Finance and Control in Hospitality Operations: Hilton Hotels Report

This report provides a comprehensive financial analysis of Hilton Hotels and Resorts, examining various aspects of its operations. It begins with an introduction to finance in hospitality, emphasizing the importance of financial control. The main body of the report includes a detailed presentation of inventory findings, reflecting on sales, control processes, wastage, and the popularity of selected items. It also delves into Hilton's marketing offers, pricing strategies, and supplier choices, along with limitations. The report evaluates these elements, offering suggestions to the management team, such as focusing on supplier bargaining power and setting prices to suit the target market. The report concludes by summarizing key findings and emphasizing the significance of financial management in the hospitality sector. References to relevant books, journals, and online annual reports are included to support the analysis.

Finance and Control
in Hospitality
Operations

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
A. Detailed presentation of the inventory findings......................................................................1
B. Reflection on sales, control processes, wastage and popularity of selected items..................3
C. Reflection on marketing offers, pricing strategy, supplier choices or limitations..................4
D. Evaluation of aforementioned elements in order to provide suggestions to the management
team..............................................................................................................................................5
CONLUSION..................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Finance is a major requirement on an organisation which is used to execute business
operations. It is very important for the financial analysts of the enterprises to take control over
spendings of money so that it could be saved for future uncertainties. In hospitality sector it is
vital for the managers to mobilize funds appropriately and control it for the effective execution
of operations (Atkinson, 2012). The organisation which is selected for this project report is
Hilton Hotels and Resorts. It was established in year 1919 by Conard Hilton. The organisation is
operating its business all around the world. Currently it has more then 570 subsidiaries in
different countries. This project covers various topics such as detailed presentation of inventory
findings, reflection of sales, control processes, wastage and popularity of the items. Along with
this reflection on marketing offers, pricing strategy, suppliers choices or limitations and
suggestions to the management team have also been covered under this report.
MAIN BODY
A. Detailed presentation of the inventory findings
Hilton is a huge organisation which is operating business under hospitality sector and
rendering services all around the world. The organisation is required to buy different types of
inventory to conduct all its operating activities. For this purpose it is very important for managers
to conduct inventory check for the hotel. A table which is showing inventory check of kitchen of
Hilton is as follows:
Vegetarian items Purchasing unit
Unit Price Amount
Milk 1000 10 10000
Sugar 450 40 18000
Honey 600 45 27000
Vegetables 1200 15 18000
Spices 150 60 9000
Fruits 800 50 40000
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Butter 450 68 30600
Salt 200 2 400
Oil 400 90 36000
Pulses 600 74 44400
Dry fruits 350 150 52500
Bread 400 35 14000
Coffee 250 43 10750
Tea leaves 150 36 5400
Spaghetti 240 42 10080
Sauces 360 25 9000
Penne 180 45 8100
Fusili 100 40 4000
Flour 1300 12 15600
Non vegetarian
items
Fish 500 30 15000
Chicken 450 45 20250
Meat 360 60 21600
Mutton 350 38 13300
Bacon 240 47 11280
Beef 160 52 8320
Pork 280 39 10920
Crabs 360 41 14760
Other sea food items 680 64 43520
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Total inventory of
the organisation 12560 521780
The above table reflects that various types of vegetarian and non vegetarian food items
are being purchased by the hotel in order to deliver the food items that customers are willing to
buy. The table is showing purchase of items for one month and at the end of the period the entity
will have 12560 units in stock costing 521780 (Bharwani and Mathews, 2012). This table is very
important for the managers as it can help them to estimate future requirements of stock for the
purpose of delivering food to the visitors who are visiting the hotel. Ingredients such as spices,
vegetables, meat, mutton, salt etc. are bought by the organisation to deliver the food items to the
customers which are ordered by them.
B. Reflection on sales, control processes, wastage and popularity of selected items
From the annual report of the organisation it has been analysed that total revenues of
Hilton in year 2016 were 11663 and from past 5 years. In year 2015 it was 11272 which has been
increased in next year up to 11663 (Annual report of Hilton, 2018). The final accounts of hotel
reflects that the company is performing well in the market which results in higher profitability of
the organisation.
Control processes are mainly used to analyse economic order quantity of the
organisation. It is mainly used in cost accounting process in order to form strategic decisions.
Purpose of calculating EOQ is minimise ordering and inventory costs of products. The
calculation of EOQ for Hilton is as follows:
EOQ= √2UO/C
U= Units
O= Ordering cost
C= Carrying cost
= √2*12560*15/20
= 137.25
The figures that are taken for the purpose of calculations are based upon estimation. EOQ
for Hilton is 137.25 which means that organisation is prerequired to purchase at least 137.5 units
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in order to execute its operations. It is very important for the hotel to order the inventory when
the units available in the warehouses get decreased from 137.25.
