Hospitality Management Report: Financial KPIs and HR Life Cycle

Desklib provides past papers and solved assignments for students. This report analyzes financial performance and HR strategies in the hospitality industry.

Unit 4: The Hospitality Business Toolkit
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Academic Year: 2018-2019

Table of Contents
Introduction...................................................................................................................2
Activity 1: Double-Entry Book-Keeping to Trial Balance...........................................2
Journal entries...........................................................................................................2
Ledger Accounts.......................................................................................................3
Trial Balance as on 1st March....................................................................................7
Activity 2: Recommending Methods to Measure Financial Performance....................7
Two Key Performance Indicators (KPIs) for Restaurants........................................7
Principles of managing and monitoring financial performance................................8
Activity 3 – Using the HR Life Cycle for Talent Management...................................9
Activity 4: Performance Planning..............................................................................10
Plan to overcome the issues of staff retention.........................................................11
Activity 5 – Training on Law for the Hospitality Industry.....................................11
Activity 6 – Briefing on Legal and Ethical Considerations........................................12
Activity 7 – Exploring Functional Roles....................................................................13
Activity 8 – Analysing Communication, Coordination and Monitoring Methods.....14
Conclusion..................................................................................................................17
References...................................................................................................................17
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Introduction
The report has been created for managing finance and recording transactions for
minimization of costs. The finance case study for the hospitality sector has been considered to
understand the key areas of management in the hospitality sector. The case study for the world’s
largest leisure travel organization has been provided, which is Carnival Corporation and PLC (as
per the case study) (CarnivalLine, 2019). Its annual assessment shows that it has:
A clientele of 11.5 million guests
more than 12000 employees (globally)
Revenues of $17.5 billion in the year 2018
The case study has been reviewed as an employee of Carnival UK for the Flagship
Programme of the business, wherein the job rotations take place and different activities need to be
undertaken, as given below in the report.
Activity 1: Double-Entry Book-Keeping to Trial Balance
Journal entries
1st February
Purchases A/cDr £34,553
To Account payable (Kates Kitchen) £5,001
To Account payable (Harry) £29,552
3rd February
Accounts receivables (beverages) Dr £11,203
Accounts receivables (food) Dr £1,824
To Sales A/c £13,027
6th February
A/c Payable A/c Dr. £5,001
To Cash A/c £5,001
10th February
Accounts receivables (beverages) Dr £8,966
Accounts receivables (food) Dr £1,687
To Sales A/c £10,653
14th February
Cash A/c Dr £2,008
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To Sales A/c (Meganne) £2,008 (Rebeťák and
Farkašová, 2015)
17th February
Accounts receivables (beverages) Dr £11,710
Accounts receivables (food) Dr £1,611
To Sales A/c £13,321
A/c Payable A/c Dr. £29,552
To Cash A/c £29,552
22nd February
Purchases A/c Dr £7,013
To A/c payable (Kate) £7,013
24th February
Accounts receivables (beverages) Dr £10,614
Accounts receivables (food) Dr £1,715
To Sales A/c £12,329
Ledger Accounts
PURCHASE A/C
Date Particulars Dr Amount (£) Date Particulars Cr Amount (£)
1st February To Account
payable (Kates Kitchen) 5,001.00 28th February By balance c/d 41,566.00
1st February To Account
payable (Harry) 29,552.00
22nd February To Account
payable (Kates Kitchen) 7,013.00
41,566.00 41,566.00
1st March To balance b/d 41,566.00
A/C PAYABLES
Date Particulars Dr Amount (£) Date Particulars Cr Amount (£)
6th February To Cash A/c 5,001.00 1st February By purchases 34,553.00
17th February To Cash A/c 29,552.00 22nd February By purchases 7,013.00
28th February To balance c/d 7,013.00
41,566.00 41,566.00
1st March By balance b/d 7,013.00
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A/C RECEIVABLES
Date Particulars Dr Amount (£) Date Particulars Cr Amount (£)
3rd February To Sales A/c 13,027.00 28th February By balance c/d 49,330.00
10th February To Sales A/c 10,653.00
17th February To Sales A/c 13,321.00
24th February To Sales A/c 12,329.00
49,330.00 49,330.00
1st March To balance b/d 49,330.00
SALES A/C
Date Particulars Dr Amount (£) Date Particulars Cr Amount (£)
28th February To balance c/d 51,338.00 3rd February By Accounts receivables
(beverages) 11,203.00
3rd February By Accounts receivables
(food) 1,824.00
10th February By Accounts receivables
(beverages) 8,966.00
10th February By Accounts receivables
(food) 1,687.00
14th February By Cash A/c 2,008.00
17th February By Accounts receivables
(beverages) 11,710.00
17th February By Accounts receivables
(food) 1,611.00
24th February By Accounts receivables
(beverages) 10,614.00
24th February By Accounts receivables
(food) 1,715.00
51,338.00 51,338.00
1st March By balance b/d 51,338.00
CASH A/C
Date Particulars Dr Amount (£) Date Particulars Cr Amount (£)
14th February To Sales A/c 2,008.00 6th February By A/c Payable 5,001.00
28th February To balance c/d 32,545.00 17th February By A/c Payable 29,552.00
34,553.00 34,553.00
1st March By balance b/d 32,545.00
Trial Balance as on 1st March
Particulars Dr Balance (£) Particulars Cr Balance (£)
Purchases 41,566.00 Payables 7,013.00
Receivables 49,330.00 Sales 51,338.00
Cash 32,545.00
90,896.00 90,896.00
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Activity 2: Recommending Methods to Measure Financial Performance
Two Key Performance Indicators (KPIs) for Restaurants
For measuring the financial performance of a restaurant former the manager would have to
keep eye on various KPIs. Tracking the figures like average check size and the expense on food
vs. sales are significant however the manager can miss some essential elements (Singal, 2013).
