Course: Financial Management

Date: 09.12.13

Hospitality Accounting

Hilton Hotels & Resorts pride themselves in being the second largest hotel chain in the world. The measure is based on the bed capacities of the hotels across the globe. Started in 1919 by Conrad Hilton, the business has expanded to major cities in the 93 years of existence. To offer services all over the world, Hilton Worldwide, which owns the brand name Hilton Hotels & Resorts, franchises some of its branches to independent operators. However most Hilton branded hotels are managed by Hilton Worldwide.

Hilton Hotel’s marketing strategy aims to attract clients on business and leisure travel. Most of its hotel chains are found in major city centers, near airports. The company has also established resorts and leisure hotels in popular destinations for holiday lovers around the world (Hilton.com). To boost customer loyalty, Hilton has established a loyalty program that seeks to reward customers to its various hotels. The program, which is one of the largest in the world, offers discounts to Gold and Diamond members. This study aims to analyze operation at one of the Hilton hotels; Washington Hilton.

The Washington Hilton started operations in 1965 and now boasts of 1,070 rooms with 47 suites. The arch designed hotel has 12 floors and offers restaurant services and bar services to customers. The hotel is privately owned; therefore explicit details about its revenues are scanty. Experts however estimate that annual revenues range from 20-50 million dollars (manta.com). The hotel’s staff is estimated to be 100-249. The competitive advantage of this hotel is the location. Washington is one of the most visited states in the US given that most central government offices are located there.

Hospitality accounting refers to the accounting practices undertaken by hotels and restaurants. Accounting communicates to both external and internal users about the entity’s operation. In managing daily operation at a hotel, management relies on management accounts. These are different from the annual accounts prepared for external users. Hotel managers use two types of internal financial and management reports; one of the report presents summarized operating results for the previous day or week. The second report forecasts operations and activities for the next day or week. Such measures are important in hotel business owing to its sensitivity.

Hotel operations are expensive and mistakes in operations need to be identified as early as possible so that corrective actions are implemented immediately. An internal management report contains detailed operating information covering a specific time for a specific product, customer, department, or for the entire hotel or restaurant. It can contain the operational results for activities of the previous day or week, or it can contain the information required to plan the next day or week.

Daily and weekly reports are used internally as management tools, whereas monthly reports are used both as a management tool and to report the monthly financial results for the three formal financial statements: the P&L, the Balance Sheet, and the Statement of Cash Flow. The reports provide the basis of management in a hotel; the more a manager comprehends the reports; the better his/her management quality. Reports generated contain daily, weekly monthly, quarterly and annual information. The reports also include operating and financial information from previous periods, which provides a basis for comparison. Future information is also part of the reports so as to provide an avenue of growth.

Date: 2015-01-12; view: 927