Financial Management, HR, and Communication in Hospitality Report

This report provides a comprehensive analysis of the hospitality business toolkit, focusing on financial and accounting management, HR practices, ethical principles, legislation, and communication strategies within The Brown's Hotel. The report covers key aspects of financial management, including source documents, recording practices, the double-entry system, trial balances, cost analysis, and the importance of accuracy in financial transactions. It also delves into the HR lifecycle, examining recruitment, onboarding, career development, and employee recognition. Additionally, the report explores relevant legislation, including contract and employment law, and the impact of ethical issues. Furthermore, it reviews different functional roles within the hospitality sector and assesses the effectiveness of various communication methods, offering recommendations for improvement. The report provides a critical evaluation of financial management and monitoring, offering recommendations to enhance financial performance. It serves as a valuable resource for understanding the multifaceted aspects of managing a hospitality business.

UNIT 4 THE HOSPITALITY
BUSINESS TOOL KIT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
Source documents........................................................................................................................3
Recording.....................................................................................................................................4
Managing and monitoring financial performance of business....................................................4
Double entry system....................................................................................................................5
Trial Balance................................................................................................................................5
Types of cost and their importance..............................................................................................7
Importance of accuracy in recording transactions.......................................................................7
CONCLUSION............................................................................................................................8
Critical evaluation of role of financial management and monitoring..........................................8
Recommendations for improving financial performance............................................................8
LO2..................................................................................................................................................9
HR life cycle and role played by HRM.......................................................................................9
Performance management plan and recommendations for improving HR life cycle................10
LO3................................................................................................................................................11
Legislations pertaining to hospitality organisation....................................................................11
Impact of contract and employment law on decision making...................................................11
Implication of regulations on standards.....................................................................................12
Impact of ethical issues of legislations......................................................................................12
LO4................................................................................................................................................12
Different functional roles in hospitality sector..........................................................................12
Review of coordination and integration with business organisation.........................................13
Effectiveness of different communication methods..................................................................13
Recommendations......................................................................................................................13
REFERENCES..............................................................................................................................15
2

INTRODUCTION
The report is on hospitality’s financial and accounting management and HR practices followed,
ethical principles and legislation with communication between various departments. The
organisation taken for the study is The Brown’s Hotel which is an eminent hotel of UK. Various
aspects of accounting and financial management have been discussed in the report. Other aspects
have also been highlighted.
LO1
Source documents
Example of the source documents and related transactions happening in hospitality business
Bank statement: It has many adjustment entries to a hospitality organisation’s book balance of
cash in hand which the company has to reference to get records in alignment with that of bank
(Schmidgall, 2019).
Cash register: It can be used as cash sales proof and which can tell about the sale transaction
recording. It can be used for many businesses including hospitality.
Supplier invoice: This document assists the cash issuance, cheque or payment electronically to
supplier. An invoice supporting the recording of inventories, fixed asset and expense.
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Recording
Recording of the entries are done in journal, general ledger and trial balance in The Brown’s
Hotel. In the age of computers, when everything is being kept in soft copy form, then also
recording procedure requires entry in physical form (Agwor and Okafor, 2018). It is because
entries have to be recorded in accounting rules and regulations and then the same is entered in
the computers. The journal entries are recorded in a chronological order.
Information in source documents is recorded in prime entry books. These are the books in which
initial transactions are recorded.
Books of prime entry
Sales day book: It is where the records of sale invoices sent to customers is recorded each day. It
lists the invoices which are sent to customers daily.
Sales return day book: It is a book in which there is record of goods which get returned by
customers. The book has record of return inwards which is done on regular basis.
Purchases day book has record of the purchase invoice which is received from the suppliers. It
lists invoices which are received from suppliers every day (Schmidgall, 2019).
Cash Book keeps a record of money which is received by the organisation and the money which
is paid out by organisation through the bank.
Petty cash book is book where prime entry has record of small amount of cash which gets in the
business is received and paid from the cash flow.
Ledger account is record where transactions which are of similar item is recorded and constitutes
a summary which is of transactions which are similar.
