Comprehensive Report on Financials and HR for Hospitality Business

This report examines the hospitality business, using Ibis Hotel as a case study. It covers the principles of managing and monitoring financial performance, including financial transactions, source documents, and the recording process. The report applies the double-entry bookkeeping system to record sales and purchases, producing a trial balance. It analyzes various cost types and their management, including material, labor, and other expenses. Furthermore, the report reviews the HR life cycle, emphasizing recruitment, onboarding, career development, employee recognition, and offboarding. It also discusses performance management, specific legislation compliance, and the impact of company, employment, and contract law on business decision-making within the hospitality industry. The report provides a comprehensive overview of financial and human resource management in the context of the food and beverage sector, focusing on key aspects such as financial accounting, HR lifecycle management, and legal compliance.

Hospitality Business
Toolkit

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Principles of managing and monitoring financial performance.............................................1
P2 Apply double entry book keeping system of debit and credits in order to record sales and
purchases in ledger. ....................................................................................................................2
P3 Produce basic trial balance by applying use of balance off rule in order to complete ledger.
.....................................................................................................................................................3
P4: Review the different stages of the HR life cycle applied to a specific hospitality job role
and their importance for retaining and developing talent...........................................................5
P5: Develop a performance management plan for a specific hospitality job role applying
techniques to resolve both negative behaviour and overcome issues of staff retention..............6
TASK 3:...........................................................................................................................................7
P6 Identify specific legislation that a hospitality organisation has to comply and adhere to.....7
P7 Using specific examples illustrate how company, employment and contract law has a
potential impact upon business decision making in the hospitality industry..............................7
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Hospitality industry is a multi-billion dollar industry which includes food and beverages,
travel and tourism, lodging facilities and recreation. The main focus of hospitality business is
customer satisfaction. While doing a hospitality business a clear plan must be there before
starting it. If a company wants a successful business then their mission should be selecting
employees who have effective knowledge of hospitality industry and all staff members should be
polite in order to build customer satisfaction. When a business is achieving success then growth
of business also increases. Hospitality business is a type of business which can even break a
company if customer don't get satisfied with services. The below report is in context with food
and beverage industry. The report includes principles of managing and monitoring financial
performance, double entry book keeping system in order to record sales and purchases, trial
balance applying the use of balance off rule in order to complete the ledger. It also include HR
life cycle, performance management plan, specific legislation and impact of company
employment and contract law on business decisions. The below report is based on Ibis hotel. It is
a brand of economy hotels which was founded by Paul Dub rule and Gerard Pelisson in 1974,
France. It has around 1218 hotels in 67 countries.
TASK 1
P1 Principles of managing and monitoring financial performance
Financial Transactions
It is defined as an agreement or communication which is done between buyer and seller
in order to sell a asset to receive payment. It includes many activities regarding day-to-day
businesses , inventory as well as fixed asset management. In context with Hotel Ibis, main role
is played by Accounting which ensures statutory compliance as well as used in making business
decisions(Abdul-Rahman and Nor, 2017).
Source documents is defined as a document in which all details regarding business
transaction is recorded. It involve many things like detail about amounts been paid, name of
parties as well as components of business transaction. In context with hotel Ibis, they used cash
book receipts, cash book payments, petty cash journal, cheques and many more (Ahmed, 2019).
All information of source documents are recorded in original books.
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Recording process:- The transactions of hotel Ibis is been recorded in form of Journal
entries in which all accounting numbers as well as debit and credits are recorded(Akbar and
Tracogna, 2018). The hotel used this system because it allows them to know about all reasons
behind decision making which is most necessary thing for them.
Principles of managing and monitoring financial performance
It is considered as the most important element for a business because without managing
and monitoring no business can be successful. In context with hotel Ibis, they use many
principles and these are explained as below:- Timeliness:- It means that all transactions must be done at appropriate time in context
with time frames. In hotel Ibis, they are using this principle so that all data can be
provided in timely manner whenever it is needed. Consistency:- It means all business transactions should be done in a consistent manner.
Everything must be done according to policies been assigned. Ibis hotel used this
principle so that they provide transactions in a way which is agreeable. Justification:- Business transactions should be done in such a way that company
objectives are achieved. The principle determines that investment which is been done and
decision behind it is correct or not. The hotel Ibis used this principle to find out whether
they have made correct investment or not. Documentation:- The transactions which are made should have proper documents. It
should be complete and well organised. Ibis hotel apply this principle so that the
documentation which they doing is completed in a proper manner.
 Certification:- All business transactions must be certified and approved. In accordance
with hotel Ibis, they applied this principle effectively as they had all authorised signatures
which are needed in establishing business.
P2 Apply double entry book keeping system of debit and credits in order to record sales and
purchases in ledger.
Double entry book keeping system refers to a method of book keeping in which the entry
which is done in an account needs a opposite entry in other account. The profit and loss
statement of hotel Ibis is explained as below:-
2

