Question

In: Accounting

What are the areas/factor to evaluate the accounting specificities of hotels when doing comparison?

What are the areas/factor to evaluate the accounting specificities

of hotels when doing comparison?

Solutions

Expert Solution

HOTEL ACCOUNTING: Hotel accounting is part of accounting practice in hospitality industry. Hospitality accounting is not a separate branch of accounting, but it is a very specialized area that focuses on those accounting techniques and practices used in restaurants, hotels, clubs, and other hospitality businesses. If hospitality were very similar to other industries, there would be little reason to create a separate book about, or even to study, managerial accounting for hospitality

Unlike conventional corporate accounting where where one set of financial statement is used, in hotel accounting financial reports are made from various department before "consolidated statements" are made for the hotel. The main financial statements are no different from other accounting reports: (i) balance sheet, (ii) profit and loss, and (iii) statement of cash flow. These 3 statements are generated for the various department and evaluated department-by-department. Below is a sample of various departments in a fully operated hotel:

-Administration

-Beverage

-Food

-Garage and parking

-Golf course

-Golf shop

-Guest laundry

-Health center

-Marketing

-Property operations

-Rental

-Room

-Swimming pool

-Telecommunication

-Tennis court

-Tennis shop

-Utility

-Other operations

Furthermore in hospitality accounting utilises the following KPI's to measure it's performance

Hospitality Terms
1. ADR
2. Check average
3. Occupancy %
4. Sales break-even point
5. RevPar
6. Profit margin
7. Product cost %
8. Product yield %
9. Contribution margin
10. Cost of goods sold

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