Managing and monitoring financial performance of business
Preparation of Key Financials
Basic financials like maintaining Balance sheet, profit and loss statement are reports which every
company has to maintain, these are the performance indicators required. This provides an
overview of the business and informs owners as well as the investors of how the organisation is
performing (Agwor and Okafor, 2018).
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Analysing Overheads
Only preparing financial statements is not sufficient. The organisation has to see where the weak
spots lie where overhead expenses are in extra or piling up. These bring the company’s
profitability down and thus requirement of their managing helps check the business financial
performance (Obinwanne, 2019).
Double entry system
Each transaction involves two parties and accounts which are affected- one account is which is
the beneficiary and other one who provides the benefit. It is called transaction’s dual entity.
In each transaction, account receiving benefit gets entered on the debit side and the other account
is credited.
Following are the principles of double entry system
a) Two parties: Each transaction has involvement of two parties which goes in debit and
credit. As per the main principles of system, each debit of an amount create
corresponding credit or each credit has debit for same amount of transaction (Yang,
2019).
b) Receiver and giver: Each transaction has a giver and a receiver.
c) Exchange in equal amount: Amount of money given in a transaction is equal to amount
received.
d) Entity which is separate: Business is treated to be a separate organisation and is said to be
an entity which is separate.
Trial Balance
It is statement of debit and credit account balances which are used as check on the arithmetical
and accuracy of entries via procedure of double entry.
Purpose of trial balance
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Trial balance is attempt for checking the accuracy in recording double entry in ledger accounts
(Obinwanne, 2019).
Structure of trial balance
Trial balance has two sides, debit and credit side. The debit side has summarisation of debit
balance while credit side has summarisation of credit balance in ledgers.
Preparation of Trial Balance
All accounts with those having zero balances are to be listed in the order they appear in the
ledger.
The debit balances to the debit column are copied and credit balance are copied to the column of
credit.
There is total done of each column and balances are compared.
The balance on the debit side has to be equal to the credit balance.
The order of accounts in trial balance is same to be that of General Ledger (Yang, 2019).
Balance of accounts with debit balance are to be added in left hand money column while
balances of accounts with credit balances are to be added in right hand columns.
Trial Balance as on 31 December 2020 of Brown’s Hotel
Particulars Debit Credit
Cash 159474
Accounts receivable 5000
Prepaid expenses 8400
Land 445000
Buildings 150000
Accounts payable 51300
Notes payable 45000
Mortgages payable 410000
Common stock 250000
Sales 61000
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Payroll expense 1000
Utilities expense 2000
Advertising expense 1600
Interest expense 2826
Total 775300 775300
Types of cost and their importance
Production process in an organisation involves different types of costs like:
Direct costs and Indirect costs which are according to three classifications of material, labour and
overheads.
Material costs means cost of material or commodity which is used by organisation for purpose of
production.
Labour cost as the name suggests is remuneration paid to employees of the organisation.
Overheads are the services cost being provided to organisation in manufacturing (Chatfield,
Chatfield and Poon, 2017).
Importance of managing these costs will save the operational costs, by dealing with suppliers for
material which is provided at less of costs and using methods of monitoring the processes which
can control overheads can help manage costs.
Gross profit is a ratio which denotes profitability and tells how much of revenue has been turned
in profit. Gross profit is calculated by removing cost of goods from sales. For example: Sales
generated of an organisation is 150000 and Cost of goods is 100000. Gross profit is then 50000
and gross margin is gross profit/sales that is 50000/150000 to be 0.33 or 33%.
Importance of accuracy in recording transactions
 Accurate recording helps save from irregularities in accounts.
 It helps in showing the exact cash inflow and outflow of organisation.
 It helps in managing customer data with accuracy.
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 It helps in saving from legal hassles.
 It helps in saving from penalties by audit team.
CONCLUSION
Critical evaluation of role of financial management and monitoring
Planning of finances: Finance managers plan the activities regarding financial impact such as
investment analysis and using techniques of budgetary control through latest budgeting
techniques for controlling and allotment of finances. However, these techniques have been time-
taking and also require specialised trainings to make the budget from scratch (Franco and et.al.,
2020).
