Continental Hotel Budget Analysis: Cash Flow, Budgeting & Control

This report provides a financial analysis of the Continental Hotel, focusing on budgeting and financial management. It includes a cash flow forecast indicating positive liquidity throughout the year, with increasing cash balances. The report contrasts traditional and zero-based budgeting techniques, recommending zero-based budgeting for its detailed analysis of operating expenses. It outlines the five-step process for implementing zero-based budgeting and discusses strategies such as using technology, training budget holders, seeking expert advice, and scheduling frequent reviews. Finally, it emphasizes the role of budgetary control in supporting sustainability, highlighting how flexible budgets and variance analysis can reduce resource consumption and increase profitability, aligning with sustainability goals. Desklib provides students access to a wealth of solved assignments and past papers for similar studies.

Assignment 2 Continental
Hotel Budget Planner

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Preparation of budget planner (cash flow forecast) for Continental Hotel..................................3
TASK 2............................................................................................................................................4
Presenting concept of Traditional based budget and Zero base budget.......................................4
Presenting the process of Zero base budget and its implementation...........................................5
Role of budgeting control in sustainability support.....................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................1
Appendix..........................................................................................................................................3

INTRODUCTION
Financial Management is the process of estimating and managing the finances within the
organization for the success of the businesses operates under hotel sector. The present report is
based on the concept of financial management and budgeting which will cover the preparation of
cash budget of Continental Hotel of London (Alvarez and et.al., 2021). Further, the report will
interpretate the outcome of case budget under the budget planner section. Lastly, the second task
will be in the form of report to the Regional Accounts director of Continental Hotel. The report
will cover understanding of traditional and zero base budget, process and implementation of zero
base budget and role of budgeting control on sustainability support.
TASK 1
Preparation of budget planner (cash flow forecast) for Continental Hotel
Covered in appendix section.
Interpretation:
On the basis of cash flow forecast preparation, it is identified that in every month of the
year, the cash flow forecast is showing positive closing cash balance at the end of the month. Not
only that, the cash flow forecast of hotel is also indicating that in month by month the closing
cash balance are increasing and showing upward trend (Korkmaz and Afşar, 2021). This means
that the liquidity performance of the hotel during Jan to December of forthcoming year is good
and positive. It means that the cash income of the hotel in the year is higher than the cash
expenses of the hotel. It might be because that hotel sales all its services as well as products in
cash only and not only that they receive interest on the positive closing cash balance of previous
month in the following month at the rate 3% from the bank.
Not only that, the hotel expenses are also less as compared to revenue which leads to
positive cash balance at the end of each month. The ability of the company to manage cash
within the business is quite good which further interpretate that the overall performance of hotel
is good. The hotel prepares and plan its budget based on past year experiences as well as the
future development (Sheina and et.al., 2019). The impact of which the hotel able to predict or
plan the most accurate and reliable budget income and expenses for the upcoming year. After
analysing the cash budget of Continental hotel of London, it is interpretated that the hotel

analysis its cash inflows as well as cash outflows on a regular’s basis in order to manage the
business finances properly and appropriately.
TASK 2
Presenting concept of Traditional based budget and Zero base budget
Traditional and zero base budget is two most significant technique or method of budgeting
with the help of which companies can predict the future income as well as expenses. The
Continental Hotel should understand both the traditional as well as Zero base budget concept
with the aim of implementing the best budgeting technique within the organization (Berg and
Madsen, 2022).
Traditional Base Budget: The traditional based budgeting is the process of projecting the
business revenue as well as expenses based on the previous year budget. For example, if
Continental hotel need to prepare the budget of 2019 than they will take 2018 budget as a base. It
is one the best tool to predict as well as analyse the business earning and expenses. The major
advantage of traditional base budgeting to Continental hotel is that it helps in decision making
process (Lang, 2020). In case if financial management of Continental hotel is planning to obtain
finance from inventors than they should adopt traditional based budgeting as it is important for
obtaining finance. It is because investors always want see company performance before investing
money (Burkert and et.al., 2018). However, on the other hand, the traditional budgeting is might
be an inaccurate representation of goals and is one of the time consuming process for the
company. It is because this technique takes half of the time of management of Continental hotel
in analysing previous year budget.
Zero Base Budget: This is also one of the significant technique or method of budgeting
which is totally different from traditional budgeting. It is because this is a process of analysing
and allocating the income as well as expenses of business based on program efficiency and
necessity rather than prior year budgets. For Continental Hotel, the zero base budget is more
suitable because it forces them to analyse each operating expenses and consider the area within
the hotel generating more revenue. In this method, the manager of Continental hotel need to
justify all operating expenses for the newer period and also keep the legacy expenses in check.
The zero base budgeting keep the management of continental hotel aware of their cash inflows as
well as outflows (Maheshwari and et.al., 2021). The impact of which the company can identify

