Chris Guilding - Accounting Essentials for Hospitality Managers

Accounting Essentials for Hospitality Managers

For non-accountant hospitality managers, accounting and financial management is often perceived as an inaccessible part of the business, yet understanding it is crucial for success. Using an easy-to-read style, this book provides a comprehensive overview of the most relevant accounting information for hospitality managers. It demonstrates how to organise and analyse accounting data to help make informed decisions with confidence.

With its highly practical approach, this third edition:

quickly develops the readers ability to adeptly use and interpret accounting information to further organisational decision making and control;

demonstrates how an appropriate analysis of financial reports can drive your business strategy forward from a well-informed base;

develops mastery of the key accounting concepts through financial decision making cases that take a hospitality managers perspective on a range of issues;

sets financial problems in the context of a range of countries and currencies;

includes two new chapters concerning managerial finance issues and revenue management;

includes accounting problems at the end of each chapter, to be used to test knowledge and apply understanding to real-life situations;

offers extensive web support for tutors and students, providing explanation and guidelines for instructors on how to use the textbook and examples, PowerPoint slides, solutions to end of chapter problems, and student test bank and additional exercises.

This book is written in an accessible and engaging style, and is structured logically with useful features throughout to aid students learning and understanding. It is an essential resource for all future hospitality managers.

Chris Guilding is Professor of Hotel Management in the Department of Tourism, Leisure, Hotel and Sport Management at Griffith University, Australia. His teaching specialism is in management accounting and he has taught on the MBA, Masters in Hospitality Management, Professional Golfers Association, Australian Institute of Company Directors Course and undergraduate programmes.

Accounting Essentials for Hospitality Managers

Third edition

Chris Guilding

First published 2014

by Routledge

2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN

and by Routledge

711 Third Avenue, New York, NY 10017

Routledge is an imprint of the Taylor & Francis Group, an informa business

2014 Chris Guilding

The right of Chris Guilding to be identified as the author of this work has been asserted by him in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

Library of Congress Cataloging in Publication Data

Guilding, Chris.

Accounting essentials for hospitality managers / Chris Guilding.

pages cm

Includes bibliographical references and index.

1. Hospitality industryAccounting. 2. Hospitality industryManagement.

I. Title.

HF5686.H75G848 2013

657'.837dc23

2013023756

ISBN: 9780415841078 (hbk)

ISBN: 9780415841092 (pbk)

ISBN: 9780203766668 (ebk)

Typeset in Sabon and Frutiger

by RefineCatch Limited, Bungay, Suffolk

Additional materials are available on the companion website at [www.routledge.com/cw/guilding].

To Dawne, Logan and Matthew

Contents

Welcome to Accounting Essentials for Hospitality Managers. This is the third edition of the book, although the books first edition was entitled Financial Management for Hospitality Decision Makers. The re-titling of the book resulted from a concern that the words financial management convey a particular meaning to many accounting and finance academics. This meaning suggests a curriculum that encompasses corporate finance topics such as the cost of capital and capital structure. Such topics would be of interest to finance specialists working in the corporate head office of large hotel chains. They are not particularly pertinent, however, to managers operating at the hotel property level. This book is concerned with the key accounting tools and techniques that facilitate effective management in a hotel property. Hence the words accounting and essentials are included in the new title.

This edition of the book contains two new chapters: , which provides an accounting perspective on revenue management, which has become an increasingly important facet of hotel management in recent years. The number of problems appearing at the end of each chapter has also been expanded to a minimum of 12. For each chapter, solutions for the first three problems are provided at the back of the book. This is a self-help feature designed to further facilitate learning and enable students to review their understanding of concepts covered by the book.

The current era of growth and dynamic change in hospitality signifies that it is an exciting time to be involved with the industry. Like many other industries, the hospitality sector is experiencing heightened levels of competition and a growing need to apply appropriate management techniques to ensure commercial success. These factors increasingly signify that a hotel manager needs a working knowledge of accounting tools, techniques and procedures.

From my experience as an instructor of accounting generally, and hospitality management accounting in particular, I have found students tend to approach their first class with a degree of trepidation and an expectation that the subject will be dry and difficult to master. Through this book, I endeavour to make the subject material accessible and to demonstrate the relevance of accounting to all hotel managers in all but the smallest hotels. Recognition of the way that accounting can be usefully applied by the modern manager is a critical factor that can stimulate a students desire to master the material covered. Once relevance is appreciated, the student starts to explore the range of ways in which accounting can serve the hospitality manager.

The approach to topics covered has been designed to maximise the readers sense that they are quickly mastering key accounting concepts. Such mastery will help the reader develop the courage to demand excellence of the hotels accounting department where he or she works. This is a key step in the design of a quality accounting system. Too frequently, managers are turned-off by accounting jargon and the way accounting reports are presented. It is an unfortunate reality that accounting reports frequently appear to be designed by accountants for accountants. This problem is partially attributable to the fact that most qualified accountants have gained their qualification through demonstrating their understanding of the rules of external reporting (i.e., financial accounting, which is the branch of accounting concerned with the preparation of annual accounts for external parties, such as shareholders). When providing accounting information to managers within the hotel, however, reports should be designed with the decision making needs of the managers in mind. Hotel accounting systems can be greatly improved if managers play an active role in ensuring that accounting reports developed for their use are designed to be of maximum relevancy and are structured in a format that facilitates easy interpretation and use.