Principles of Managing & Monitoring Financial Performance in Hospitality Industry

This document discusses the principles of managing and monitoring financial performance in the hospitality industry. It covers topics such as key financial statements, double entry booking system, trial balance, and the use of balance off rule. The document also explores the various stages of the HR life cycle and the importance of performance management plan. Additionally, it highlights specific legislation that hospitality organizations need to comply with.

Unit 4 - Hospitality
Business Toolkit

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1 ...........................................................................................................................................3
P1 Principles of Managing & Monitoring Financial Performance ............................................3
P2 Double Entry Booking System .............................................................................................4
P3 Trial Balance and the use of balance off rule for leader .......................................................6
TASK 2 ..........................................................................................................................................7
P4 Various Stage of HR life Cycle ............................................................................................7
P5 Performance Management Plan ............................................................................................8
TASK 3 ...........................................................................................................................................9
P6 Specific Legislation for Hospitality Organisation ................................................................9
P7 Impact of Employment law and contract law on business decision making ......................11
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Hospitality industry is wide category of different fields in service industry which include
the facility of food& drink services,theme park, lodging, event planning, transportation etc.
Different small & large hotels, resorts, motels, bars and restaurants are involves in such industry.
The main concentration of respective industry is on to provide quality service to audience. It also
involves activities related to planning, organising, coordination as well as analysing different
type of activities in effective & efficient manner. The topics that was cover in this report are
investigation of different principles of managing or monitoring financial performance,
application of double entry book keeping system of Dr/ Cr. To record purchase & sales
transactions in ledger. Preparation of trial balance applying the use of balance off rule to
complete the ledger. For this study, The Chelsea Harbour Hotel will be consider that is very
luxuries hotel in London. The main motive of this report is to analyse different stages of HR life
cycle applied to a specific hospitality job role & importance for retaining and developing talent is
also cover in this project. In this assignment performance management plan also include for
specific hospitality job role by applying techniques to resolve negative behaviour & outcome
issues regarding staff retention. Identification of specific legislation that hospitality industry has
to comply and adhere to are also cover in this report. And the last topic of project is explain with
the help of example how company, employment, contract law put impact on decision making in
hospitality industry.
TASK 1
P1 Principles of Managing & Monitoring Financial Performance
In order to analyse the performance of the company it is necessary to focus on each and
every financial activities which can helpful to manage and monitor the financial performance of
specific company. Without proper practice of profits , cash flow and high sales activities
companies can not become successful so that it is mandatory to ask the report to the company
accountant and financial department so that company can take care of each and every financial
performance and also mange and monitor it (Hertzman and Zhong, 2016). There are various
steps which are useful to maintain and control the financial performance of Chelsea Harbour
Hotel hotel which are discussed below-

 Prepare key Financial Statement – Every company need to prepare a balance sheet and
profit & loss account and both these statements are essential to measure the financial
performance of the company. All these statements give the overview of financial heath of
the company. The financial department of the Chelsea Harbour Hotel prepared a financial
statement and consider profit & loss statement and then prepare a balance sheet of the
hotel. Prepare Debtors Trial Balance – It is necessary to prepare debtors trial balance every
month which can aid to track the customers who really own them funds. With this help of
this statement, company can track the irregular accounts and also identify defaulters so
that they can get back money. Chelsea Harbour Hotel prepare aged debtors trial balance
statement so that hotel can maintain each an every record (Kozlov, 2017). Prepare Inventory Records - It is important to keep maintain the inventory record of the
company. There are various business that invest in machinery and other equipments those
are help to make work easy of the company. The Chelsea Harbour Hotel should maintain
a proper record of there inventory so that hotel can purchase the material according to
this. Prepare Working Capital Statements – To prepare working capital statement is essential
for the company so that company can calculate all types of financial rations which can
help to maintain the over all financial performance. The calculation of current and quick
ration is essential and Chelsea Harbour Hotel used to consider all these calculation
(Whalen, 2017). Prepare Fund & Cash Flow Statement –Fund flow and cash flow statement are
prominent for the company that consider how much liquid cash company contain. All
these statements intermediate the long term financing for the Chelsea Harbour Hotel
some activities easy to consider like repayment of long debts, allocation of resources and
business expansion etc.
 Overheads Analysis – To prepare only financial statement is not enough to mange the
financial performance of the company. Company need to consider all the overhead
expenses such as rent, salaries and other marketing and sales expenses. The Chelsea
Harbour Hotel also consider this analysis to manage and control fund activities (Pearson,
et. al., 2018).