Management of capital: Financial management has responsibility of estimation of capital
requirements and it has to be done time to time for determination of capital structure and the
composition and making choice for funding sourcing for capital needs in Brown’s hotel.
However, the techniques for capital estimation have not been always accurate as there are other
factors such as of market, due to which the capital estimated may seem less in actual need
(Carmen, Daniela and Larisa, 2020).
Recommendations for improving financial performance
Lower down on expenses
The best way for improving financial position is reducing expenses. Operational expenses of the
Brown’s Hotel have to be reduced (Franco and et.al., 2020). The Brown’s hotel must cut
operational costs, which it may accomplish by taking steps such as deferring significant
expenses, utilising fixed assets such as old storage rooms and warehouses, and moving to less
expensive energy alternatives, among other things.
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Sale of assets
The sale of assets that the hotel believes are no longer useful can result in money that can be
used to expand operations. The hotel has retained a significant cash worth, albeit a rise in the
same will help the hotel improve working capital and make the assets useful. Leasing of valuable
assets is another alternative available to the organisation. This could aid in capital growth.
Using fresh marketing tactics
This can be done using digital media such as the internet and social media, which is a less
expensive way of reaching out to individuals. This can save the company money on advertising
costs, such as hiring people to set up billboards and hoardings, and so on. Brown’s Hotel can also
take up environmental concerns and sponsor such activities which bring a change in society
(Carmen, Daniela and Larisa,2020).
Increasing the cash flow
There are a few ways that the business can enhance its cash flow, by increasing the customer
base through providing additional discounts and services. Using digital tools to keep track of
outstanding payments might be beneficial. Reduced costs and the establishment of a regular
payment schedule for expenses can help sustain cash flow.
LO2
HR life cycle and role played by HRM
Companies into the hospitality industry too like companies in other industries needed to be aware
about different stages of human resource cycle in order to operate business effectively. It is
helpful in ensuring that the company will hire effective employees along with developing
effective team work within organisation. In case of assistant general manager, HR life cycle
involving different stages are as follows:
Recruitment: It is the first stage in the HR life cycle where applications are invited from eligible
candidates (Santhanam and et.al., 2017). The important role played by HR manager at this stage
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is to evaluate background, qualification and experiences effectively in order to finalize the
candidate is suitable.
Onboarding: Here is the first phase when employee confronts with the company which involves
decision making by employees related to whether to stay in the company for long or not in an
initial period after joining the company. This stage is of great importance which helps employees
in understanding their responsibilities and working pattern of the organisation.
Career development: Brown hotel’s HR manager must be actively perform at this stage which
involves framing career development policies in order to facilitate employee’s growth through
promotions and other monetary benefits and incentives. It is also a very important stage in terms
of motivating employees to remain serving the company for long term with the help of
professional development tools.
Employee recognition: While serving in the organisation, employees expect to get awarded for
their actions and efforts in terms of benefits and rewards. Recognizing employee is necessary
from time to time in order to ensure long term stay of employee with the company and the same
applies to the assistant manager.
Off boarding: The HR life cycle ends here, as at this stage employees leave the organisation due
to any of the personal or professional developmental causes.
Performance management plan and recommendations for improving HR life cycle
The biggest challenge faced by modern organisation is employee turnover which acts as an
obstacle in the path of expanding operations of the business as companies are not able to obtain
and retain the required pool of talent and accordingly this results in ineffective operations of the
business (Presbitero, 2017). The performance management plan useful for the company towards
analysing performance of employees and overcoming the challenge of employee retention has
been framed as follows:
Planning: This stage involves developing performance management plan by Brown hotel for the
role of assistant manager in order to ensure their growth within the organisation. Here many
measurements pertaining to measuring and reviewing performance are utilised by Brown hotel.
Monitoring: At this point, the monitoring of assistant manager’s performance is analysed to
ensure higher effectiveness within Brown Hotel.