the area which is causing higher cash outflows. In simple term, this technique of budgeting is
helpful in determining the reason that why company is spending money in specific task. Is that
specific activity is beneficial for the company and if not that company should eliminate it.
However, on the other hand, the zero base budgeting also have drawback of manipulation by
savvy manager, highly resources intensive which also need to be consider before adopting this
technique. Also, because of the high complexity and expensive technique of budgeting, small
and medium size organization face lack of financial resources issue (Turner and Coote, 2018).
Presenting the process of Zero base budget and its implementation
The five process or steps that need to be followed by the manager of The Continental hotel
in order to implement the Zero base budget technique within their business are as follows:
Start: This is the first step in which manager of hotel are required to begin at zero level
each year (Ngo, 2022). It means they need to create annual budget from scratch where they are
not allowed to use past year actuals as a baseline.
Evaluate: This is the second step of zero base budgeting process in which the manager is
required to evaluate the critical cost area. For example, in the second step the manager of
continental hotel is required to evaluate each cost area and identify the ways to eliminate the
unnecessary activities to reduce such cost (Gemino, Horner Reich and Serrador, 2021).
Justify: In the third step of the zero base budgeting system, the manager is required to
account all the cost components of the budget. It means the manager of Continental hotel need to
identify the area of cost which are cost effective or cost saving. This helps the management to
further improve the productivity of such area in order to reduce the overall cost of the business
products and services (Sulindawati, Musmini and Dewi, 2019).
Streamline: This is the fourth step of process of zero base budget which involve
determination of activities should be performed by the company and how many cost is required
to complete that specific activity. During this process, the manager of Continental hotel is
required to automate and standardize processes wherever they think so (Ibrahim, 2019). This step
plays vital role in the determination of estimated cost required to process the whole operation of
business in current period without taking base of past year.
Execute: Lastly, in the execution step of the process, the manager of Continental hotel is
requiring to execute the process of zero base budgeting. This is basically done by the company

via communicating the plans, roles as well as the responsibilities with each staff or employees
clearly and appropriate manner.
In order to implement the above process of Zero based budgeting within Continental hotel
of London, the manager of organization is required to adopt the following ways:
Use enabling technology to drive ZBB process: This is one of the way with the help of
which manager of Continental health able to implement ZBB process within their business. This
is one of the best technique in which the manager is require to place a technology such as excel
etc. so that budget holder able to implement the zero base budgeting technique. There is also
some other automated expense tracking software which is also install by the company for the
implementation of zero base budget (Damitio and Schmidgall, 2018).
Proper Training to Budget holder: This is also one of the significant ways with the help
of which company such as Continental hotel able to implement the zero base budgeting in
successful as well as appropriate manner (Dali, 2021). For example, in this, the budget holder is
requiring to provide the proper training and development session to its budget holder who
prepare and update the monthly and annual budgets.
Using outsider expert advice: This is also one of the implementation ways under which the
company such as Continental hotel are require to hire the expert from outside the company
which can prepare and update budget using zero base technique (Doherty and Fredey, 2020).
This is also one of the best way with the help of which manager of Continental hotel able to
implement the zero based budgeting within the business. Experts are able to prepare the zero
base budget more accurately and clearly for the company.
Schedule frequent review: This is also one of the zero-base budgeting implementation
strategies under which the company such as Continental hotel is required to schedule the review
of technique or system (Nguyen, 2019). This is helpful for tracing the progress and update the
necessary modifications. In this sense, it can be said that frequent review of zero base system is
also one of the implementation ways through which management of Continental hotel can
implement zero based budgeting (Dali, 2021).

