SUMMER INTERNSHIP PROJECT REPORT ON
“COST MANAGEMENT IN HOSPITALITY INDUSTRY”
FOR THE PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE
AWARD OF DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
(Session: 2022-2024)
ABSTRACT
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Hospitality industry is one of the business entities that budgeting must be functional and active. The
method of it application or execution matters. It will be a good practices to know that for
effective hospitality operation and growth of food costing and control system should
be extraordinary. In the researchers were able to point out the basic element that facilitates the
growth of business in the hospitality industry through the proper use of food costing and control, so it
can be said that operational cost can be observe as the cost of starting a new entrepreneurship or the
cost of investment in the newly open business. Operational cost is the very cost managed by the
general manager or the manager in charge of the activities in the industry and it contributes to the
growth in the business and the hotel welfare or well-being. Operational cost consists importantly of
selling price, which is the actual cost of food, including the accumulated cost for sale, mark-up for
sale, sales variation and sales function. This study will be able to contribute immensely to food
costing and control in the hospitality industry with Indian perceptive palying a majority role. It was
conclude the for a successful business activities or operation to be achieved, and effective cost
control and operations should be introduced in the business of organization and operators shouldn’t
be in charge of managing the operations and purchases of in the industry as this can introduces
bureaucratic measures though waste which cannot be controlled and managed and as a result
recommendations were made that the operators of the industry should learn and learn professionals
for effective4 food costing and control system and owners of the industry(business) should draw a
clear coast between ownership and management to help reduce management cost
INTRODUCTION
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In the Indian hospitality industry food cost control is very important because as it requires
proper budgeting as cost control can limit waste. Food cost and control when properly done and
attention given to every detail and process in it functions and activities results into growth of the
industry. The principal and application of food costing keeping cost low in planning ahead. The
Information of the in-house gusto food and beverage production department makes it easier to
control food cost. There are various method used in the different departments including cost plus. In
preparing or making appropriate food cost and control in the hotel industry, the general manager
does the budgeting, and in some hotels the breakfast supervisor carries it out, depending on the
establishment while in some, the general manager, accountant, store man, purchasing officer, food
and beverage controller, food and beverage manager, supervisors, kitchen supervisor, restaurant and
bar supervisors does it, while income organization food and beverage manager and supervisors takes
care of the food cost and control. It is important to operate food costing and control in
the industry as far as food is involved, even if it is only staff meals, because this is part of the
hotels expense and it needs to be controlled properly. Food costing can be said to be the all time
function in the industry including regular and ad-hoc function operations. Understanding control
system and how to apply the system the first in first out(FIFO) system is applied in order to prevent
throwing food away, we make surreal items that were brought first are used first in all functions and
sales outlets including stores and purchasing various things, like in portion control and audit, stock
taking, sales, cash control, cashiering and reporting, prevention of theft, and pilfering [Link] the
hospitality industry different portion control methods are involved and it affects the industry
positively, when it is well applied or done through weighing of items and making sure that each plate
that leaves the kitchen has the exact same amount of it meson them and extra has to be charged
extra, these methods help to standardize things. Monthly figure and operating statements are
involved in the Indian hospitality industry, just to access, evaluate and monitor the operations and to
determine where you standing business either you are making it or losing and also determine the
levels of your progress, if you targets are been meet or not, as this will help in overview of there
venue and expense, been a very important aspect of controlling. To understand the rationale behind
feeding and its effects on food cost, percentage is necessary so that you can determine, amend,
moderate or reposition and re-strategize on your food and beverage operations as this helps food
cost controlling to be done properly. Food costing voles cost of production and labour which
actually looks at purchasing within season and purchasing outside season, cost of extra labour
within and outside season and management decision on causal staff. Management cost is not
over looked where the cost of supervision and control is considered, the input of the
management staff per hour and their monetary value. Operational cost is also an important factor
in food.
The Hospitality and Tourism Industry
The Hospitality Industry in India is estimated at USD 23.50 billion in 2023, and is expected to reach
USD 29.61 billion by 2028, growing at a CAGR of 4.73% during the forecast period (2023-2028).
The hospitality and tourism industry has been witnessing a healthy growth number and accounted for
7.5% of the GDP. India is a part of the top 100 clubs on Ease of Doing Business and ranks 1st in the
greenfield FDI ranking globally and to strengthen the cruise tourism sector, the Government of India
(GoI) has selected Chennai, Goa, Kochi, Mangalore, and Mumbai ports to develop them as cruise
tourism hubs. These terminals will have facilities like hospitality, retail, shopping, and restaurants.
With a global footprint and an annual revenue of well over $500 billion, it’s hard not to ignore one of
hospitality's most important segments: the lodging industry.
