Accounting Procedure In A Hotel (A Case Study Of Royal Marble Hotels, Benin City)

Project and Seminar Material for Accountancy / Accounting

Accounting Procedure In A Hotel (A Case Study Of Royal Marble Hotels, Benin City)


Abstract


This project work which is titled “Accounting Procedure in a Hotel” is aimed at explaining the accounting procedure that is applicable in a hotel system. The researcher intends to establish this by using royal marble hotel Benin City as a case study for the research project. Hotel accounting procedures help a hotel management and other firm in the hospitality industry prepares accurate financial statements that conform to regulations and accounting principles. These regulations include international financial reporting standards (IFRS) and generally accepted accounting principles (GAAP). Hotels follow the general principles of accounting, but due to the unique nature of guest accounting, hotel accounting departments use terms that may not be familiar to accountants in other industries. Accounting terms related to the management of guest payments, charges and disputes can be confusing to outsiders, but they represent everyday concepts in the hotel industry. This project work is divided into five chapters, each chapter taking it own share of the explanation of what hotel accounting procedure is. Chapter one handles the introduction to the study, under which the researcher have historical background of the study, the background/profile of the hotel used as a case study which is royal Marble Hotel, Benin City, statement of the problem, object of the study, significance of the study, definition of term etc. Chapter two covers the literature review, giving a detail explanation of what a hotel is, what accounting procedure is all about, and the accounting procedure in a hotel system. Chapter three covers the research methodology; chapter four is on data presentation and analysis while chapter five covers summary, conclusion and recommendation.


Chapter One


Introduction

1.0 Background of the Study

The purpose of this research work is basically to explain the accounting procedure in a hotel.

For a proper understanding of the study, it is wise to first of all explain the meaning of hotel. Thereafter, the meaning of accounting will also be looked into in a separate term. Also, the meaning of accounting procedure will be observed, then, accounting procedure in relating to hotel firm will be explained. For a proper understanding, Royal Marble hotel Benin City was used as a case study.

Hotels follow the general principles of accounting, but because of the exclusive nature of a hotel when compared to other organization, hotel accounting departments use terms that may not be familiar to accountants in other organizations or industries. Accounting terms related to the management of guest payments, charges and disputes can be confusing to outsiders, but they represent everyday concepts in the hotel industry.

Accountants recognize the importance of proper hotel accounting procedures, as it is the foundation upon which all financial decisions are based. They have a knowledgeable and dedicated hotel Accounting Team to ensure the highest level of support possible to each investor. With a comprehensive centralized hotel accounting system, they provide essential hotel accounting services to investors interested in accounting for hospitality.

The practice of accounting has been a practical one since the inception. This is one of the notions in the writers mind when carrying out this study. Here, practical involvement in this work unveils the most of the accounting operations as are being obtained in the hotel.

A dedicated Property Accountant whose responsibility is to manage the accounting function supports each one of a hotel. The duties include the balancing and auditing of the managers’ and employees’ work, maintenance of the hotel’s accounts receivable and accounts payable, processing of employee payroll and ensuring adherence to accounting standard operating procedures by all departments within the hotel. In a hotel, the properties Accountants have the additional responsibility for the Human Resources function. While a Regional Director of Human Resources supports them. Accountants in some hotel have the opportunity to develop their Human Resources skills including interviewing, recruiting, counseling, coaching, disciplining and motivating.


1.1 The Profile of Royal Marble Hotel

Royal Marble Hotels is located at about 2,200 meters above sea level on a green hill valley and Government Reservation Area (GRA) in the ancient kingdom of Benin City, “the heart beat of the nation.” The hotel is nested in an area of colourful garden flower and is conveniently located close to the city center, the Benin Airport, the Oba of Benin Kingdom palace, the National Museum of Benin of historical greatness.

Royal Marble Hotel’s primary mission is to bring in hospitality industry beyond mere accommodation, but providing a peaceful and secured homely environment for visitors or travelers from all parts of the world.

