Finance Project Report: West London Hotel Expansion Analysis

This project report focuses on the financial aspects of a European-style boutique hotel's expansion into West London, with an investment of over 700,000 Euros. The report examines principles for managing and monitoring financial performance, emphasizing areas for maximizing profitability and assessing financial strengths. It includes journal entries and ledger accounts using a double-entry bookkeeping system. Furthermore, it details the HR life cycle stages for talent management, encompassing recruitment, training, and retention strategies, along with a performance management plan. The report also addresses relevant legislations the hotel must comply with, and the impact of company, employment, and contract law on the business. Finally, it explores the interrelation of functional roles within the hospitality sector and various communication, coordination, and monitoring methods to strengthen the value chain. The report aims to provide a comprehensive analysis of the financial and operational considerations for the hotel's expansion.

Project Report

1. INTRODUCTION...............................................................................................................1
TASK 1............................................................................................................................................1
P1 The principles of managing and monitoring financial performance.................................1
P2. Double Entry bookkeeping system:................................................................................1
P3 Trial balance......................................................................................................................5
TASK 2............................................................................................................................................6
P4 The different stages of the HR Life Cycle stages for Talent Management in hospitality
industry...................................................................................................................................6
P5 Performance Management Plan........................................................................................8
TASK 3............................................................................................................................................9
P6 Specific legislations that a hospitality organization has to comply and adhere to ...........9
P7 How company, employment and contract law has a potential impact on business..........9
TASK 4..........................................................................................................................................10
P8 How different functional roles interrelate with each other within hospitality sector......10
P9 Different methods of communication, coordination and monitoring applied within
hospitality industry to strengthen the value chain ...............................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Today with growing demand of customers to get best services, organisations that deal in
hospitality industry, gain opportunity to earn high profitability by catering their needs. This
would help in expanding their business at different locations and generating more revenue
(Ramasastry, 2015). The present assignment is based on a European style boutique hotel which is
going to expand its business by opening another hotel at small scale in West London. For this
purpose, it has made investment of over 700,000 Euro at initial stage. In this regard, concept of
different principles for managing and monitoring the financial performance for given company is
discussed, so that business can be expanded efficiently. Here, different stages of HR life-cycle
for introducing new workers and retaining existing one is also described, including the
performance management plan. Along with this, specific legislations that given company needs
to comply, with different methods of communication are also highlighted.
TASK 1
P1 The principles of managing and monitoring financial performance
Finance refers to a main component of a company without which it becomes not possible to
run business effectively. Therefore, one of the most important tasks that management of an
organisation undertakes for successful business is monitoring the financial performance on a
regular manner (Shi, Lee and Whinston, 2016). For this purpose, if management of a company
understand where its business is currently stand from different perspectives, helps in managing
finance more efficiently. This would also help in evaluating where the business is heading a huge
advantage over its competitors. Therefore, the present hotel who seeks to open new branch in
areas of West London, are not concerned on some main points for monitoring the financial
performance. It includes –
 To identify the most and least areas of business, where company can gain high
profitability.
 To ascertain the financial strengths of business.
 To determine if business plan is performing in line with main objectives.
 To examine how much cash business will generate after expansion within a year.
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Therefore, by evaluating these points, management of present company can analyze the
current state of business. Further, to manage and monitor the financial performance, some
principles are given below:-
 Organize the finance: It refers to first step for creating wealth, which helps in tracking
the bank account details, mortgages, business loan, brokerage accounts and more (Häser,
Felderer and Breu, 2016). Here, budgeting software will help given hotel in tracking all
these account details and organizing the budget plan accordingly.
 Spend less than what business earn: Using personal financial tool software in
monitoring and budget the spending to achieve long term goals.
 Evaluate risk: By evaluating the risks that might be occurred in business during
expansion, will aid to gain better return on investment. This principle also known as risk-
return trade off, that helps in reducing the risks which may impact on business negatively
(10 Basic Principles of financial management, 2016).
 Maximize employment benefits: Providing employee benefits like insurance, dental and
medical facilities, flexible spending accounts and more, help in reducing taxes and
optimizes finance more efficiently.
 Plan for uncertainties: To handle worst situation in business like financial crises, ups
and down of profitability and any condition that affect profitability, it is essential for
management of present hotel to save money and develop plan against financial exposure
as well.