The hospitality industry spans across service industry sectors such as restaurants, hotels and the
broader tourism industry. As one of the largest job creators and economic contributors, it is
important for both customers and workers to understand the ins and outs of this dynamic industry.
The word hospitality evolved from the Latin hospitalitis, which referred to the relationship between
guest and host, as it took its root from hospes, the word for host, guest, stranger, or visitor. Thus
hospitality is the act of welcoming guests or strangers (Princeton) or “entertainment of strangers or
guests without reward or with kind and generous liberality.” At its core, hospitality is all about
delivering a great customer experience
Double Tree by Hilton
DoubleTree by Hilton is an American hotel chain managed by Hilton Worldwide. DoubleTree has
been the fastest growing Hilton brand by number of properties since 2007, and by number of rooms
from 2007 to 2015. As of December 2019, it has 587 properties with 135,745 rooms in 47 countries
and territories, including 122 that are managed with 35,122 rooms and 465 that are franchised with
100,623 rooms.
DoubleTree competes in the full service category, alongside sister chain Hilton Hotels & Resorts.
Among the many signature things that DoubleTree is known for are their chocolate chip cookies,
which were originally made in the early 1980s for VIPs but now given to all guests and made by
Nashville-based Christie Cookie Company for over 30 years. In 2020, during the COVID-19
pandemic the brand published a home-adapted recipe for their cookies.
S.W.O.T ANALYSIS OF HILTON
A SWOT analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses,
Opportunities, and Threats of a business, project, or individual. It involves identifying the internal
and external factors that can affect a venture’s success or failure and analyzing them to develop a
strategic plan. In this article, we do a SWOT Analysis of Hilton.
STRENGTHS OF HILTON :
Strengths are the positive things that an organization possesses. These strengths provide an edge for
companies to compete in the market. Any organization that possesses more strengths will be able to
compete well in the market.
This section of the SWOT analysis will have a look at the strengths that Hilton possesses.
1. Worldwide Recognised Brand
Brands try hard to gain recognition across the globe. This helps them in increasing their customer
base and revenue. If a brand is globally recognized, it gets easier for that brand to attract customers.
Hilton hotels and resorts are a world-class hospitality company and one of the largest global hotelier
brands. Hilton operates in more than 122 countries and owns more than 7,000 properties worldwide.
Hilton is one of the most reliable hotels in terms of security and comfort in different parts of the
world.
This acts as a strength for the brand because it helps in increasing the brand’s customer base.
2. Huge Customer Base
Businesses look for ways to increase their customer base because as the number of customers
increases, more revenue is generated. In the case of Hilton, it has a wide customer base.
Currently, Hilton has more than 112 million members registered worldwide. These members play a
significant role in making Hilton such a famous brand. Besides that, due to the presence of so many
customers, Hilton manages to cover its costs and earn some profit, making the business beneficial for
the shareholders.
3. Satisfied Workforce
Employees are the engine that pulls the business in the right direction. It is very important for
businesses to keep their employees satisfied. Hilton is considered a brand that is famous for keeping
its employees satisfied. In 2020, Hilton was added to the Fortune list of the top 100 companies to
work for.
The Hilton hotel is known for its great treatment of workers and their families. The brand
understands the importance of ensuring they provide their employees with all the possible facilities.
Hilton hotel provides its employees with several benefits, such as health and insurance coverage,
educational assistance programs, saving plans, and more.
WEAKNESS OF HILTON :
Weaknesses account for drawbacks that hinder the growth of any company. Of course, every
company has some drawbacks. However, work should be done to cater to these weaknesses. In this
section, we will highlight some of the weaknesses of Hilton.
1. High Number of Staff
Businesses need workers to carry out their daily operations. However, if the workforce grows too
big, it can become a liability for the company. The hotel industry requires a high number of
employees due to the nature of the business.
Since Hilton is a hotel chain, it requires a lot of workers. Currently, Hilton has a workforce of
142,000 employees. Having such a high number of employees hurt Hilton since affording them is
difficult for the brand. In addition, paying salaries to so many employees would increase Hilton’s
operational costs, lowering its profit margins.
2. Bad Reviews
Social media is an essential tool used for marketing in today’s world. For example, people often try a
product or go to a restaurant and give reviews about the place. These reviews act like word of mouth,
and they shape other consumers’ points of view.
Some customers of Hilton hotels have rated the hotels poorly on various social media platforms.
According to these reviews, the brand’s customer service was poor, and the hotel’s ambiance wasn’t
good. Such bad reviews spread like a virus and damage a brand’s reputation.
3. Data Breach
Over the years, as the world has moved towards technological advancement, businesses have
realized the importance of data. However, we often hear news of data breaches in the current era. Big
brands are often accused of misplacing data or getting their data hacked. Similarly, a few years ago,
Hilton failed to protect the data of its users.