Developing: Post monitoring, the evaluation of personal and professional development of
assistant manager at Brown hotel must be done in an effective manner (Kim and et.al., 2019).
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Rating: Post conducting evaluation, assistant manager is given with certain ranking depending
upon their performance and development.
Rewarding: Depending upon the ranks obtained by assistant manager, they are duly rewarded
for their exceptional performances.
In the context of hospitality industry, the two major factors deciding the growth of business is
employee and customer’s satisfaction. When there is high turnover within the company, it is
impossible for the management to ensure higher effectiveness. To overcome this problem, it
would be better for Brown hotel to use some monetary benefits tools like incentives, bonus and
promotions along with other non-monetary benefits in order to encourage higher productivity
and enhance their ability to access pool of talented candidates.
LO3
Legislations pertaining to hospitality organisation
The list of most appropriate legislations applicable on Brown hotel on being in the hospitality
industry are as follows:
 Contract law
 Employment law
 Workforce health and safety law
While attracting pool of talented candidates within their concerned organisation, it is necessary
to ensure that every policies and procedure must comply with the rules and regulations governing
the same. Also, specific regulations and legislations to the hospitality industry must be complied
with by the company in order to ensure the achievement of planned growth rate through the
expansion of their operations.
Impact of contract and employment law on decision making
Hospitality industry have many laws and legislations that are applicable to it and they must
adhered to it, but among all the most those laws, contract and employment laws has a very
significant impact on the decision making of the company.
Contract law allows for hiring and making best possible use of the workforce according to the
need of the company (Pham, Tučková and Jabbour, 2019). The simplicity and effectiveness of
contract law allows for companies to run their business through effective employees along with
retaining them for long term. With the application of employment law on the company, it is
possible for employees to stay with the company for longer term as this law includes various
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employment welfare programmes that need to inculcate within organisation in order to make
business decisions effectively if the company wishes to retain their workforce for long term in
order to get increased productivity.
Implication of regulations on standards
The implication of contract law is that, whatever the compensation stated in the contract of
employment must be complied by the manager and a reasonable standard must be there for all
employees that allows for avoiding unequal distribution of monetary benefits.
The implication of employment law is that, a certain level of standards followed by the
organisation while hiring their workforce must be equally applicable in all situations regardless
of the background of the candidates.
Impact of ethical issues of legislations
The ethical issues associated with the hospitality concern are as follows:
Underpayment to employees gets avoided when employment law is applicable to the companies
which allows for even avoidance of unequal and unfair distribution of income (Santhanam and
et.al., 2017). So, it would be recommended to Brown hotel to plan compensation for their
workforce in a fair and just manner in order to ensure higher satisfaction and long term retention
of their employees.
Violation of human rights can be best avoided with the applicability of employment law on
Hospitality Company like Brown hotel which is generally seen in terms of poor safety and health
facilities and precautions related to the same, exploiting immigrants and encouraging child
labour. It would be recommended to Brown hotel to avoid such inhuman behaviour in order to
succeed and build image in the market which is necessarily required for obtaining talented
candidates.
LO4
Different functional roles in hospitality sector
There are many functions which are inter-related with each other in hospitality department. Front
office dealing with checking in and attending customers, housekeeping looking after cleanliness,
maintenance looking after repairing of defects in electronics and wiring, security function,
laundry regarding washing and catering dealing with food preparation and layout are all
important in the department’s proper functioning. They all have their roles to perform and are
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interrelated in a different hierarchy with line managers reporting to a common hotel manager in
the end.
There are different ways of communication which are useful in organisation’s way of working.
Face to Face communication: It is the most common form of communication used in
organisations which can bring improvement in understanding and removal of doubts instantly.
E-mail: An official mode of communication which is used for quick communication and gives an
opportunity for having a conversation in a crowded office (Franco and et.al., 2020).
Social media: Many organisations make use of social media for communication among groups
for sharing common views.
Review of coordination and integration with business organisation
There is apt coordination in Brown’s hotel with various departments working towards it. The
front office coordinate with the housekeeping to make the rooms ready for check-in by the
customers, the housekeeping clean the rooms and make the information available by posting
status on e-panel that the room has been cleaned. This lets the housekeeping know which rooms
are ready to be made available for check-in.
