TOPIC: Financial
Information
Needs for
Tourism &
Hospitality
Decision-Makers
MINI-LECTURE: The
Need for Accounting
Information
We will focus on…
…financial accounting
…management accounting
…decision-makers in tourism &
hospitality
…best possible financial outcomes
In these people-driven &
service-focused
industries…
…how does understanding
financial information help us?
…why are effective financial
management techniques
fundamental to success?
TOPIC: Financial Information Needs for
Tourism & Hospitality Decision-Makers
1. The need for accounting information
2. The nature of accounting information
3. Characteristics of tourism & hospitality
4. Hotel ownership & management
structures
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information abouta ffi ng
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what are the accounting
information needs of different
stakeholders?
TOPIC: Financial
Information
Needs for
Tourism &
Hospitality
Decision-Makers
MINI-LECTURE: Nature
of Accounting
Information
financial managemen
accounting t accounting
financial accounting
FINANCIAL
STATEMENT
S
standardised financial reports to support external
management accounting
short-term
pricing budget
decisions forecasts
analysing
optimal
opening hours
management accounting
diverse,
unique, non-
techniques
standardised
specific to
needs
covers periods
within one day, up
to multiple years
Profit = $50,000
Profit = $30,000
financial accounting
profit is reported on the
“income statement”, also
known as a “profit & loss
(P&L) statement” USALI = Uniform
Systems of Accounts in
standardised the Lodging Industry
operational info to
hotel owners,
investors, managers
etc. for purpose of
TOPIC: Financial
Information
Needs for
Tourism &
Hospitality
Decision-Makers
MINI-LECTURE:
Accounting Information
Needs of the T&H
Industries
unique characteristics of T&H
1. disparity and interdependency of functions
2. high exposure to sales volatility
3. perishability of the product and service
offering
4. high fixed cost structure
5. labour intensity of the services.
disparity of functions
managers from
different departments
have different levels of
influence
must differentiate
between managers
according to what they
can be expected to
control
interdependence of functions
results from one
department influence the
results of other
departments
when setting budgets and
targets, functional
interdependency must be
accounted for
high exposure to sales
cyclical
volatility
demand
external
shocks &
downturns
perishability of service
offering
services cannot be
stored for later sale
if unsold today,
opportunity is lost
forever
absolute vs. relative
perishability
high fixed cost structure
many costs do not
fluctuate with sales, they
stay the same
fixed costs vs. variable
costs = implications for
budgeting
labour intensity of the
frequent interaction
services
of guests and
employees
up to 40% of revenues
in some developed
countries
need to manage labour
costs and enhance
productivity
TOPIC: Financial
Information
Needs for
Tourism &
Hospitality
Decision-Makers
MINI-LECTURE:
Ownership &
Management Structures
in Hotels
4 main hotel owner/manager
structures
1. independent hotels
2. hotel consortiums
3. hotel franchises
4. hotel management
contracts
independent hotels
privately
owned
owner takes
responsibility for
management
not brand
affiliated
owner is an
autonomous
decision-maker
hotel consortiums
an affiliated group of
independent
operators
fee to access marketing
platforms, agreement to
deliver minimum standards
financial freedom +
brand recognition
franchised hotels
inexperienced
hotel owner can
purchase ‘know- higher levels of
how’ brand recognition
drive sales
revenue
owner is also manager,
but does not own the
brand, cannot expand
hotel management contracts
hotel owner contracts
an experienced hotel
management owner provides all
company to manage financial resources to
daily operations the management
owner exposed to company
financial risk,
management company
is not
contract designed to
align interests of
owner &
management
Your use of accounting info
& analytical techniques will
change, depending on
whether you need to report
to a hotel owner, or a hotel
manager.