Restaurant manager has to track many KPIs for maintaining the smooth running of the restaurant.
The KPIs can show the restaurants health, client contentment, finance, marketing attempts,
management effectiveness and different operational costs. With the KPIs the manager can quickly
recognize the issues in running of the restaurant, and find what is going smooth or needs
intervention. The two important KPIs for the restaurants are:
Sales per head: these indicators are usually known as average ticket size. The restaurants
generally evaluate the sales per head at various times in a day. In this case, as a restaurant
manager it is important to know what the sales per head are during dinner and lunch hours. This
tracking has to be done on weekly and monthly basis also for understanding the different trends,
either positive or negative (Kaizeler, 2012). This can be calculated by dividing the entire sales (£)
by the number of guests visiting the restaurant.
Revenue per Available Seat Hour: It is also known as RevPASH (Kimes and Beard,
2013) during a given time and it is important as it involves the time for calculation. Just like the
hotel industry wherein the returns are calculated on the basis of available room, in this case The
returns for hotel are calculated on the basis the available seat hour which is a critical number to a
sister restaurant manager do the efficiency of every seat in generating revenue. It is a great
measurement as it utilizes capacity, time and average check for evaluation.
For example in case there are 45 seats in a restaurant which is open for 12 hours then the
restaurant will have 540 hours each day and in case the revenue is £4800 then the RevPASH will
be calculated as £4800/540 i.e. £8.89.
Principles of managing and monitoring financial performance
The principles to manage and monitor the financial performance are:
Principle 1: A budget has to be laid to offer a tool to:
- plan resources required to attain the aims and goals of the restaurant,
- evaluate present financial performance,
- determine noteworthy transaction miscalculations, and
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- Identify considerable modifications in situations or business circumstances (Decressin,
Fonteyne and Faruqee, 2017).
Principle 2: A budget should be accurate, practical and achievable.
Principle 3: A budget has to be made after a fullassessmentwhich includes:
- a clear understanding of the budget's goal to the restaurant’s mission, objectives and purposes,
- a comprehensive
- assessment of the restaurant’s financial requirements with the purpose of attaining its
objectives, and
- A plan to enhance resources or change objectives and aims, if existing resources are unable to
fulfill unit's requirements.
Principle 4: Real financial outcomes have to be regularly likened to the budget for:
- identifying changes in situations or the business setting,
- determining transaction miscalculations,
- measuring the financial performance,
- ensuring needless costs are being shunned,
- ensuring that expenses are reasonable and essential to achieve the unit's objectives, and,
- Sufficiently supporting the transactions.
Principle 5: When real financial outcomes diverge significantly from the budget, then a
manager has to:
a. look for the reason,
b. assess the activity, and
c. take remedial action.
Principle 6: the restaurant has to operate within the budget. Whenever the expenses go
beyond budget, explanation for such extra has to be provided. Moreover units have to create a
formal plan to remove shortages caused.
Principle 7: All expenses have to abide by all relevant rules, guidelines and protocols.
Principle 8: Every unit has to assess the financial impacts before a new action is begun or
an existing activity is altered or removed.
Principle 9: Every unit has to make sure that the estimated benefits are more than the
expenditures for any scheduled or constant activities (Soppe, Van Zijl and de Bos, 2010).
Principle 10: Every unit should take sufficient precautions to protect from the loss or
unofficial usage of restaurant’s assets.
