Financial Planning And Controlling In Catering And Hotel Operation (A Case Study Of Circular Hotel Limited, Ilorin)
1.1 Background of the Study
Although we know that setting up hospitality industry in a prominent position in the Nigeria industrial league table with regard to the number of employees and annual turnover, in its present state, it is fairly of displeased original dating from the introduction of the regular mail coaches in the eighty century and developing, further during the colonial Era, with the advent of railway and their motor car which gave ordinary men the means of traveling easily than ever before.
Whenever a person leaves this home for more than a few days, he has to seek hospitality from his kind elsewhere, it may be that he requires a meal because he is too far away to go home and eat. He may be staying away over night which will require a room and a bed. If a man goes to work in the morning and does not return until late in the night, unless he takes his won food and makes his own tend he will have his meal in a staff canteen of work or to the services he obtained, he will expected at home such as a smile and a welcome. “The view aim of a hospitality industry is pressing that of providing temporary substitute for home”
There had certainly been hotels since biblical times and no doubt before, and all the eastern regions at least enjoy providing travelers, an obligation which has continued up to date. This was even supported by the legal requirement of the United Kingdom (UK). Hotel proprietors acts of 1958 history in several king garages and some terms come and go in popularity from time to time. The two main roots appear to be Latin and German.
Hospital is a Latin word which means a place for quest while her Bergen is German work which means to hide shelter.
1.2 Statement of the Problem
Hotel and catering establishment play a major role in the tourism industry in Nigeria just a the volume of sales of the various individual, catering establishment depends to some extents on the level of efficient management of the financial resources and their level of prices if hotel are to continue in making substantial contribution to the earning of foreign exchange, it must be consigns of the core of financial planning and control of certain aid, hotel establishment and carryout in depth analysis of the main features of their operation decide what problem for accounting and financial control purposes.
The inherent problems existing with respect to financial management in the hospitality industry could be viewed with respect to the following:
- Implore cost control system.
- Lack of people budgetary system.
- Inflexibility in the cost structure and nature of products.
- Little attention had been paid to the core of financial planning.
- Complex sales instability and cycle of operations
- Inefficient sourcing of finance and improper advance planning and control on how they should be utilized their stock .
The limitation listed above and others stated in the objective of the motivating force behind the study.
1.3 Objective of the Study
The main objective of the study is to device a means of improving on the management of scares financial resources with particular reference for planning and control in circular hotel Ilorin.
The study also sets out to determine the following objectives.
- The extent to which budgeting and budgetary would aid the proper control its financial resources.
- How the resources of financial form appropriate sources and at the right cost would maximize the owned of the catering and hotel operation.
- To determine the appropriate credit control policy which help in the maximization of bad debt.
- To determine the extent to which management not liquid financial resources would obstinate the possibility of shortage of excessive holding of cash.
- To disclose ho9w costing and budgetary control is used as tool for control in the hotel operations. Route.
- To determine the extent to which the administer of the stock or investors in the hotel operation would help in reducing wastage, pilferage and reduction in excessive investment in perishable stock.
1.4 Significance Of the Study
Hotel and catering establishment that are successful hardly succeed by chance. They are often the out come of extensive planning and control on the parts of the efficient management team, especially as tit relates to the management of their scarce financial resource, since financial have been describe as the “life blood” of any business venture.
More so, finance had also been describe as the resource had also been described as the resource input to the proper management of men, money materials and machinery without growth planning and control (even in hotels with service in great demand) will be unable to sustain the level of operation required. And control. Uncertainly and change is a luxury that is hardly enjoyed by hotels and catering establishment operating in a volatile economy like Nigeria, it than follows that by which the planning and control of their financial resources would help its services in the implies competitive business environment.
By carrying out a study on the financial operation in circular Hotel Ilorin. The study will go a long way to achieve the following benefits.
- The study will help to review the optimum stock level.
- The effective management of working capital with the object of reducing excessive investment on it.
- The study will help to add in no small measure to literature in financial management in catering and control the hotel operation.