Role of budgeting control in sustainability support
Sustainability is the process of utilizing the natural resources in such a manner that meet
the present needs without compromising the capacities of future generation (Yuliansyah and
et.al., 2018). It is important to understand that the role of budgetary control over the support of
sustainability is quite high thus it is advisable to management of Continental hotel that they
should implement this strategy within their organization. The role of budgetary control in support
of sustainability is as follows:
Using Flexible budgets to support and improve sustainability: In present time, many
companies are using flexible budget and reporting on their energy as well as water usage as a
part of their sustainability. For example, Hilton hotel report on their energy and water intensity
via energy per unit of output within their financial statement (Beredugo, Azubike and Okon,
2019). Thus, it can be said that via preparing budget and using variance analysis as a budgetary
control technique helps the company to estimate its electricity and water usage. Further, this also
helps the company to reduce the overconsumption of natural resource with the aim of
achievement of sustainability goals as per UN.
Further, the role of budgeting control over the sustainability development is that it helps
the company to reduce their expenses and increase their profitability. With the help of budgetary
control, companies able to enhance their profitability which they further use for charity and
donation (Ntshonga and Kamala, 2019). For example, Premier Inn is a UK based multinational
hotel chain which uses zero-based flexible budgeting technique within their hotel. This has
helped the company to reduce their overall energy and waste consumption bills and increase their
profitability. Further, the management of Hilton has used some percentage of this profit on poor
children education donation. In this sense, it can also be said that Continental hotel can also use
the budgetary control tools and techniques within their organization with the aim of supporting
the sustainability (Student, 2021). The contribution of continental hotel on the sustainable
development will enhance the brand image of company in the market.
CONCLUSION
After summing up the above information, it has been analysed that the cash flow forecast of
Continental hotel is good as every month are showing positive closing cash balance. The report

has also concluded the concept of zero base and traditional based budgeting. Further, the report
has stated the process of zero base budgeting and the ways the hotel adopt in order to implement
the same. Lastly, the report has concluded the role of budgeting control on the sustainability
support of the business.