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P2. Double Entry bookkeeping system:
(I) Journal Entry in
the books of hotel business
S. NO. Particulars Dr. Cr.
1 Bank A/c Dr. 50000
To Capital A/c 50000
(Being money in cash is invested in hotel business)
2 Prepaid rent A/c Dr. 5000
To Bank A/c 5000
(Being rent paid in advance)
3 Furniture A/c Dr. 3000
To Bank A/c 3000
(Being furniture purchased)
4 F & B A/c Dr. 2500
To Bank A/c 2500
(Being F&B purchased)
5 Bank A/c Dr. 1000
To Bookings A/c 1000
(Being bookings is made for one night for 10 rooms)
6 Bank A/c Dr. 1500
To Bookings A/c 1500
(Being rooms book for 3 nights for wedding party)
(II) Journal Entry in the books of hotel

business
S. NO. Particulars Dr. Cr.
1 Bank A/c Dr. 700000
To Capital A/c 700000
(Being money in cash is invested in hotel business)
2 Lease A/c Dr. 200000
To Bank A/c 200000
(Being lease paid )
3 Furniture A/c Dr. 30000
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To Bank A/c 30000
(Being furniture purchased)hospitality
4 F & B A/c Dr. 45000
To Bank A/c 45000
(Being F&B purchased)
5 Bank A/c Dr. 600000
To Bookings A/c 600000
(Being hotel booked business travellers for 100 nights )
6 Bank A/c Dr. 1200000
To Bookings A/c 1200000
(Being hotel rooms booked for 100 nights)
7 Wages A/c Dr. 150000
To Bank A/c 150000
(Being wages paid to Chef)
8 Wages A/c Dr. 60000
To Bank A/c 60000
(being wages paid to house keepers)
9 Wages A/c Dr. 45000
To Bank A/c 45000
(Being wages paid to maintenance workers)
10 Purchase A/c Dr. 55000
To Bank A/c 55000
(Being F&B purchased )
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11 Software A/c Dr. 10000
To Bank A/c 10000
(Being software purchased)
12 Professional fees A/c Dr. 10000
To Bank A/c 10000
(Being professional fees is paid)
13 Insurance A/c Dr. 15000
To Bank A/c 15000
(Being insurance paid)
(I) LEDGER ACCOUNTS
Capital A/c
Particulars Amount Particulars Amount
To Closing Balance C/d 50000 By Bank A/c 50000
50000 50000
Furniture A/c
Particulars Amount Particulars Amount
To Bank A/c 3000 By Closing Balance C/d 3000
3000 3000
Prepaid Rent A/c
Particulars Amount Particulars Amount
To Bank A/c 5000 By Closing Balance C/d 5000
5000 5000
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F & B A/c
Particulars Amount Particulars Amount
To Bank A/c 2500 By Closing Balance C/d 2500
2500 2500
Bookings A/c
Particulars Amount Particulars Amount
To Closing Balance C/d 2500 By Bank A/c 1000
By Bank A/c 1500
2500 2500
Bank A/c
Particulars Amount Particulars Amount
To Capital A/c 50000 By Prepaid Rent A/c 5000
To Bookings A/c 2500 By Furniture A/c 3000
By F & B A/c 2500
By Closing Balance C/d 42000
52500 52500
(II) LEDGER ACCOUNTS
Capital A/c
Particulars Amount Particulars Amount
To Closing Balance C/d 700000 By Bank A/c 700000
700000 700000
Lease A/c
Particulars Amount Particulars Amount
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To Bank A/c 200000 By Closing Balance C/d 200000
200000 200000
Furniture A/c
Particulars Amount Particulars Amount
To Bank A/c 30000 By Closing Balance C/d 30000
30000 30000
F & B A/c
Particulars Amount Particulars Amount
To Bank A/c 45000 By Closing Balance C/d 45000
45000 45000
Bookings A/c
Particulars Amount Particulars Amount
To Closing Balance C/d 1800000 By Bank A/c 600000
By Bank A/c 1200000
1800000 1800000
Wages A/c
Particulars Amount Particulars Amount
To Bank A/c 150000 By Closing Balance C/d 210000
To Bank A/c 60000
To Bank A/c 45000
210000 210000
Purchase A/c
Particulars Amount Particulars Amount
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To Bank A/c 55000 By P&L A/c 55000
55000 55000
Software A/c
Particulars Amount Particulars Amount
To Bank A/c 10000 By Closing Balance C/d 10000
10000 10000
Professional Fees A/c
Particulars Amount Particulars Amount
To Bank A/c 10000 By P&L A/c 10000
10000 10000
Insurance A/c
Particulars Amount Particulars Amount
To Bank A/c 15000 By P&L A/c 15000
15000 15000
Bank A/c
Particulars Amount Particulars Amount
To Capital A/c 700000 By lease A/c 200000
To Bookings A/c 1800000 By Furniture A/c 30000
By Purchases A/c 55000
By F & B A/c 45000
By Software A/c 10000
By Insurance A/c 15000
By Professional Fees A/c 10000
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To Wages A/c 210000
By Closing Balance C/d 1925000
2500000 2500000
P3 Trial balance
(I) Trial Balance
Particulars Dr. Cr.