P2 Double Entry Booking System
Profit & Loss Account
This is also known as Income Statement. Profit and loss account comes under the
financial statement that gather profit and all the expenses which consider monthly, quarterly and
also yearly. Double entry system also consider as book-keeping statement. Book keeping also
determine the process of each and every business transaction which help in record all the debit
and credit transactions in a specific column (Milligan, et. al., 2020).
Debit and Credit Entries Recording
These entries consider the golden rules of the accounting. In accounting , all the
transactions take place on the basis of debit and credit entries. These two different types of
entries contain most useful part of the financial performance of the company (Gnanapala, 2017).
These entries also know as the journal entries and there are many rules contain in the journal
entries rules like –
Real Account – Debit what comes in
Credit what goes out
Personal Account – Debit the receiver
Credit the giver
Nominal Account – Debit the expenses
Credit the gainer
Profit and loss statement of The Chelsea Harbour Hotel for January 2020

Usage of computer software to keep maintain the financial data information
The preparation of financial statement is necessary to analyse the financial transactions so
that organisation can take appropriate decision to obtain the organisational objectives. Computer
software help to reduce the pressure to maintain the book-keeping manually. Now it is become
more easily to create the debit and credit entries and analyse all the investments and expenses
step by step with the help of computer software so that organisation maintain all the business
activities records (Chung and Chung, 2018).
P3 Trial Balance and the use of balance off rule for leader
Trial Balance consider as a book-keeping worksheet that maintain the ledgers account
balance and also complied into company debit and credit entries. The main purpose of trial
balance is that it make sure that all the entries of the company are in book-keeping structure and
all the calculations are mathematically proven. This is generated by the end of the accounting
period and use it to prepare the final statement of the hotel (Piroozfar, et. al., 2018).
Trial Balance for Chelsea Harbour Hotel

Features of Trial Balance
There are various features of the trail balance such as account number, name, debit and
credit column etc. the financial department of the Chelsea Harbour Hotel consider all these
features so that so that hotel manage all the debit , credit and ledger entries. Some useful features
are list of account, company name , debit & credit entries and total balance of the company (van
Schalkwyk, et. al., 2016).
Trial Balance help to recognise the error
Trail balance helpful to identify and also rectification of all the error in the ledger
account and debit and credit account. This account statement help to measure all the error and
also help in rectify those error so that organisation can take useful decision as per the financial
performance of the hotel.
Importance of Budget for plan and monitor

 Income Stream – It is the profit that created by the company with the hep of profit
margin, the financial manger of the Chelsea Harbour Hotel consider all the income of
these organisation as an investment and high rate of return on the risk factor. Pricing strategies & setting realistic goals – To maintain the financial performance of
the organisation company used many pricing strategies which help in cost incurred and
help in production of the products that are utilised by the customers so that it can help to
generate more profit. Manager of the Chelsea Harbour Hotel also implement all the
pricing strategies like cost plus strategy that help to gain more profit and help to get the
realistic goal of the hotel (Spronken-Smith, et. al., 2016).
 Fixed cost & variable cost – Fixed and various cost are essential to measure the over all
analyse of the funds. Both cost useful to find out the total cost of the company. Some
basic cost are incurred by the Chelsea Harbour Hotel such as wages , loan, service cost
etc.
TASK 2
P4 Various Stage of HR life Cycle
To fill the vacant position of customer management manager in Chelsea Harbour Hotel
following HR life cycle is follow as it includes five stages from which each individual of
company goes through. Recruitment - It is the initial stage of this process. In this appropriate candidate is
selected and places at right job position. Chelsea Harbour Hotel HR manager identify
desires of workforce in company. According to needs suitable candidate is selected for
F&B department unit. Before appointment, knowledge and skills of individual can be
checked because it save time .(Ylä-Anttila, 2017). Education- In this information regarding roles and responsibility is provided to new
candidates so they become familiar with organisation culture. Right as well as accurate
information about food & beverage unit must be given to new candidate as it tends to
help them to understand the responsibility. Motivation - Time to time motivation must be given by HR manager Chelsea Harbour
Hotel by giving different types of rewards to employees so that they contribute up to
their maximum level in achieving targets of company. Human resource manager

