Detailed Financial Analysis and Budget Report: Hotel Futura 2015/16

This report provides a comprehensive analysis of the Hotel Futura's budget for the year 2015/16, examining the impact of renovation, occupancy rates, and revenue streams. The analysis includes a detailed breakdown of revenue from rooms, food, and beverages, highlighting the effects of changes in room availability and occupancy. The report identifies key areas of concern, such as increased staff costs and other expenses, offering recommendations to address these issues. It also proposes the implementation of a CribeMaster Inventory Management System to improve inventory control and efficiency, detailing the associated costs and benefits. Furthermore, the report provides insights into marketing strategies for maximizing revenue when the hotel reaches full capacity and compares key financial figures for 2016/17 against 2015/16.

Running head: MANAGE FINANCES
Manage Finances
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Task 4:........................................................................................................................................2
References:.................................................................................................................................5

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Task 4:
Budgeting is a process of estimation of revenues and expenses based on certain
demand forecast and estimated costs. It can be used for various important business decision-
making process and building various business strategies (Cardoş 2014).
In the given case study actual figures for 2014/15 for the Hotel Futura have been
given and based on that budget for the year 2015/16 has been prepared. With a forecast of
90% of room availability for renovation and maintenance and a occupancy rate of 78% of the
available rooms, it can be estimated that a total revenue would be $13.28million. The hotel
has various segments and budget statement shows revenues and expenses for each of such
segments. Main sources of revenue for the hotel are, room revenue, food revenue and revenue
from beverages. Due to changes made and resultant estimates of revenues and expenses
following affects can be observed.
It can be observed that, though there is a decrease in the room availability and
occupancy, the total revenue has been increased due to higher room rent and increase in
revenues from other segments (Ittner and Michels 2017). On the other hand, expenses in
some departments have also been increased which can be shown comparatively using the
following bar chart.

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The total staff cost has been increased significantly as well as the cost of food. As the
budget estimates shows that there will be an increase in the food and beverage revenues,
accordingly the cost of goods sold and the other expenses will also be increasing, but the staff
cost should not be increased significantly. Therefore, it can be concluded that the hotel should
focus on the staff and human resource department and investigate the reason behind the
increase in staff costs. Further, it can be observed that the other expenses have also been
increased significantly and needs consideration too. Hence, the hotel should identify the
reasons behind the increase in other expenses also (Hagel 2014).
When the hotel reaches its full accommodation capacity in the year 2016/17, they
must build up such marketing strategies to increase the demand for their services and to
utilise the fuller room accommodation capacity. Therefore, they should not be increasing the
prices for their room rent, food and beverages, rather they should focus on the quality of their
services, so that the fuller capacity of the hotel could be utilised. Following table can show
the differences in key figures for the years 2016/17 as compared to the year 2015/16.

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For better controlling and management of inventory of the hotel, the CribeMaster
Inventory Management System can be purchased and installed. It is developed by the ICS
Inventory Control Systems, they are specialised in developing and giving inventory control
systems and solutions. It will cost around $5,500 to purchase the system and to install it and
an annual subscription of $4,000 would be required. A better inventory control system may
help the hotel to manage their inventory system more efficiently as well as it can help them to
keep an ongoing track of the inward and outward inventory. It will require some computer
terminals and point of sale devices which will cost around %20,000 in total. As it is an
technological upgrade to the hotel, their employees need to be trained and make them
accustomed with the system which may cost some additional staff cost to the hotel (Inventory
Control Systems 2020).

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References:
Cardoş, I.R., 2014. New trends in budgeting–a literature review. SEA–Practical Application
of Science, 2(04), pp.483-489.
Hagel, J., 2014. How to better connect planning, forecasting, and budgeting. Journal of
Accountancy, 217(4), p.20.
Inventory Control Systems - CribMaster Australia. 2020. CribMaster Inventory Management
System - Inventory Control Systems - CribMaster Australia. [online] Available at:
http://icsys.com.au/solutions/software-solutions/cribmaster-inventory-management-system/
[Accessed 17 Jan. 2020].
Ittner, C.D. and Michels, J., 2017. Risk-based forecasting and planning and management
earnings forecasts. Review of Accounting Studies, 22(3), pp.1005-1047.