on expand on business operations in negative manner.
In second option hotel located at the middle of the city so mostly people aware about the
hotel so no need of the promotional expenses and use websites to connect with the different types
of the customers. The hotel does not take all the charges from the customers and in the weekend
hotel have more rooms to provide accommodations services to guests. Along with in normal
day’s business travelers and normal people would like to stay in this hotel due to provide extra
services. The Grant hotel have effective variable and fixed services so fr this use different

budgets like flexible budget in which adjust the amount as per the changes of environment so it
helps to estimate profit in future. Along with Hotel also use cash, sales and other budgets for
other departments and according to budget people follow all the activities and get success for
longer period of time (Lay and Jusoh, 2017).
CONCLUSION
As per the above report it has been concluded that management accounting is using by
the every types of business entity to proper manage all the activities. Along with use the systems
and reports which are related to various departments to monitor the activities and take right
decisions. After the analysis of both options select second option of Boutique hotel in order to
get success for longer time period but it is taking long time to finish the project. To manage the
project implements the different budgets to get different results on time.

REFERENCES
Books and Journals
Abba, M., 2018. Explored and Critique of Contingency Theory for Management Accounting
Research. Journal of Accounting and Financial Management. 4(5). pp.40-50.
Choi, H. and Byun, J., 2018. The relationship between corporate social responsibility and
earnings management: accounting for endogeneity. Investment Management & Financial
Innovations. 15(4). p.69.
Gnawali, A., 2017. Management Accounting Systems and Organizational Performance of
Nepalese Commercial Banks. Journal of Nepalese Business Studies. 10(1). pp.8-19.
Lay, T. A. and Jusoh, R., 2017. Organizational Capabilities, Strategic Management Accounting
and firm performance. Jurnal Akuntansi dan Keuangan Indonesia. 14(2). pp.222-246.