Principles of Financial Performance in Hospitality Business

This report analyzes the principles of financial performance in the hospitality industry, including the preparation of financial statements, trial balance, and the application of the double entry bookkeeping system. It also discusses the stages of the HR life cycle and the impact of employment and contract law on business decision making. The case study focuses on Corinthia Hotels London.

Hospitality Business
Toolkit

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Analysing the principles of financial performance................................................................3
P2. Applying double entry bookkeeping system of debits and credit .........................................4
P3. Producing basic trial balance ................................................................................................9
TASK 2..........................................................................................................................................10
P4. Determining stages of HR life cycle ...................................................................................10
P5. Developing performance management plan........................................................................12
TASK 3..........................................................................................................................................13
P6. Identification of legislation applied in Hospitality organisation.........................................13
P7. Defining example that employment and contract law impact business decision making . .14
TASK 4..........................................................................................................................................15
P8. Exploring functional roles in hospitality sector ..................................................................15
P9. Analysing communication method used in organisation.....................................................16
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Hospitality management includes managing and overseeing the administrative task of
hotels and ensure that costumer feel warm and welcoming through their services and facilitates
(Arcuri and et.al., 2020). This sector helps the people to provide employment in various sectors
and leads to certain costumer benefits in many ways and satisfying their needs and requirement
is top most essential demand. In this report the company chosen is Corinthia Hotels London at
the corner of Northumberland Avenue and Whitehall place in central London.
The topic covered in this report is the way that Corinthia hotel manages finance and
record transaction to minimise cost in hospitality sector and identification of Human resources
life cycle in the context of HR strategy. Apart from that discussing the potential impact of legal
and ethical consideration on Hospitality business is being analysed.
TASK 1
P1. Analysing the principles of financial performance
In every organisation there are certain ways to monitor the financial performance and
their efficiency. This is important to undertake such principles to ensure better growth in future
and that leads financial monitoring of business. In the Hotel Corinthia this principles are very
essential to maintaining the success of organisation' accountants in every areas. Following are the
principles are as follows-
 Preparation of financial statement- The basic need of every company is to produce
balance sheet and profit and loss statement for the business and regulate all important
books to keep the record of all transaction (Ariza-Montes and et.al., 2017) In the
company Corithia Hotel this is necessary to prepare these financial statements to know
the financial status of company and gives an overview to the management.
 Preparation of aged Debtors trial balance- It is important to prepare trial balance so
that organisation can keep the record of all customer who owed money. For the Hotel
Corinthia this facilitate in monitoring all transaction to follow up diligently and assure
that they got the money back from debtors.
 Inventory records- This concern with investing heavily in machinery, equipment and
raw material and ensure all accurate inventory records. This records helps in knowing
how much stock was purchased, how it went waste and whether they gone missing at any

point of time. In the Corinthia this is essential to keep the records of all inventory
purchases and facilitate in calculating stock ratio.
 Preparing working capital requirement and financial ratios- It is essential to ask the
companies to put regular working capital requirement and various ratios that how things
must be regulated properly (Eissner and Gannon, 2018). In the company Corinthia, the
proper monitoring of assets and liability in the company is important and to ascertain that
how much time it will take to convert the cash.
 Preparing of Fund and cash flow statements- These statements are integral and vital
part of company and that tells that how much money is coming and going out from the
business. Through this it is easy to know the cash position of management and regulating
the proper earning. In the company Corinthia this statements helps in knowing the major
efficiency and effectiveness of the company and tells the liquidity of company. This
ensure that cash is using in proper manner and using in productive activities and
functions.
P2. Applying double entry bookkeeping system of debits and credit
Double entry system concern with book-keeping method that include all monitory
transaction that taken place in business and requires correspondence with opposite entry. There
are two equal side of every transaction that deals with debit and credit. They both function in
their own way in different rules and nature of account (Hu and Olivieri, 2020). Proper
knowledge of there rules is necessary to attempt right entry and for that there are certain
principles and rules that mentioned in accounting system. They are very basic rules and
regulation that define the need of this record and that also ensure effective way to handle such
transaction. In case with Corinthia Hotel, Journal entries and ledger posting for the March, 2020
as as follows:
Journal entries for Corinthia Hotel for the month ending March, 2021

P3. Producing basic trial balance
Trial balance is said to be book-keeping sheet that used in balancing all transaction of
ledger and compiled in credit along with debit account having total balances (Kulshreshtha and
Kulshrestha, 2019). The preparation of this is essential at the end of reporting period and it
facilitates in balancing out the both the sides in order to make proper book keeping system. The
main aim is to ensure that all transaction are correct and regulate the mandatory balances of all
ledger accounts. It is mandatory to ascertain all necessary transaction in order to extracted as
accounting cycle and that leads to proper cycle of all financial transaction. Following are the
importance of the trial balance in the company-
 Checking the accuracy- It facilitates in providing the actual amount entered on the right
side of current account from certain ledger account. For the company Corinthia, this
helps in maintaining accuracy of all transaction.