appreciate their workers for their good performance as it leads to increase satisfaction in
employees which results to efficient working and business as well as workforce growth. Evaluation - In it , workforce performance is evaluated and analyse time to time by their
superior. After doing evaluation improvement measures can be instructed by superiors in
Chelsea Harbour Hotel If HR manager is able to evaluate employees performance in
desirable manner that it tends to create healthy and strong relationship between managers
and their subordinates (Esparza-Aguilar, et. al., 2016).
 Celebration - In this employees are appreciated for their performance and extra
perquisites can be provided by Chelsea Harbour Hotel HR manager to boost employees
as well as F&B manager morale so that feeling of belongingness is created which
indirectly leads to proper talent management.
HR life Cycle importance to overcome staff retention issues
This cycle helps to reduce employees turnover rate and tends to improve morale of workforce so
it increase the sense of belongingness towards company and tends to decrease employees
turnover rate.
P5 Performance Management Plan
Planning is done to fill the vacant position of customer management manager in Chelsea
Harbour Hotel.
 Plan - It is collection of various rules, regulations, that enable them to achieve goals of
the company in effective and efficient manner. The Chelsea Harbour Hotel should create
rules as well as standards to serve food of high quality. With the help of this workforce
get clear picture of activity which they need to be perform to achieve the objectives
which are pre determined (Wang, Akeju and Cao, 2016).
Implement
The plan which was set above are needs to be implement in real scenario. With regards to
Chelsea Harbour Hotel managers are very attentive to put these steps in every functions of
business and assign or delegate each worker so that they work accordingly. Thus it support staff
members to put their best efforts towards assign task or organisation. Evaluate - In this evaluation of performance is to be done . On the basis of it decision are
taken by senior authority. Top managers in Chelsea Harbour Hotel monitor the

performance of workforce continuously and motivate them to improve their performance
with regards to gain competitive advantage.
 Feedback- After evaluation of performance this stage prevails where organisation
provide the facility to clients / customers to give their comments or feedback about
performance of company. In The Chelsea Harbour Hotel chef follow-ups the feedback of
customer and on the basis of that they take corrective action to accomplish pre determine
objectives. Thus, it develops positive attitude between its staff towards their company
which tends to enrich brand image and also leads to reduce employee turnover in the
workplace (Häusler, 2017).
Company faces many disputes or conflicts between employee, customers, and employer
that puts negative impact on working conditions. As, its manager responsibility to handle their
workforce and make arrangement & provide them good working condition that leads to enhance
organisation productivity and profitability.
TASK 3
P6 Specific Legislation for Hospitality Organisation
Legislation consider as a action that help in making laws that provide their positive
contribution in relationship of employees and also enhance some sense of trust among employees
and employer. It can also give positive support in HR strategies to achieve the business goals.
Basically legislation is most prominent instruments of the government that help in protect all
citizens and organising society effectively. Legislation identifies all the rights, duties and
responsibilities of every individuals to who the legislation can be apply .
Legislation consider as a statutory law that is governed by rules and regulations of United
Kingdom Government that are imposed on companies to control the issues related to the health
and safety of the employees. Hospitality industry experience many challenges and issues related
to the legislations like employee protection act, cybercafe and many more laws and legislation
that are mandatory to follow by Chelsea Harbour Hotel. The explanations of all the essential
legislation are given bellow- Environment Legislation Act, 1974 – This Act contain all the issues related to the
environment including air, Water, pollution and noise that give adverse impact on the
health of individual, animals and society. The higher authority of the Chelsea Harbour