While cooking food different types of items get wasted due to climate and weather
change. It is very important for the managers and kitchen staff of Hilton Hotel to use appropriate
tools to keep them fresh and safe. Major reason behind wastage is ordering excess amount of
material without analysing the uses. It can be controlled by the managers by keeping track record
of inventory with the help of inventory management reports and then order it accordingly (Cetin
and Dincer, 2014).
The food items that are sold by the organisation are very popular because skilled chefs
and cooks are hired by Hilton so that they can offer tasty and good items to the visitors. All the
dishes that are supplied by hotel are made without any artificial supplement. All the rules and
regulations that are related to food safety are followed by Hilton because it cannot afford risk as
it is one of the world's best hotels.
C. Reflection on marketing offers, pricing strategy, supplier choices or limitations
Hilton is the global leader in the market of hospitality sector and its uses attractive
marketing techniques so that it can attract large number of customers. It helps to aware the
clients about the services and products that are offered by the entity and establish good relations
with them. It has a huge brand name which does not require any identification but still the
managers of the entity always try to satisfy the customers with the help of its services (Park and
Jang, 2014). Occasionally discount coupons are provided to the customers that could be
redeemed by them on next visit. It is a marketing technique which is used by Hilton to retain its
customers.
There are various types of pricing strategies that could be used by Hilton in order to set
appropriate price for its services and products. All of them are as follows:
Penetration: In this strategy companies set low prices for goods and services in order to
reach maximum number of customers and market the products. It helps to capture large market
area by attracting huge number of consumer. It can be used by Hilton, when it is willing to
expand its business in a new geographic location.
Premium: In this pricing strategy organisations keep the price high as the main target of
them is to capture upper class customers of the market. It is mainly used by those business
entities which has good market image and brand loyal customers who dopes not switch or
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change their choices whether they get products on higher or lower prices. Currently Hilton is
using this pricing strategy as the targeted customers of it are upper class consumers.
Skimming: In this pricing strategy organisations set lower price for their products and
services on initial level and then increases it with the time. When demand for the items get
increased then companies raise prices in order to enhance profits. It can be used by Hilton while
introducing it self in a new location and when achieve all its objectives then it may raise prices of
its services (Legrand, Chen and Sloan, 2013).
The suppliers who supply items to Hilton are selected by managers by considering
different aspects such as quality, rate, quantity. The factors that may limit the suppliers are their
bargaining power. If there is a monopoly of them then it will enhance their power to bargain but
if there are end number of suppliers in the market then it may result in low power of them.
D. Evaluation of aforementioned elements in order to provide suggestions to the management
team
By analysing all the aspects that are described above a few suggestions can be provided
to the management team of Hilton in order to accomplish all the business goals successfully. The
suggestions are as follows:
 The organisation should focus on the bargaining power of suppliers so that all the items
can be bought from them on low prices.
 Another suggestion for management team of Hilton is that the price should be set by
keeping the target market in mind so that all type of customers may afford to visit the
hotel (Singal, 2014).
CONLUSION
From the above project report it has been concluded that it is very important for all the
business entities which are operating business under hospitality sector to arrange sufficient funds
for business operations. After arranging monetary resources the managers of the organisation
should focus on its control so that money can be saved for future and uncertainties. The factors
that are required to be considered by the managers are marketing offers, pricing strategy,
suppliers, sales, control processes and wastage. All of them may help the managers to form
strategic decision for the betterment of the organisation.
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REFERENCES
Books and Journals:
Atkinson, H., 2012. Performance measurement in the international hospitality industry. In
Accounting and financial management (pp. 65-89). Routledge.
Bharwani, S. and Mathews, D., 2012. Risk identification and analysis in the hospitality industry:
Practitioners' perspectives from India. Worldwide Hospitality and Tourism Themes.
4(5). pp.410-427.
Cetin, G. and Dincer, F. I., 2014. Influence of customer experience on loyalty and word-of-
mouth in hospitality operations. Anatolia. 25(2). pp.181-194.
Legrand, W., Chen, J. S. and Sloan, P., 2013. Sustainability in the Hospitality Industry 2nd Ed:
Principles of Sustainable Operations. Routledge.
Park, K. and Jang, S., 2014. Hospitality finance and managerial accounting research: Suggesting
an interdisciplinary research agenda. International Journal of Contemporary Hospitality
Management. 26(5). pp.751-777.
Singal, M., 2014. Corporate social responsibility in the hospitality and tourism industry: do
family control and financial condition matter?. International Journal of Hospitality
Management. 36. pp.81-89.
Online
Annual report of Hilton. 2018. [Online]. Available through:
<https://ir.hilton.com/~/media/Files/H/Hilton-Worldwide-IR-V3/annual-report/2016-
annual-report>
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