 Assist in financial statements- This will help in future steps of accounting procedure
such as Profit and loss account, Balance sheet, cash flow statement (Li, Huang and Song,
2020). For the company Corinthia this helps in balancing all ledger account that used in
accounting books.
 Ensure comparative analysis- This ensure that all years are properly taken into account
and balances along with peer analysis and helps in ensuring trends in business. For the
company Corinthia this trail balance helps in taking effective step to ensure proper in all
business transaction. This gives an appropriate way to ascertain the proper balances of all
ledger account
With this balance of general ledger are carry forwarded to next accounting period with
remaining accounts.
Trial balance of Corinthia Hotel for the accounting period March, 2021
TASK 2
P4. Determining stages of HR life cycle
Human resources life cycle concern with the concept that indicate all phases on an
individual personnel in the firm (Linneberg, Madsen and Nielsen, 2019). It has many
responsibilities and duties that needs to be identify to facilitate the various benefits in order to

visualize certain phase of employees. Through their cycle they understand the lifestyle that
require to ascertain the work they done. The main importance of all HR manager to perform their
all function and activities. In the company Corinthia, the individual employee is properly
monitor to execute the performance of the company. Following are the HR life cycle-
Recruitment- This is first stage that used to find the appropriate employee for vacant
position. The HR manager of Corinthia company helps in sourcing and attracting the employees
through using different internal and external methods (Martínez-Martínez and et.al., 2019).
Selection- After recruiting the right person there is proper process of selecting the
eligible and compatible employee for the position. This contain certain steps to choose the
appropriate person. In the Corinthia company this life cycle is properly execute by Human
resource manager to ensure right personnel for the organisation.
Training and development- This stage deals with providing essential training and
development to the selected employees so that they easily perform all activities and functions.
For the company Corinthia this stage is very important part for the Human resources to perform
as this decide that whether they are properly able to perform the duties or not.
Retention- This concern with most critical stage for the Human resources as it include
certain methods to keep and retain the employees for longer period of time. This has certain
measures such as policies, rules and regulation. In the company Corinthia, this is responsibilities
of Human resources to appreciate the performance of employees and provide adequate relaxation
to ensure them for long period of time (Martinez-Torres and Toral, 2019).
Termination- This is last stage of Human resources manager duty to terminate the
employees or accept their termination letter according to their reason and circumstances. For the
company Corinthia, this is essential to ensure that employees were provided with no disruption
and inefficiency during their working hours.
Importance of HR life cycle stages for retaining the talent:
Human resources life cycle phases plays important role in management to maintaining
the talent. Following are the important stages-
 The initial stage is recruitment that is important to help the HR manage to search the right
person for right positions.

 In the second stage of Selection is essential from the point of view from management as it
ensure that compatible and eligible employee is places at right post. As due that it
develop the efficiency in the management.
 Training and development builds the confidence among employee and it helps in
retaining the talent in organisation. For the company Corinthia this develop the
effectiveness and performance of overall management.
 Retention phase helps in motivating the employees to work more hard through certain
policies and laws introduced by company. This helps the company to accomplish their
task and specified objectives.
P5. Developing performance management plan
Performance management plan refers proper discussion of knowledges and skills that
requires to perform in the management and that leads to ascertain all resources to fulfil it. This
refers to proper alignment of all goals and objectives of employees or an individual to perform
the activities and functions (Pablo-Romero, Pozo-Barajas and Sánchez-Rivas, 2017). In the
company Corinthia there are certain problems that issues that used to face by many waiters and
other employees in the organisation and refuse to perform certain activities and functions due to
inefficiency in the working condition. The need to recognised this performance of all employee
the need to develop the management plan to resolve the various issues which is confronted by
many employees. Through this, managers works on several ways that measuring employee
performance, making adequate comparisons with actual performance with set standard. In the
company Corinthia, this management plan helps in giving major goals in monitoring and
controlling their the performance of various employees according to their duties and
responsibilities.
Performance management plan
Objectives Actions Review Monitoring and
controlling
To overcome the
problem with negative
behaviour
To take accurate
action to regarding the
issues and closely
observing the
It needs to implement
the review program to
facilitates the proper
functioning. This will
Activities will be
observed and
controlled through
certain techniques.

behaviour of all
employees. In the
company Corinthia ,
conducting certain
activities and functions
to ensure that all
personnel are
performing with better
attitude or not.
Maintaining the
effective
communication to gain
their trust and also
helps in knowing the
reason behind this.
take around 5 months.
To resolve staff
retention issue
To set proper
objectives of all
employees of
Corinthia Company.
Through flexible
schedule and career
path.
The time taken is 3
months to review the
performance.
To provide them
certain situations and
through various
methods.
TASK 3
P6. Identification of legislation applied in Hospitality organisation
Legislation include certain rules and regulation, acts and provision that is made by
government of country. It is mandatory to adhere with all the types of frameworks in
management operation to ensure smooth functioning (Rather and et.al., 2019). In the company
Corinthia has to follow all the legislation to ensure the productivity. Following are the acts-