Hilton had a security problem with its cash register. In addition, the company’s credit cards were
compromised due to a data breach. In early 2018, the hotel chain had to pay 700,000 dollars as a
penalty to resolve this issue. This incident seriously impacted customers’ confidence in the company
and its services.
OPPORTUNITIES PRESENT FOR HILTON :
Opportunities mark the chances available for any organisation to succeed in the future. Every
organisation is provided with some opportunities to do well. In this section, we will analyse some of
the opportunities that are present for Hilton.
1. Look Into Social Media Marketing
Businesses nowadays have changed their ways of marketing due to the technological advancements
we have recently experienced. Instead of investing in Billboards, TV ads, and pamphlets, businesses
have shifted to social media marketing.
Hilton can hire social media managers and market its brand on social media platforms such
as Facebook, Twitter, Instagram, etc. By marketing on these platforms, Hilton can reach new
customers, which can help the brand in generating more revenue.
2. Expansion to Developing Countries
Businesses often look forward to expanding their operations in developing economies since they
have high demand and cheap labor. Both of these things are very beneficial for any company.
As we know, one of the best ways to grow is to enter new markets. Keeping that in mind, Hilton
should penetrate developing countries of Asia and Latin America. They have great growth potential,
and the investment wouldn’t be high, but it would generate a lot of revenue for the company.
3. Mergers and Acquisition
Brands are always looking to increase their customer base and share in the market. However, one of
the easiest ways to do so is to form a merger or acquire any pre-existing brand. These practices are
used by businesses to consolidate their position in the market.
Hilton being a dominant player in the market, has the opportunity to form mergers and acquire pre-
existing small businesses to increase its customer base and profit margins. By forming mergers,
Hilton can use the expertise of different brands in different operations. Moreover, acquisitions will
increase the customer base of Hilton.
THREATS FACED BY HILTON :
Every brand faces some threats from the environment where it practices business. These threats must
be catered timely, or they can damage a brand. In this section, we will look at some of the threats
faced by Hilton.
1. Legal Cases
Any company operating in a market feels threatened by legal procedures since they negatively affect a
brand’s reputation. Brands don’t want to get involved in lawsuits because they push away investors
and customers.
Hilton Hotel lost its lawsuit with Starwood some years ago. The court gave the verdict in favor of
Starwood, and Hilton had to pay a fine of 75 million dollars. Many investors and stakeholders were
affected by this lawsuit, which pushed them away from their business deals.
2. High Competition
Businesses always avoid markets where there is intense competition since the result of high
competition always leads to low-profit margins. Due to price wars and unnecessary marketing
expenditures, businesses observe severe losses. Hilton being a hotel chain, operates in a highly
competitive market.
Hilton’s hotel chain has been around for over 100 years and has expanded to several countries.
However, there are some threats to their future growth if it doesn’t keep up with the pace of
technology. For example, Marriott International and other hotel brands are increasing their market
share quickly by offering better services at lower prices.
3. Russia-Ukraine Conflict
Many businesses have wrapped up their operation in Russia after the war between Russia and
Ukraine. Hilton is among those companies that have been operating in Russia for years. However, as
the conflict between the two countries started, Hilton decided to suspend its development operations
in Russia.
By taking this step, Hilton closed the market of millions of people. As a result, Hilton has lost a
significant share of its revenue which it used to generate from Russia. In addition, Hilton now feels
threatened since no one knows when Hilton will be able to continue developing in Russia.
HILTON SWOT ANALYSIS : FINAL WORD
Hilon is a renowned hotel and resort chain that operates in almost every country. Its roots can be
traced back to 1919, when its owner entered the hotel business. Over the years, the operations of
Hilton evolved, and soon it became one of the leading hotel chains in the world.
After discussing Hilton’s history and current operations, we proceeded and carried out Hilton’s
SWOT Analysis. The SWOT Matrix highlighted the strengths, weaknesses, opportunities, and threats
faced by Hilton.
Besides learning about the internal and external factors affecting Hilton’s operations, we are sure you
must have understood how to conduct a SWOT analysis from this article. If you still have any
queries, don’t hesitate to look at some examples of SWOT analysis
PESTLE ANALYSIS
Hilton PESTLE (or PESTEL) Analysis assesses the brand on its business tactics across various
parameters. PESTLE Analysis of Hilton examines the various external factors like political,
economic, social, technological (PEST) which impacts its business along with legal & environmental
factors. Let us start the Hilton PESTLE Analysis:
Political Factors:
The political factors in the Hilton PESTLE Analysis can be explained as follows:
Hilton hotels & resorts are one of the most popular global hotel chains. Political stability in the
country becomes a very important factor as hotels need to cope with the political situation in various
countries in which it is operating. If a particular country is not stable then people will fear to go to
that country for leisure or work purposes which will reduce the number of visitors to that country and
thus affecting the revenues of the hotel adversely. Hilton hotels operate in various countries so it is
exposed to various political risks associated with the country.
