Question

The following partial organization chart is an extension of Exhibit 12–1 for Aloha Hotels and Resorts. ■ Problem 12–41 Designating Responsibility Centers; Hotel (LO 12-2) Waikiki Sands Hotel Grounds and Maintenance Department Front Desk Housekeeping and Custodial Department Food and Beverage Department Hospitality Department Bell Sta Guest Services Recreational Services Department Each of the hotel’s five main departments is managed by a director (e.g., director of hospitality). The Front Desk subunit, which is supervised by the front desk manager, handles the hotel’s reservations, room assignments, guest payments, and key control. The Bell Staff, managed by the bell captain, is responsible for greeting guests, front door service, assisting guests with their luggage, and delivering room-service orders. The Guest Services subunit, supervised by the manager of Guest Services, is responsible for assisting guests with local transportation arrangements, advising guests on tourist attractions, and such conveniences as valet and floral services. Required: As an outside consultant, write a memo to the hotel’s general manager suggesting a responsibility- center designation for each of the subunits shown in the organization chart above. Justify your choices.

Answer 1

Lets first understand what is Responsibility Center?

In the complex web of businesses today, there are various businesses with different layers of investments and purposes tied to each other on a notional basis. For ex., Apple Inc and Amazon has different types of business running in their hood. Apple has not only hardware business of iPhones and MacBooks, it also has services business like Apple Tv. All these sub departments act as an independent unit with their own budget, own employees, own tasks, own goals, own revenue projections and expenses. Such units within a business is what we call a Responsibility Center. Center with its own responsibilities to work towards the achievement of own as well as organisational goals.

There are primarly four types of Responsibility Center: investment, revenue, cost and profit. For Waikiki, its 3 subunits can be designated as following centers:

• front desk: Front desk can be designated as revenue center as its main activity is to collect revenue and it does not have any expenses of its own or any investment responsibility.
• Bell staff: Bell staff is just a cost center as it incurs only the costs necessary so that other centers could generate revenue and make investments. They do not have any source of revenue and only assist guests with better services.
• Guest services: It is a profit center as it incurs its own cost of managing valet and floral services as well as generate revenue from providing these services to the guests.

Hope this helps, if not please let know in comments. Please mark the answer as helpful for the efforts put, it will mean alot. Thanks