 Health and safety act, 2015- This contains the guidelines related to provide the balances
frameworks to protect the health and safety in the workplace. According to the Corinthia,
this act ensure that all measurable action is taken to protect the health of all employees in
the workplace.
 Labour relation act, 1995- This legislation concern with about the rights related to trade
unions and facilitates in bargaining at workplace. In the company Corinthia, this helps in
managing the situations of various labour issues such as strikes, forums and other dispute
reasons. This helps in providing the various ways to overcome the problems related to
labour and facilitates in dealing with them to ensure the proper functioning of
management process.
P7. Defining example that employment and contract law impact business decision making
There are some laws which used to impact on framed decision in the firm that operates in
hospitality sector. It is mandatory to follow the legislation while executing the business
management while taking all these laws as stated and has to be adhered as per the rules and
regulation. Following are the law which impact the decision of Corinthia Hotel:
 Company law- This act governed by insolvency Act 1986, the UK corporate Governance
cod, European Union Directives and it is important to organise and run the business. This
act impact the decision-making of the company Corinthia as it involves various
guidelines that must be followed in their management process. For example, if there is
any changes in government policies related to the company perspective than it is
necessary to implement in short period of time. This will give negative impact on many
activities of the company as they has to follow all guidelines and rules made by
government.
 Contract law- This termed as essential act that concern that a contract has to create
mutual obligations between two parties within. It includes certain legal documents that
has clear contract as per the stated guidelines and rules (Wang, Hung and Huang, 2019).
For the company Corinthia, this is necessary to has this law as this relates the
performance of various operations as in business management there are some contracts
that occur in the company. The performance of many firm and parties is successfully
taking the decision related to the contracts and for example if there is any changes in

illegal activity taken by the company will negatively impact the managerial decision-
making.
 Employment law- This law is deal with the relationship with employee and employer at
organisation and ensure that HR is following all the guidelines and standards while
providing assistance and dealing in many ways. For the Corinthia, this impact the firm
management to larger scale for example, manager of the company has to adhere with all
the guidelines and rules to protect and safeguarding the interest of all employees and
must positively treat them.
TASK 4
P8. Exploring functional roles in hospitality sector
There are some functional roles that is set by activities that are implemented by some
department of the firm. All the organisational roles are interrelated to each other and they has
similar goals and objectives to achieve and their main objectives is to fulfil the demand and
needs of costumer. In the company Corinthia, there are some functional structure in which all
employees are coordinated and interrelated with each other to attain the objectives. Following are
the roles in the hotels are as follows-
 Housekeeping department- This is important department of hotel that plays essential role
in impressing the guest experiences and ensure that all rooms, lobbies, restrooms are
hygiene and ready to use. This is operational kind of role which is done by Hotel and in
the Corinthia, this function will facilitate in improving the high quality services provided
by the organisation (Reilly, 2018).
 Finance and marketing function- The main functional role played by marketing function
that they promote several packages and offer certain facility to attract the guest in their
hotel. For the Finance function this concern with allocating and monitoring all budget
activities and carry out smooth functioning in the organisation. In the hotel Corinthia,
these both are interrelated and connected to perform their respective functions and roles
in the management.

P9. Analysing communication method used in organisation
There are certain communication methods are in organisation that used to perform in
many ways to complete the method and process in management. In the Hotel Corinthia, this
communication method is able to perform all activities and functions and that deals in many
ways. Following are the ways-
 Internal communication- This communication take place within the organisation or
among the employees and employers. This could be oral, written, visual and it inform,
instruct, educate and develop the people of organisation. In the Hotel Corinthia, this
communication facilitate in increasing personal relationship with each other and also
leads to counselling and training to the employees.
 External Communication- This communication deals with people address with
customers, competitors, public and press (Martínez and Nishiyama, 2019). This takes an
important way to decide the necessary conversation in different manner and methods. In
the Hotel Corinthia, this communication method will help in performing better services
when they used to connect with outside costumers and investor and will get to know the
about their performance and efficiency.
CONCLUSION
From the above report it is concluded that Hospitality sector refers to sector that deals in
providing various facilitates to the costumer to give certain offers regarding other activities. In
the organisation of Hotel there is potential of handling and meeting needs and requirement of
costumer. In this report the principle of managing the finances are preparation of cash flow
statements and profit and loss account, preparation of financial statements. Double entry system
involves the transaction that occurs in the accounting period and facilitates in managing the
monetary records. Health and safety act, 2015 , Labour relations and other legislation rules are
there that must be follow by the firm. Some rules and guidelines used to influence the decision
making of Hotel such as Company law and contract law. Apart from that some communication
methods are that used in all organisation that make easy in their functioning and leads to increase
in the productivity.

REFERENCES
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