Question

Discuss two possible limitation factors to consider in preparing a budget for a hotel or restaurant.

Explain:

1. Why they are potential limitation factors.

2. Based on your limitation factors, explain how quality, cost, and price could help to maximize your budget profit.

Please provide one example.

Answer 1

Limitation factors are the factors which create a limit or a maximum ending barrier for the organisation at the time of preparation of the budget. The maximum the limiting factors the growth will hamper the most of an organisation. On the other hand, a budget is a financial plan to be prepared to estimate the future costs of the organisation.

There can be various limitation factors to be considered in preparation of the budget for a hotel or a restaurant.

1. Need for renovation

A hotel or a restaurant are firstly known for their ambience than their food, service, hospitality etc.

If a customer is not pleased by the ambience or the environment of the hotel he might have a bad word for it without seeing its masterpiece.

Generally hotels and restaurants are renovated with the trends of the past or even current prevailing trends.

A hotel in a posh locality will have more customers than in a backward locality.

Need for renovation might be a limiting factor because there can be :

• Shortage of space
• Shortage of finance
• Shortage of assets etc.

Hotels are generally made in a larger space because they provide multiple facility apart from the dining.Restaurants on the other hand needs plenty of space but lesser than hotels.If there would be shortage of space large number of customer cannot be attended at a time which will sometime be loss creating for the business.

Renovation is generally done on a large scale like to the whole of the area of the hotel or to the key part. Any addition will require finance at first hand. Renovation is a kind of a thing which one can not exactly estimate the costs and in general life exeeds the budgeted costs most of the time. Shortage of finance can be both general or specific to a particular activity which needs to be considered.

Assets for a restaurants or hotels are its sitting arrangements, decorations, transportation, living etc.A larger space will add up to the cost of more assets because the space needs to be filled with the apt things.

2. Services provided

After the ambience and looks the second most important thing for a hotel and a restaurant are services provide by them. It can be a limitation factor because services provided by a hotel or a restaurant can be of many types. Say for a hotel services can be serving in the dinning, room service, laundry services, transportation services, entertainment services etc. On the other hand restaurant services will include dining, packing, home delivery etc. Services are vital because these are kept in the mind for the customer for a longer period. A customer wants the best of the service if he is really paying good for the same.

Need for renovation and services provided are limitation factors because these are very crucial and most important things to run a hotel or a restaurant business. If there is no renovation and poor structure there is no profit for having a high class chef or ace security. Similarly if the services provided are bad then there is no benefit of having marble flooring and expensive sculptures.

To be in a profitable state a business should consider these limiattion factors at first hand. As or the hotel or restaurant business their presence is necessary but they should try to control costs related to them. These factors can be both profitable if used in proper sense and can be limiting the profits if are not placed wisely.

2. For Need for renovation: Its quality will be good if it is done at proper place like say for a hotel renovation can be best used at the hotel rooms, lobby, and dinning area at first. All other places are also necessary but when are considering to have the best at limited cost these are more important. It will be profitable in the sense that these places have a maximum number of customers at a time. If a customer is satisfied with the look it will further enjoy visiting again or even refer others which will be profitable.

For services provided: Service is the other most important thing a person see at a place. A hotel being a bigger space having various services like different dinning sections, rooftop dinning, pool side dinning, gyming facilities, gaming facilities, room service, waitering services etc. The key point here is that the service has a maximum interaction of the customer needs to be considered at first than the others. If these are apt then the quality will automatically increased and will increase the profits because the rating of the hotel will increase with the maximum services it will provide.

Hotels differ from the restaurants in away that they are a larger space and involve multiple things like dining, hotel rooms etc whereas restaurants are generally known for dining. Here in the given question limatation factors are considered for both to an extent.