Bank 42000
Capital 50000
Furniture 3000
Prepaid Rent 5000
F & B 2500
Sundry Expense
Bookings 2500
Total 52500 52500
(II) Trial Balance
Particulars Dr. Cr.
Bank 1925000
Capital 700000
Furniture 30000
Insurance 15000
F & B 45000
Bookings 1800000
Lease 200000
Wages 210000
Purchase 55000
Software 10000
Professional Fees 10000
Total 2500000 2500000
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TASK 2
P4 The different stages of the HR Life Cycle stages for Talent Management in hospitality
industry
HR lifecycle can be defined as a process to get employee engagement in business and gain
high cooperation of workers for achievement of business objectives (Fritsche, Soeters and
Meessen, 2014). It is also known as employee life-cycle that describes six main stages as
attraction, recruitment, on-boarding, development, retention and separation to manage talent at
workplace (Six stages to success with the employee life-cycle, 2018). In context with present
hotel, to optimize human resource talent, importance of these stages can be analyzed in following
manner:-
Attraction – It refers to initial stage of HR life cycle which states how to attract talented
candidates towards business, by placing an advertisement for a specific job position. For
example – To place an experience person on the post of CRM (Customer Relationship
Management) as a manager, management of given hotel need to put a job description or
advertisement for this post on job portal and social sites to attract eligible workers.
Recruitment – After placing a job advertisement, the next stage of employee life-cycle is
to recruit best talented worker by making a proper judgement on required skills and abilities that
require for a certain job. For example - to fulfil position of CRM manager post, managers of
given hotel will take interview of selected candidates who have applied for the same to judge
specific skills and certain experience of them (Paredes, Pedregal and Pérez, 2014). This would
help them in hiring best workers at workplace increasing performance of workforce
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Figure 1HR-Life cycle stages
On-boarding – This stage states to provide proper training to new hired candidates to
make them familiar with business and inform them what company is expected from them.
Through this process, workers can prepare themselves as per their position at workplace. The
main duty CRM manager is to determine the actual demand of customers and cater their needs
accordingly, therefore, on-boarding process after hiring a new manager for this post, help in
analyzing how to work efficiently for building best relations with targeted audience.
Development – By organizing workshops, high training and development courses, will aid
given hotel for enhancing required skills of workers and prepare them to give best performance
for achievement of business objective.
Retention – As employees are main assets and consider as main component of competitive
advantage, respective hotel needs to provide appropriate employment benefit like attractive
compensate and incentives to them (Stokan, Thompson and Mahu, 2015). This would help in
retaining best talented workers for long-term profitability in business.
Separation – It is the last stage which is also known as employee-separation stage, where
due to personal reasons or at retirement state, workers leave workplace. Therefore, managers of
respective hotel need to develop strategies that leaving a worker may not disrupt others
performance.
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Thus, concerning on all these stages of HR life-cycle, it will prove beneficial for given
hotel to bring talented workers at workplace and optimize their efforts for achievement of
business objectives.
P5 Performance Management Plan
A performance management plan (PMP) refers to a process of monitoring and managing
the performance of employees against the goal and key parameters of same. This plan is
generally developed to facilitate the constructive discussion with management and staff of
workplace (Schulz and et.al, 2015). For example – to identify the reason behind not getting better
performance of cleaning staff, management of given hotel who seek to open up new branch in
other locations of West London can establish an effective discussion with staff to get their
feedback for same. By making interaction with them, managers can identify why staff members
of cleaning staff do not give high contribution in providing effective services to its customers, so
that better approaches can be implemented for performance improvement of them. Therefore,
under this discussion, it has been evaluated that as business of hotels are run on 24 x 7 hour
basis, so, having less flexibility in working hours arise feeling of tiredness among cleaning staff.