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Activity 3 – Using the HR Life Cycle for Talent Management
The next job rotation is into the Human Resources Department, where the review of the
HR Life Cycle is done w.r.t. the role of a Food & Beverage Manager on a Cruise Ship -The HR
life cycle is the concept where the stages of employees time explain with respect to specific
organization and the human resources division has a role to play at every stage. models of human
resource life cycle have 6 stages which are:
Recruiting: In this stage the procedures involving hiring of a new staff member are
involved. A few organizations utilize talent acquisition software which allows them to create and
automate every aspect of hiring procedure such as utilization of application tracking system, Pre-
employment screening and planning the time and schedule of interviews along with the follow up
with the candidates (Hersey, Blanchard and Johnson, 2017). This software can assist the
recruitment team in streamlining the hiring procedure and to attract the top talent.
On-boarding: the workers who have given acceptance to the job offer become part of the
organizational work/force. In this stage they are given with the information and tools for working
effectively and integrating into the business culture. The workers get to know about the rules,
policies, responsibilities and culture of the organization during the training. During this stage, they
are added to the identity and access management system of the restaurant.
Developing: In this stage development procedure is involved. The workers are given
feedback for the work - by performance reviews, meetings from discussions, and one-to-one
sessions (Nagendra, 2014). The regular feedback is important for this stage as it assists the
manager to get awareness about the team members and also assist the team members to
understand how well they performed against the objectives. Employee engagement can also be
boosted by the feedback,
In this case, the chosen organization can use a LMS (Learning management system) or the
performance managing software for managing staffs, setting objectives and giving timely
feedbacks (Qwaider, 2011).
Retaining: As the employee is part of the business and knows his role well the
organization has to retain him and ensure that there is continuous employee development. In this
stage, regular evaluations, trainings and recognition are necessary to sustain employee
engagement and retain the worker. For tracking the continuous learning and succession plans,
talent management software can be used.
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Off boarding: It is the final stage of the HR life cycle. In this, the workers leave job
because of new job, layoffs, retirement, termination or personal reasons. For this, HR division has
to apply proper process and documentation.
Activity 4: Performance Planning
There are certain examples of negative behaviours displayed by the staff members like
gossiping, showing general discourtesy, insubordination or bullying etc. For these negative
behaviours, it is important that the manager creates a performance plan and this plan will involve:
Training- The preventive training should be given to the team members so that they are
aware of the behavioural expectations. This way the managers are also aware of how to act in case
the employee is unable to meet those expectations (Laudari, 2014).
Facilitation of the important teamwork activities- This would help in building better
understanding amongst colleagues. In this, the employers can apply workplace personality testing
elements to assist the employees make out they may have diverse work approaches and diverse
tendencies in how they connect with others.
Civility training can be included for all staff members who would involve cultural
sensitivity, diversity awareness and business ethics/ etiquettes etc.
Documentation and following of disciplinary policies- Manager can talk to staff
regarding the disruptive behaviours, may be many times, yet the lack of documentation can lead o
no records maintained for the discussions that took place. By documenting the discussions, the
manager has the record for how and when the expectations were set up with the employee.
Following up with employee- Improvements in performance can be sustained by follow-
ups with the employees. The unacceptable performance must not go unnoticed and unaddressed
yet the manager must give employee a chance to improve, which would be a useful morale
booster.
Plan to overcome the issues of staff retention
Employee retention is important in the given industry as the businesses compete for talent
and the cost of employee turnover is extremely high. There are other costs linked with the
turnover like lower engagement, lower productivity, cultural effect and cost of hiring and training
new staffs (Plachy and Plachy, 2008).
For avoiding the issues linked with the staff retention, it is suggested that:
- Making a provision of ongoing education and training
- Bringing clarity of paths to advancement
- Making sure that there are right benefits offered
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- There has to be transparency and openness
- Building up an atmosphere of mutual trust and support.
Activity 5 – Training on Law for the Hospitality Industry
The HR department also needs to deal with different legal issues which have effect on
daily operations of the business. As a part of the Flagship program that every employee attends
the training seminar on “Law for the Hospitality Industry”. The employees, managers and other
staff members must be aware of different hospitality laws because they are in the state laws which
have to be followed and should not be broken. This is applicable for hotel industry, restaurants,
lodging places, country club, conventional facilities, bar as well as far or any other location which
is serving food on providing place for staying overnight. When the Business does not follow the
state, local or federal laws then there can be lawsuits, penalties, finance and negative publicity,
which no hospitality business would want to (Koseoglu, Law and Dogan, 2018).