Royal marble Hotels, an ultramodern hotel, first in the Niger-Delta zone of the blackest populous nation, Nigeria. In the very heart of the ancient city and charming city of Benin, Royal Marble Hotels was planned with all the character of a small town with gardens, the room, suites, restaurants, conference and banquet halls, bar, swimming pools, gym, etc. all flow into each other, creating a unique and welcoming atmosphere; The national museum, zoo, golf field, among other things and some are 1 kilometer from the hotel.

The hotel houses 110 elegant and well equipped suites that come in numerous sizes and structures, to accommodate the tastes of various guests.

The services at the hotel include a bar, laundry services, a pool bar, restaurant, an internet café, gym facilities, a casino, security services, and many more services. The restaurant is a fully serviced 24 hours and offers numerous dishes including African and Cosmopolitan cuisines.

Activities that are available for guests include trips to the national museum, the zoo, golf fields all situated within a one kilometer radius.


1.2 Statement of the Problem

Some of the problems that are involved in accounting in a hotel system are as follows:

There are often confusions as the accountant cannot judge which accounting procedure will be best suited for the smooth functioning of a hotel.

Another problem that is associated with hotel is lack of existence of a trained accountant in some hotels. It is quite unfortunate that some hotel management in Nigeria feel that the services of an accountant are not relevant to their businesses. It is also unfortunate that some who know the usefulness of an accountant in their businesses do not have the financial means of employing a professional accountant.

Other problems include the unavailability of reliable accounting information on which to base managerial decision and the inability to project or even give an estimate of what their production, scales and profit level will be like in the successive future period.

Another problem is that of seeking the support and involvement of all levels of management and the difficulty in educating all individuals who are to be involved in the accounting process and gaining their full participation.

However, the inability to apply the financial management system in a flexible manner and the inconsistency in maintaining effective follow up procedures and adapting the accounting procedure in a hotel is also not an exception.


1.3 Research Question

To find out whether the accounting procedure of hotels is effective, the following questions are raised:

  1. Can the accountant decide the best accounting procedure that should be adopted in a hotel?
  2. Are there adequacies in the practice of accounting procedure adopted in a hotel system?
  3. Are the accounting practices enough to report profit and provide management with timely and reliable information for decision making?
  4. What is the caliber of accounting personnel employed in the hotel?
  5. How adequate is the internal control system in the hotel?

1.4 Research Hypothesis

Hypothesis is a tentative statement about relationship that exists between two or more variables.

In this study, the null hypothesis (Ho) will be tested against alternative hypothesis (Hi). Two hypotheses will be formulated by the research in testing the null and alternative hypothesis.

These are as follows:

  1. Ho: an accountant can not decide the best accounting procedure that should be adopted in a hotel
    Hi: an accountant can decide the best accounting procedure that should be adopted in a hotel
  2. Ho: there are no adequacies in the practice of accounting procedure adopted in a hotel system.
    Hi: there are adequacies in the practice of accounting procedure adopted in a hotel system.

1.5 Purpose of the Study

The purpose of this research study is to determine the accounting procedure in a hotel system and to ascertain the level of importance and the overall benefit the hotel management derive from such accounting procedure existing within the hotel.

  1. To understand the objectives for coordinating a hotel on keeping books of account of their transactions.
  2. To access adequacy of financial records and other books of account by an accountant in a hotel.
  3. To know the roles of accountant in reporting profit and loses and providing management with timely and reliable information for decision making.

1.6 Significance of the Study

This study is aimed at showing the accounting procedure that is applicable within the hotel system and examine the role of accounting procedure in a hotel as a tool of management, an instrument of control, a technique of decision making, a system of performance measurement and reporting which is vital in business growth and expansion.

This study could be of immense use to anybody who wants to gain some insight into the role of an accountant and the current method of accounting procedure in a hotel.


1.7 Scope of the Study

This study covers such areas as: hotel system, accounting, accounting procedure and accounting procedure in a hotel system. The area covered in this research work includes Royal Marble Hotel, Benin City.

The data to be collected would also be restricted to Royal Marble Hotel.


1.8 Limitation of the Study

This research work is limit due to some factors:

Management Restriction:

Managements often are not willing to give out some useful information that would have helped the researcher in getting the needed information about the company. This was a source of limitation to this project work.

Time Factor:

The time giving is too tiny for me to carry out the project work accurately.