Hotel can focus on decline the affect of pollutions in environment so that Chelsea
Harbour Hotel can able to accomplish all the goals of legislative actions more effectively. Consumer Legislation Act, 2019 – The other name of this act is Consumer protection act
that basically amended by the UK government for the appropriate rights of the consumers
so that they can handle all the issues by their own in term of business and organisations.
The management of the Chelsea Harbour Hotel hotel are very much concerned about all
the consumers rights and also follow this act which help to determine the problems of
consumers and resolve it so that Chelsea Harbour Hotel can get full satisfaction of their
consumers (Elshaer, 2019). Employment Act, 2002 – This act helps to introduce new provisions related to the
friends, family and working. This act is also helpful to resolve all the disputers and
conflicts at the working place and consider equal treatment for each and every employees
of the organisation. The Chelsea Harbour Hotel is focusing that all the staff members of
their organization feel equal and organisation so give equal treatment without any
discrimination.
 Food Safety Legislation Act, 1990 - This act ensure that all the organisation are need to
serve healthy food and there is a need to maintain the specific parameter related to the
food quality so that all the customers can feel safe and secure. Hotel Chelsea Harbour
Hotel provide useful guidelines related to the food safety to their staff member so that
they can give their active participation in the food making process and maintain high
level of hygiene.
All the legislation are mandatory for the Chelsea Harbour Hotel so that hotel can imply in
business activities and also create effective relation to obtain the organisational goals and
objectives.
P7 Impact of Employment law and contract law on business decision making
All the business organisation provide effective impact on the strategic decision making
through the specific legislation governed. All the rules and regulations that governed by the UK
government ensure full control over the organisational activities to gain the lawful objectives so
that they can achieve the goals. The management department of the Chelsea Harbour Hotel
consider the employment and contact law and also implement all the guidelines. These laws are

helpful to eliminate the harmful actions which can affect the employees and society. The
description of these both law are given below-
 Employment Law - This law is useful to govern the employees and employers relations
and also trade union. This law act like a outline to protect the UK employees and labours
rights. This law is applicable in all the decision making process which are related to the
employees and workers. This law also impact the decision of appointments of employees
and also involved in various performance activities of the employees. The management
department of the Chelsea Harbour Hotel implement this law so that it can create a strong
relationship among employers and employees so that hotel can take the more advantage
and achieve their daily targets.
 Contract Law – This law contained a specific agreement related to the legal goals
through specific proposal and its acceptance for an given agreement. The manager of the
Chelsea Harbour Hotel can use this law and also implement the lawful activities to
perform many agreements on the basis of the regulations of the UK Government.
Some laws and legislation can helpful to obtain the organisational goals in an effective
manner by the useful guidelines of the legislation. Each and every law and legislation playing a
significant role and the effective of specific legislation affect the organisation positively and
negatively both and it impact the organisation culture and environment. Some legislation give
negative impact on the hospitality industries business operations. Some examples of the
companies discussed below which faced adverse impact of these legislation.
 KFC is the most famous food retailer company that experienced some issues at their
Stockton Borough branch that fined £1. M because two employees of the company faced
burn injuries.
 Wilko is a popular retailer company that mainly operate their business in home décor.
This company was fined at least £2.4 M. when one of the employee of this company
paralysed in event.
 Jaguar Land Rover was fined because one of their employee lost his leg when a car bump
in the production process.
All the examples shows the massive complexities that happened in the companies and it
demonstrate the direct impact on the companies decision making process. In respect of
hospitality sector , some rules and regulations are determined so that all the rules and legislation

can give good impact on the working conditions of the companies and companies need to do
some fortifications and changes so that it can give positive impact in the decision making
process of the companies.
CONCLUSION
After deep study and analysis it is to be conclude that Hospitality covers both negative as
well as positive impact on different functions of business. Each business set rules, and formulate
principles so that financial performance of company can monitor easily . By preparing
performance management plan conflicts can resolve easily and Better working environment can
be developed. With formulation of policies and legislation , business operation can direct easily
to attain competitive advantage as well as to achieve great level of productivity. In order to
satisfy different department workforce, different ways of coordination, monitoring,
communication has been addressed.

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