Profit and loss statement of Hotel Ibis for March 2021
3

Particulars Amount Particulars
A
m
o
u
n
t
To Opening Inventory 17,000 By Sales 145,000
To Purchase 63000 Less : Return Inward -3200
1
4
1
8
0
0
Less : Return Outward -1800 61,200 By Closing Inventory 21,000
2
1
0
0
0
To Gross Profit 84,600
Total 162,800 Total 162,800
To Administration Cost 33,000 By Gross Profit 84,600
8
4
6
0
0
TO Distribution Cost 30,500
To Depreciation 9,000
To Finance Cost 1,600
To Tax 2,100
To Net Profit 8,400
Total 84,600 Total 84,600
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Effective recording of debit and credit:- In this process of recording transactions both
debit as well as credit entry are recorded (AL-Sultani And AL-Da'ami, 2018). Through these
entries it becomes easy in managing data in a organised format which leads to effective
presentation.
Manual addition to computer software to record financial data together with
information:- Accounting done through computerised software leads to an organised database
and all requirements are fulfilled through computer software also. It has many advantages like
speed, accuracy , up to date information. Through use of computer software it becomes helpful
for organisations also to record and provide data.
P3 Produce basic trial balance by applying use of balance off rule in order to complete ledger.
Trial balance is something like a list which includes debit as well as credit balances used
in order to analyse accuracy of double entry been done in ledger accounts. The balance off rule is
done at the end of accounting period (Altinay and et. al., 2019). The final accounts are produced
after the preparation of the trial balance. Here a sample of a basic trial balance:
Trial Balance for The Ibis
Particulars Debit Credit
Storage Cost 500
Purchase 10500
Sales 14600
Motor
expenses 530
Cash at Bank 54000
Cash in Hand 18700
Payables 29100
Premises 250000
Van 52250
Fixtures 8350
Inventory 23200
Receivables 15420
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Sales Return 900
Purchase
Return 70
Salaries 5000
Business Rates 1480
Capital 397060
Total 440830 440830
Analyse types of cost and how they can be managed to influence the financial performance of
business.
Material Cost: Cost of raw material or the substance used for manufacturing a product is
called Material Cost. Raw material is the basic necessity for producing a good for sale. It can be
a raw or maybe in manufactured state. It may be direct or indirect.
 Direct material Cost: It is an important part of the finished good. It can also be explained
as process material, stores material, production material and many more(Bagdasaryan,
2019). Let's say for an example, Purchase of raw material is a direct material cost.
 Indirect Material Cost: It is a cost which is incurred for the use of supporting purposes of
the organisation and can't be recognised with the individual cost of the product. For
example, Consumable stores, oil and waste, stationery and many more.
Labour Cost: It is a cost which can referred as salary or remuneration paid to the
workers or the employees of the organisation. Labour can be defined as human resource which is
necessary for manufacturing products from raw materials. It can also be direct or indirect.
 Direct Labour Cost: It is the cost which is paid to employees or the workers in the form
of salary or remuneration for the production process and be recognised easily with the
individual cost of the product.
 Indirect Labour Cost: It is the cost which is incurred on the employees or the worker who
are not a part of the production process but are a part of the further process of selling or
promoting that product (Brien and et. al. 2020). For example, expense of salesmen,
foreman or director's salary.
Other Expenses: These are the costs of which are a part of the production process but
are not the expenses of material or labour. For example, Expense on Transportation, Rent,
insurance, power, etc.
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 Direct Expenses: The expenses which can recognised directly in the individual cost of the
product. For example, Machinery charges, transportation, etc.
 Indirect expenses: The expenses which are not directly related with the individual cost
centres. For example, Rent, Electricity, Telephone, etc.
TASK 2
P4: Review the different stages of the HR life cycle applied to a specific hospitality job role and
their importance for retaining and developing talent.
The employee life cycle refers to the different stages an employee goes through during
the time of the organisation. The role a HR carries during the process is very crucial. Each stage
has it's challenges but it's the responsibility of HR to regularly improve the processes for each
stage to enhance the success of the employees.
Five stages of Employee Life Cycle:
1. Recruitment: The very first stage of employee Life Cycle starts even before the employee
is hired in the organisation. Growth of the business starts with recruiting right kind of
people. This is an important part in development of the business and to gain success, the
HR team should create a strategic recruiting strategy.
2. On boarding: On boarding is a crucial part of this life cycle. This is the time where the
hired employee decides the period of time he will sustain in the company. 90% of the
employees decide it within a period of 90 days whether they want to quit or continue
(Clifton, 2019). This is important because as an employee becomes a part of the
company's human resource by understanding jobs, establishing work relations with
colleagues, superiors and developing a vocation.
3. Career Development: Today, Employees want to earn satisfaction instantly. They want
appreciation whenever they are performing well in the organisation and wanna prove that
they are best at their work. In today's world, everyone wants to become successful
quickly (Koch and et. al., 2019). Career development strategies are one of the best ways
to keep talented people engaged. Discussing the career goals in the initial interviewing
process to ensure that the goals of the company are hard-nosed and aligns with the goals
of the organisation. Regular reviewing the performances help employees become aware
of how well or bad they are performing.
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4. Employee Recognition: Loyalty and productive team comes with time and motivation.
Reviewing the performance of the employees regularly will motivate the employees and
will create a positive environment at the workplace.
5. Off boarding: This is the stage where the employees leave the office due to retirement,
leaving for school, new and better opportunity or some personal family issues. This step