Finance:

This also restraints me in carrying out my research work as being expected.


1.9 Definition of Terms

Efficiency:

This is a fact of performance which relate to the rate of resource utilization (ie cost incurred in the course of the work. Ovuorie G (1997).

Accounting:

This is the fundamental processes of developing theories for the discipline of accounting. And the primary aim of accounting theory has been to provide a basis for the predication and interpretation of accounting behaviours and events. James Ilaboya Advanced Financial Accounting (2005).

Hotel:

A hotel is an establishment that provides paid lodging on a short-term basis.

Policies:

Koontz, O Donnell and Weihrich (1980) define policies as a general statement or understanding which guide thinking in decision making; the essence of policies is the existence of discretion, within certain limits in guiding decision making.

Management:

Act of running and controlling a business.


Chapter Five


Summary, Conclusion and Recommendation

5.1 Summary of Findings

For a proper understanding of the project, the researcher first of all explained the meaning of a hotel. Thereafter, the meaning of accounting was also explained in a separate term. Also, the meaning of accounting procedure was observed, then, accounting procedure in relation to hotel was also explained. Then to get a full understanding, Royal Marble hotel Benin City was used as a case study.

In hotel industry maintenance covers many aspects such as house keeping, electrical, janitorial services etc., which may be outsourced. Since each activity is different, there will be several contractors. Their terms will be available from the individual agreement contracts made with them which should form the basis for accounting function.
From the research findings it was established that the hotel accountant decides the best accounting procedure that should be adopted in a hotel in which he operates.

Using Royal Marble hotel as a case study for this research project, it was discovered that there are adequacies in the practice of accounting procedure that has been adopted the Royal Marble Hotel.

This project also find out that hotel accounting procedures helps to report profit and loss and provide management with timely and reliable information for decision making.


5.2 Conclusion

Hotel accounting procedures help a hotel management and other firm in the hospitality industry prepares accurate financial statements that conform to regulations and accounting principles. These regulations include international financial reporting standards (IFRS) and generally accepted accounting principles (GAAP).

Hotels follow the general principles of accounting, but due to the unique nature of guest accounting, hotel accounting departments use terms that may not be familiar to accountants in other industries. Accounting terms related to the management of guest payments, charges and disputes can be confusing to outsiders, but they represent everyday concepts in the hotel industry.

Hotels follow the general principles of accounting, but because of the exclusive nature of a hotel when compared to other organization, hotel accounting departments use terms that may not be familiar to accountants in other organizations or industries. Accounting terms related to the management of guest payments, charges and disputes can be confusing to outsiders, but they represent everyday concepts in the hotel industry.

Accountants recognize the importance of proper hotel accounting procedures, as it is the foundation upon which all financial decisions are based. They have a knowledgeable and dedicated hotel Accounting Team to ensure the highest level of support possible to each investor. With a comprehensive centralized hotel accounting system, they provide essential hotel accounting services to investors interested in accounting for hospitality.


5.3 Recommendation

This study has endeavored to establish the accounting procedure in a hotel. The management reacts according to the aggregate of accounting information that is available in a hotel when taking decision.

A hotel is such an organization that engages in huge daily activities, I therefore recommend that a hotel accountant should be diligent in keeping track of all daily operation reports such as daily labor, revenue, purchasing and operating statistics.

A hotel accountant should also be thorough in the area of Cash Flow Reports such as providing weekly or monthly basis at the corporate level with input on revenue and expenses from the hotel’s property.

Based on the fact and findings, I also recommend that accountants and managements of hotels should be diligent in formulating accounting procedure for the hotel to ensure a better accounting procedure that will safeguard the financial base of the hotel.

Again, there should be a standard accounting procedure in a hotel since the management decision making is also dependent on the available accounting information in the hotel. Without confidence in the available accounting information, the management may find it difficult why making decision.

Hotel accountant should develop a standardized accounting procedure in such a way that will reveal and report the hotel’s financial status to the management.

Hotel accounting procedure should be consistent and meet the requirements of the Generally Accepted Accounting Principles (GAAP) within a country.

Hotel accounting procedures should cover such areas as how to record financial data, summarize financial data, prepare financial statements, and everyday accounting matters of a hotel.


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