So, it is better to provide flexible working hours to staff members so that they can improve their
performance. The another importance of PMP plan can be analysed via -
 Resolve the negative behaviors of working staff: As negative behavior of workers may
impact not only performance of them but also business performance as well, therefore, it
is major responsibility of managers of given hotel to develop effective PMP plan to turn
negative behavior of workers into positive. For this purpose, they must create positive
environment at workplace where employees are allowed to share skills with each other to
perform well, help in increasing collaboration among them (Smith, 2013). It will also help
in getting positive attitude of workers towards achievement of business objectives.
 Overcome issues of staff retention: Development of performance management plan
also help in reducing staff turnover rate by providing them high benefits, resolving issues
and increasing morale of them to work for common goal achievement.
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TASK 3
P6 Specific legislations that a hospitality organization has to comply and adhere to
In order to establish a new hotel and running previous one effectively, present hotel which
runs from last 10 years successfully, need to comply its business with certain laws (Costa and
et.al, 2013). This would help in operating business ethically as well as earning more
opportunities for further expansion of hotel. In this regard, some major legislation that present
hotel needs to adhere are given as beneath:
Equality Act, 2010: This law strictly prohibits to organizations to conduct any activity
that shows discrimination with its employees (Stokan, Thompson and Mahu, 2015). It is essential
for respective hotel also to provide equal rights to all workers and give equal opportunity to
eligible candidates to get employment within its business.
Health & Safety regulation Act, 1981: This act forces organizations to concern on
safety and security procedures at workplace. It is major duty of management of a company to
adhere its business with health and safety regulations, where workers and associated people can
feel safe during working or staying in premises (Read and et.al, 2015). In respect of present
hotel, adhere to this act helps in feeling of more safety in workers towards business which
directly tends to get high performance of them by increasing productivity and long-term
retention.
Human Right Act, 1981: It considers as most influencing act that state to provide entire
rights to human resource to get equal treatment at workplace. As per this act, any company
cannot dismiss or terminate its employees without prior notice or specific reasons. Adhering this
law, help respective hotel in arising the feeling of job security under its workers and gain their
retention for longer period of time, to run business smoothly.
P7 How company, employment and contract law has a potential impact on business
Company law can be defined as a set of rules and regulations that every person associated
with same business, has to follow to run business ethically. This would help workers to know
their roles and responsibilities as well as what organisation is expected to them, so that better
performance can be gained (Schulz and et.al, 2015). Thus, to develop any policy related to
employment benefits, operational activities and more, management of present hotel also requires
to concern on its company rules and regulations, to run business ethically. Similarly,
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employment law impact directly the decisions of HR department related to practices and policies
to manage workplace. In this regard, to develop employee policy for recruitment and other
procedure, management of given hotel has to concern on entire laws that may affect their
decisions for the same. Along with this, contract law that defines as an agreement that a company
made with all its stakeholders like suppliers, distributors, employees and more, also has potential
to influence business policies of given hotel (Smith, 2013). Therefore, to develop any strategy or
making decisions for further expansion, concern on contract law also need to adhere by
respective hotel.
TASK 4
P8 How different functional roles interrelate with each other within hospitality sector
In hospitality industry like hotels, departments are generally divided on the basis of
functions they operate. As shown in below figure, the main departments of hotel industry can be
defined as Sales & Marketing, Food & Beverage, Human resource management, Engineering,
Accounting and more. Functions of all these departments are interrelated with each other in
highly manner. For example – Sales and Marketing division of present hotel concerned on
identifying the demand of targeted audience and provide this information to further departments
helps in catering their needs accordingly (Costa and et.al, 2013). Similarly, by getting
information about taste and preferences of targeted audience aid Food & Beverage division to
serve best quality of foods with a wide range to provide them satisfied services. Furthermore,
main responsibility of HR departments is to provide guidance and develop skills of employees of
each department to give best performances. This would help other departments in getting
talented staff for performing their functions more effectively. Thus, cooperation of all divisions
aid hotel sectors in providing best services to customers and engage them with business for long-
term profitability.
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P9 Different methods of communication, coordination and monitoring applied within hospitality
industry to strengthen the value chain
To develop coordination among different departments such as HRM, marketing, Food &
Beverage etc., it is essential for present hotel to implement best method of communication
system. This would also help in strengthening the value chain and increasing capabilities of
business to monitor performance of each department more effectively (Read and et.al, 2015).
Along with this, implementing best communication system also aid to build trust among
departments and team-members, increase efficiency of business to provide best customer service,
get opportunity for enhancing professionalism and more. In this regard, different methods of
communication system that can be applied at workplace of present hotel are given as below:-
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