should also be planned as the on boarding process (Kovalev and Kovalev, 2017). When
an employee leaves the organisation, it impacts the others in the team and job of the HR
as it is the responsibility of the HR to make sure the employee leaves in a non-disrupting
manner.
P5: Develop a performance management plan for a specific hospitality job role applying
techniques to resolve both negative behaviour and overcome issues of staff retention.
Performance management Plan:
This plan states the process which is made in order to identify several activities those are
in order with employees and their efforts of goal accomplishment towards the business. The HR
of the Ibis is executing this strategy so as to gain control over the performance of the employees
and giving them directions towards achieving organisational goals and objectives (Liu And et.
al., 2017). The main role of this plan is to maintain the quality of food & beverages and services
offered by The Ibis. Better quality and maintaining cleanliness in the hotel attracts customers as
well as increases the standards of the hotel.
Plan: In simple terms, Plan is a blueprint which states the goals and objectives of the
organisation and the strategies & ideas to achieve them. The manager of The Ibis's food
department is trying to figure out the measures to the problems faced by the customers
(Nikolskaya And et.al., 2018). This is helpful in seeking customer attention for a longer period of
time.
Track or Monitor: This states a process of reviewing and monitoring the performance of
the employees and their efforts of achieving the targets. This system helps in motivating and
ensuring better performance ad extra efforts of the employees.
Review: This step states the process of reviewing the work done in order to give the best
possible outcomes to the clients. Food and beverage department constantly surveys the tastes and
preferences of the customers which helps in adopting best strategies to develop and improve the
quality of food.
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TASK 3:
P6 Identify specific legislation that a hospitality organisation has to comply and adhere to.
Legislation states the statutory laws which are governed by several rules and regulations
of the government of the UK. These policies are imposed so as to maintain safety and ensure
protected workforce. In the Hospitality sector, laws related to health and safety are to be
implemented so as to ensure better quality and customer gratification. This may lead to some
challenges such as Cyber theft, data protection, etc. Some of the Laws imposed are:
Environmental Legislation Act, 1974: This states the problems which arise due to
industrial waste and polluted air, water and atmosphere. Practices used by the Ibis minimises
waste and ensures less harm to the environment.
Food Safety Legislation Act, 1990: This law states that the food made in the hotels
should maintain the standards and appropriate quality measurements. This ensures health and
safety of the consumers.
Consumer Legislation Act, 2019: This act states the rights of the consumers that can be
protected in a way that the issues can be minimised. The manager of the Ibis implements this act
so as to avoid delays in attaining goals and objectives.
P7 Using specific examples illustrate how company, employment and contract law has a
potential impact upon business decision making in the hospitality industry.
Legislation refers to an act or process of making or imposing laws. Legislation impacts
the strategic decision-making due to the intervention and restrictions by the government. These
laws are imposed to ensure full control over the organisational activities and restricts the illegal
and unethical operations with a purpose of attaining business goals and objectives. An
organisation like The Ibis implements various laws to restrict harmful activities by society and
manpower whilst focusing on the business goals and objectives. The laws can explained below:
Employment Law: This law states to maintain better relations between an employee and
employer and several rules and regulations are defined to ensure the complete hiring and
employment process. This law make sure that the employees and employer maintains
professional relations that comply with the several employment laws (Smith and Eggert, 2018).
The manager of The Ibis has implemented the employment laws in the organisation to ensure
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best professional relations between employees and the employer and to ensure safety and health
of the employees.
Company Law: The company law of the UK regulates companies which are formed
under the Companies Act 2006. This law impacts the hotel at the time of existence and while
during the time of functioning. All the decisions and policies made should be based and should
follow the Companies Act 2006. In the context of The Ibis, the hotel is now bound to follow the
code of conduct set by the government of the UK.
Contract Law: Contract Law is an interesting topic for a business owner as this may
affect the day-to-day functioning of the business. It legally and lawfully binds the daily business
activities between two parties while involving in an agreement or a contract. The managers of the
Ibis have implemented this to make sure every agreement or a contract is according to the rules
and regulations.
CONCLUSION
After analysing the above information, it can be concluded that Hospitality is one of the
growing and money making sector. Professionals working in this sector focuses on consumer
satisfaction. The financial transactions is an agreement or communication which is made
between the buyer and the seller for the purpose of buying and selling. After these transactions,
they are recorded in the books of accounts as journal entries, then the ledger accounts are
prepared, after the preparation of the ledger Trial Balance is prepared and after the preparation of
the trial balance the three final accounts of the company is prepared. There are three kinds of
direct and indirect costs which affects the price as well as influence the functioning of the
business-- Material, Labour and other expenses.
There are five kind of stages in HR life cycle-- Recruitment, On-boarding, Career
Development, Employee Recognition and Off-boarding. There are some legislations and laws
which should be followed by the hotels in order to function and work without any interruption by
the government. This would create good image in front of it's customers and will help in
increasing the customers. The company and it's decisions are affected some laws and acts created
by the government like Employment Act, Company Act and Contract Act.
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