Effectiveness of different communication methods
The different methods like face to face communication, e-mail communication and information
through walkie-talkies practised in hospitality can be seen in security function. Here the security
personnel make contact with each other and register and send names of customers through e-mail
to head office. It helps in keeping a track of the number of customers checking in and the
information of the customer database gets collected. Remaining connected through walkie-
talkies ensures the reporting of any problem or the current situation which helps avoid any
inconvenience and improves customer experience meeting organisation objectives.
Recommendations
Coordination and integration can help in removing doubts and coordinating beforehand to make
the customer experience a better one.
Here are a few recommendations:
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a) Maintenance department has to function in coordination with front office and
housekeeping. Example: Housekeeping department find there are some errors in the
rooms for fixation like electronic devices facing problems in operating (Knežević and
Mitrović, 2017). The same can be then communicated to maintenance which can be then
corrected and maintenance can pass the message to front office to keep the room on hold
till the error gets rectified.
b) A sort of informal gathering or function in the organisation can help in employees
knowing each other well and rewind from the schedule. This shall bring a feeling of
togetherness in a unit and integrated towards achieving goals and objectives.
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REFERENCES
Books and journals
Schmidgall, R.S., 2019. International Association of Hospitality Financial Management
Educators (Educators (iAHFME) Academic Member 2018 Total Annual AHFME)
Academic Member 2018 Total Annual Earnings. Management, 27(2), p.6.
Agwor, T.C. and Okafor, R., 2018. Accounting Ethics and Financial Reporting Quality of
Tourism and Hospitality Firms in Rivers State. Journal of Accounting and Financial
Management ISSN, 4(3), p.2018.
Obinwanne, C.O., 2019. The Role of Effective Internal Control System to the Financial
Management of Hotel Operations. International Journal of Research in Tourism and
Hospitality, 5(2), pp.17-24.
Yang, Y., 2019. Effects of the size of acquisition on a hotel group's financial
performance. Journal of Hospitality Financial Management, 27(1), p.6.
Franco, S., Caroli, M.G., Cappa, F. and Del Chiappa, G., 2020. Are you good enough? CSR,
quality management and corporate financial performance in the hospitality
industry. International Journal of Hospitality Management, 88, p.102395.
Carmen, S.C.O.R.Ț.E., Daniela, Z.Ă.P.O.D.E.A.N.U. and Larisa, D.R.A.G.O.L.E.A., 2020.
SOURCES OF INFORMATION FOR MEASURING PERFORMANCE IN THE
HOSPITALITY INDUSTRY. Annals of the University of Oradea, Economic Science
Series, 29.
Chatfield, H.K., Chatfield, R.E. and Poon, P., 2017. Is the Hospitality Industry Ready for the
New Lease Accounting Standards?. The Journal of Hospitality Financial
Management, 25(2), pp.101-111.
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Knežević, S. and Mitrović, A., 2017, June. Analysis of the opinions in the audit reports of
companies in the hospitality sector: accommodation and catering service. In TISC-
Tourism International Scientific Conference Vrnjačka Banja (Vol. 2, No. 2, pp. 324-340).
Santhanam, N., and et.al., 2017. Impact of human resource management practices on employee
turnover intentions. Journal of Indian Business Research.
Pham, N. T., Tučková, Z. and Jabbour, C. J. C., 2019. Greening the hospitality industry: How do
green human resource management practices influence organizational citizenship
behavior in hotels? A mixed-methods study. Tourism Management, 72, pp.386-399.
Kim, Y. J., and et.al., 2019. The effect of green human resource management on hotel
employees’ eco-friendly behavior and environmental performance. International Journal
of Hospitality Management, 76, pp.83-93.
Presbitero, A., 2017. How do changes in human resource management practices influence
employee engagement? A longitudinal study in a hotel chain in the Philippines. Journal
of Human Resources in Hospitality & Tourism, 16(1), pp.56-70.
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