Also trade war between various countries now will impact on the hostel operations and profitability.
Also due to lockdowns imposed by various countries now have tremendously affected the hotel
industry and so it is having a very tough phase now. But gradually many countries are also now
easing their lockdown which will help the hotel industry to grow and increase their revenues.
Economic Factors:
Below are the economic factors in the PESTLE Analysis of Hilton:
Like any hotel business, Hilton’s business is defined by several economic factors. Before starting a
business in a particular country, a company must check the economic condition of that country.
Economic factors impact the hotel industry in various direct and indirect ways. These factors are not
in control of business but affect overall revenue of the business. It includes factors like interest rate,
inflation rate, growth rate, GDP of that country. Hilton hotels have a chain of luxurious hotels so it
should target the countries which have people with high disposable income. Also having a stable
economic environment is very important for the growth of this kind of business. Due to COVID-19,
many countries are having very low interest rates to incentivize the various investors to make
investment in the country. Loans are available at very cheap rates than before. So, it can be a very
good time for hotels to expand and diversify its business due to cheap availability of credit. Also,
most of the countries are in slowdown due to nationwide lockdown, so the level of productivity is
pretty low in the various countries across the globe. The pandemic has really affected the operations
of the various businesses and thus people are left with less income to spend on various leisure
activities which is definitely not a good factor for the hotel.
Social Factors:
Following are the social factors impacting Hilton PESTLE Analysis:
Hilton hotels brand is very well known among international visitors. Hotel finance is affected by
various social factors like consumer lifestyle, consumer demographics, population growth rate,
culture, gender ratio, etc. With increase in income of the people their spending habits also change.
So, their willingness to spend on leisure activities increases which is a good thing for the business.
Also, as the lifestyle of the people across the globe is improving which is also a very good sign for
the hostel profitability in the future. Due to COVID-19 people have fear interacting with various
people and they prefer to stay at their home. They avoid various social gatherings which is a matter
of concern for Hilton hostel. As a hotel, it does not have control over the social factors, so it can wait
for the things to get better in the future.
Technological Factors:
The technological factors in the PESTLE Analysis of Hilton are mentioned below:
There is continuous improvement in technology in today's competitive world. A company cannot
afford to ignore these factors to compete with various competitors. Hilton hotel must upgrade its
technology wherein necessary for improving its value proposition which it offers to its customers.
Adopting technology which disrupts the industry is very important as it may help company in
reducing its costs and also at the same time enhance customer experience. Hotel should accept all
modes of payments which is very important in today’s world of digitalization. Due to the rise of
social media and development of various websites had helped customers to book hotels anywhere at
any time at their convenience.
So, hotel bookings are now becoming more sophisticated so this factor cannot be overlooked by the
business.
Legal Factors:
Following are the legal factors in the Hilton PESTLE Analysis:
Laws and regulation of the country really affects the operation of the hotel in which it is operating.
Employee laws, customer laws and other legal framework should be followed by the hotel, so that it
does not attract intervention of the government and various NGOs in the operations of the business.
Legal factors are closely interlinked with political factors. Hilton hotel should have a close look at
the various laws of the countries at which it is operating. Various laws are amended continuously so
the firm should know these changes in law and can make the necessary changes in the business
required by the law. Various laws have been also made by the government of various countries to
tackle the problem of COVID-19 like to maintain social distance between people and also sanitize
the hotel rooms, to stop the spread of the disease. These things have increased the cost of operation
of the hotel and definitely affect the profitability of the company.
Environmental Factors:
In the Hilton PESTLE Analysis, the environmental elements affecting its business are as below:
As people are becoming more sophisticated towards protection of the environment. They keep close
check on which company is having proper waste management and what it is doing for the
environment. Hotel businesses often become a point of criticism for polluting the environment.
Climate change is a serious environmental threat for the Hilton hotels. Different countries have
different norms or environmental standards which can impact the profitability of an organization in
those markets. Even within the country different states may have different laws related to the
environment. People now praise companies which take initiative to protect our environment. This
also results in increasing the goodwill of the company which can be very beneficial for the company
in the long term.
Hotels should take various steps toward saving the environment of the globe. This will also help
companies in avoiding intervention of various NGOs and governments in the operation of the
business. The hotel must look at the environmental factors closely to satisfy its various stakeholders.
To conclude, the above Hilton PESTLE Analysis highlights the various elements which impact its
business performance. This understanding helps to evaluate the criticality of external business factors
for any brand.