REFERENCES
Books and journals
Alvarez, T. and et.al., 2021. Management accounting practices and performance of SMEs in the
Hotel industry: Evidence from an emerging economy. International Journal of Business
and Social Science. 12(2). pp.24-35.
Beredugo, S. B., Azubike, J. U. and Okon, E. E., 2019. Comparative analysis of zero-based
budgeting and incremental budgeting techniques of government performance in
Nigeria. International Journal of Research and Innovation in Social Science. 3(6). pp.238-
243.
Berg, T. and Madsen, D. Ø., 2022. Budgeting in Hospitality. In Encyclopedia of Tourism
Management and Marketing. Edward Elgar Publishing.
Burkert, M. and et.al., 2018 Inc.: A Case Study on Capital Budgeting with Capital Rationing in a
Service Industry ContextA Case Study on Capital Budgeting with Capital
Rationing. Issues in Accounting Education.
Dali, N. R. S. B. M., 2021. Conceptual Framework for Determinants of Cloud Zero-Based
Budgeting Adoption: The Moderating Role of Government Intervention Policies.
Damitio, J. W. and Schmidgall, R. S., 2018. Club Capital Budgeting Practices over Four
Decades. Journal of Hospitality Financial Management. 26(2). p.5.
Doherty, T. and Fredey, C., 2020. Hotel Revenue Management: Forecasting and
Budgeting. Hospitality Revenue Management, pp.139-163.
Gemino, A., Horner Reich, B. and Serrador, P. M., 2021. Agile, traditional, and hybrid
approaches to project success: is hybrid a poor second choice?. Project Management
Journal. 52(2). pp.161-175.
Ibrahim, M. M., 2019. Designing zero-based budgeting for public organizations. Problems and
Perspectives in Management. 17(2).
Korkmaz, E. and Afşar, A., 2021 Activity-Based Budgeting for Hotel Food and Beverage
Services: A Case Study.
Lang, M., 2020. Consumer acceptance of blending plant-based ingredients into traditional meat-
based foods: Evidence from the meat-mushroom blend. Food Quality and Preference. 79.
p.103758.
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Maheshwari, S. N. and et.al., 2021. Principles of Management Accounting. Sultan Chand &
Sons.
Ngo, Q., 2022. The impact of participative budgeting on the supply chain resilience amid
COVID-19 pandemic: Empirical evidence from Vietnam. Uncertain Supply Chain
Management. 10(3). pp.1065-1076.
Nguyen, D., 2019. Application of capital budgeting methods in small and medium-sized
enterprises: case studies of SMEs in Vietnam.
Ntshonga, O. and Kamala, P., 2019. Suitability of conventional management accounting
practices to small and medium enterprises operating in the hotel sector of the Cape
Metropole. African Journal of Hospitality, Tourism and Leisure. 8(5). pp.1-14.
Sheina, E. G. and et.al., 2019. The relationship of financial planning and budgeting in turnover-
oriented enterprises. Academy of Entrepreneurship Journal. 25(4). pp.1-9.
Student, A. I. B. N. P., 2021. Reconsidering Budgeting after the COVID-19 Outbreak. Audit
Financiar. 19(2). pp.351-358.
Sulindawati, N. L. G. E., Musmini, L. S. and Dewi, N. A. W. T., 2019, November. Analyzing the
Need to Develop Materials in the Teaching of Hotel Accounting that Meet the
Requirements of the Graduate Users. In International Conference on Tourism,
Economics, Accounting, Management, and Social Science (TEAMS 19) (pp. 101-104).
Atlantis Press.
Turner, M. J. and Coote, L. V., 2018. Incentives and monitoring: impact on the financial and
non-financial orientation of capital budgeting. Meditari Accountancy Research.
Yuliansyah, Y. and et.al., 2018. Budgetary participation and its impact on individual
performance. Tourism and hospitality management. 24(2). pp.325-340.
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Appendix
Cash Flow Forecast:
3

Jan February March April May June July August Sept Oct Nov Dec Total
£ £ £ £ £ £ £ £ £ £ £ £ £
Receipts :
Cash sales 6,800 6,800 6,800 6,800 6,800 6,800 6,800 6,800 6,800 6,800 6,800 6,800 81,600
Payment at
business
account 85,000 66,000 85,000 40,000 42,000 49,000 56,500 66,900 74,000 49,000 50,900 50,800 7,15,100
Interest
Received 180 2,554 4,424 6,926 8,053 9,323 10,829 12,616 14,751 17,167 18,971 20,879 1,26,673
Total
Receipts 91,980 75,354 96,224 53,726 56,853 65,123 74,129 8,63,316 95,551 72,967 76,671 78,479 9,23,373
Payments :
Alcoholic
beverages 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000
Premier
league 3,000 3,000
Sky 250 250 250 250 250 250 250 250 250 250 250 250 3,000
Virgin
Active gym 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000
Vehicle
valeted 140 140 140 140 140 140 140 140 140 140 140 140 1,680
Vehicle
insurance 4,000 4,000
Magazines 250 250 250 250 1,000
Wardrobe 1,750 1,750 1,750 1,750 7,000
Wages 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 72,000
Beverages 350 350 350 350 350 1,050
Vehicles 275 275 275 275 275 275 275 275 275 275 275 275 3,300
Building
insurance 2,500 2,500
Petrol and
diesel 500 500 500 500 500 500 500 500 500 500 500 500 6,000
Rates 300 300 300 300 300 300 300 300 300 300 3,000
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