The Food safety law has important role in hospitality segment and the knowledge
regarding the way of cleaning and storing food items can keep the clients safe and assist the
organisation in avoiding any penalties or lawsuits. Other safety laws would involve the hotel and
motel fire safety act which has a list of hotels which fulfil the minimum fire safety Regulations.
The restaurants also need to fulfil their guidelines with respect to fire safety. This way the
customers can be at ease when they know that the rest from all the places they are visiting is has
made investment into safety of its customers in case of fire. The restaurants also have other laws
to follow such as maximum occupancy law, keeping aisles clear so that customers can go to
emergency exits quickly, creation of adequate exit points. The law of keeping records is important
for the hospitality business because these reports can sometimes turn out to be valuable resources
when the business has to prove adherence to any of the different hospitality regulations. The food
organisation or catering business has to keep a tip sheets so that the track can be kept for the
workers who with deep and there should also be accurate and updated employee contracts and
paperwork for payroll taxation. The workers who are aware of the hospitality lost can maintain
highly accurate reports and would not throw away or delete any significant documents. When the
organisation maintains proper records then the proof can be there for adequate pays given to
workers and even that is important tax deductions are not missed out (Thomas, Thomas and
Thomas, 2013). Apart from these the employees must be trained on the company laws,
employment laws and contract law as these have potential impact on business decision-making in
the hospitality business overall.
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Activity 6 – Briefing on Legal and Ethical Considerations
The regulatory frameworks are important to ensure compliance with the basic standards
however in some cases the effect of legal, ethical and regulatory issues can also be significant.
The potential impact of the regulations, legislations and ethical principles on decision-making for
Carnival UK will involve the provision of good quality of food, proper handling, right serving
schedule, and responsible service of alcohol. Food quality is important part in any restaurant
business and there should be systems in place for accounting for waste and tracking should be
done on daily basis. There should be proper training and education provided to the staff members
in terms of serving alcohol and they should be empowered to cut any guest off in case they feel
that guest is intoxicated (Bulley, 2015). When there is any restaurant or a carnival or food to be
served then it is important that the manager plans the kind of food, decor, menu and various legal
concerns are there before serving the customers. It is important that the licences are there provided
by the controlling jurisdiction which would need inspection of the facilities for making sure that
the business fulfils the safety standards. For getting the licence, it is important that there is a
commercial kitchen which is completely compliant with the related laws. In case the alcohol is to
be served then the liquor license requirements are also to be fulfilled. Once the license is issued,
the additional inspections will also be there for maintaining that license.
It is important that the menu is carefully chosen to make sure that the recipes are not
copied or the concept is not copied from any other business. The concept and name of the business
should not infringe on competitors ideas and in case it does then there can be legal action taken
against the business.
Activity 7 – Exploring Functional Roles
The hospitality industry has various categories of areas within the service segment which
involves restaurants, planning of events, transportation, lodging, theme parks, and additional areas
in tourism industry as well as cruise line. The hospitality business is a huge industry with various
billion dollars of revenue that is highly dependent on the availability of disposable income and
leisure time. The hospitality units like hotels, amusement parks and restaurants have various
groups like direct operations which involve housekeepers, bartenders, workers in kitchen, servers,
porters and many other such roles and there are other areas like human resources department,
marketing as well as management. The hospitality business has various organisations which offer
accommodation and food services. The hospitality industry is separated into two segments as per
the skill sets needed for the job or role in world. The segments involve food and beverages,
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gaming and entertainment, recreation, meeting and events, visitor information, and tourism
services.
Source: Lashley, (2018)
The hospitality business is relation among the host and the guests or it can also be stated as
the activity or exercise of showing hospitality. Particularly this involves the entertainment of
guests, reception, strangers, visitors, club memberships, special occasions, conventions,
attractions, resorts and various services for all the tourists and travellers which visit the facility.
In case of the chosen business there are also various functional roles which are into
marketing, food and beverage, management, human resources and front desk managing. The front
desk manager has to create reports as needed and he also ordinates payrolls, expenses and
schedule for fulfilling the timelines and budget. There are various initiatives in which the front
desk executive or manager has to participate to make sure that the guest data is processed in
effective manner along with the proper security standards being followed.
The hospitality manager is one who has the role of making sure that employs work
together in effective and efficient manner to attain the goals laid down by the business in which
they operate. The hospitality manager has to deal with physical and human resources for
achieving the customer servicing goals of the business and therefore he has to effectively plan,
range, lead and control. For planning he has to set the objectives and decide the course of action to
achieve those goals. For this he has to be aware of the environmental situation which is faced by
the business and must predict future risks and situations (Jennings, 2015). He has to be a good
decision maker in this case. He scans the environment and looks for critical risks and
opportunities, the competitors and customers. The manager should plan and laid down the
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