- The study will also helped to explore the instability in sales and list structure in which plans was devised to instigate against uncertain future.
- To put in place a comprehensive control system for their credit policy.
1.5 Research Methodology
The tools for data collection was mostly interview and questionnaire. Comprised of open ended and close ended questions, descriptive method of data analysis was used.
The primary and secondary data collection used including going to the case of study and related establishment.
To carry out personal and direct administration of questionnaire, personnel, interviews,. Interview of personal and the company and statement issue by the company that are relevant to the study was equally used.
The secondary method of data collection and analysis involve the collection of processed data, information facilities in the campus (Kwara State Polytechnics) Kwara State Library Complex Ilorin was also used, such materials as journals magazines and text. Relating to the data area under the study was used.
1.6 Research Hypothesis
In order to provide solution to the research problems identified, to purse the purpose of this stud, the following hypothesis were formulated and test empirically:
- Hi: financial planning and control enhance hotel operations.
Ho: financial planning and control does not enhance hotel operation system.
- Hi: there is a relationship between financial planning and control of hotel operation
Ho: there is relationship between financial planning and control of hotel operations.
1.7 Plan Of the Study
The entire study is made up of five chapter, chapter one took a critical review of the hospitality industry, the theoretical background the need for the study and what the study had set out to achieve.
Chapter two reviewed related literature that have “direct relationship that exist between two variables object to the study” the variance analysis and views of various authorities control the management as it affects accounting and finance.
Chapter Four based on the data analysis, data presentation and finding of the study.
Chapter Five served as the conclusion and recommendation and the various area of further of the study.
5.0 Summary, Conclusion and Recommendations
At the beginning of our research, we gave a brief historical background of our study and reasons why we fell that the study is worthwhile, is principally the need for planning and control cost with the objectives of running catering establishment for profit. The significations of the stud highlighted how investment in working capital would help reduce excessive capital tie down and the expectation to hw the study would contribute immensely as an addition to the existing literature on the topic of financial planning and control in Hotel operation.
Also extensive discussion on the topic was made with reference to the view of the various auditors. The feature of the hospitality industry in general was extensively analyzed with respect to sales instability, cost structure, nature of product and cycle of operations. The market feasibility and fundamentals of control, the working capital management, cost control and costing budgetary control, control ratios, various analyses, capital structure and the source of finance were also discussed.
A brief history 9of the case study was also given so as to enable us to know how the hotel is, its operation.
Descriptive analysis of data collected was also given in a quantitative form.
A detailed examination of the financial activities with particular emphasis on planning and control in Circular Hotel Limited, has been given to this field of study made our research effort desirable.
An attempt has been made in this body to highlight the importance of financial planning and control as it relates to Hotel and catering operation.
In order to make progress at a reduce cost, comprehensive budgeting and budgetary control together with a standard costing techniques for the control of inventory, there will be a reduction in excessive investment in inventory.
The importance of budgeting and budgetary control in any establishments cannot be over emphasized. In view of the fact that there is no formal budgetary control in addition to standard costing techniques we recommend that there should be a formal budgeting system in the Hotel, the from should be a budget committee headed by the hotel accountant comprising representatives of various department, as in our appendix (i); this will assist in planning of hotel operation which could be short or long term in nature.
Since formal management information system and report are not properly instituted in circular hotel limited. We recommend that the various reports should be prepared on a timely basis. If the report should be prepared on a timely basis. If the report are properly prepare on time, it will go a long way in monitoring the performance of the various department within the hotel establishment, example of such report are embedded appendix (2) of our study.
It is of our opinion that each budget as an integral part of financial planning in the proper operation of any establishment, it should be prepared either on monthly or quarterly basis so as to easily identify cases of cash shortage and surplus balance for appropriate action to be taken at the right time. A detail of the cash budget in any typical hotel establishment is shown in appendix (3) of our study.
In view of the importance of the standard costing and variance analysis techniques in the financial control of any establishment, we recommend that this techniques of control should be put in practice in the running of the hotel without delay.
Furthermore, due to the fact that there is no quantitative techniques for the control of inventory such as economic order quantity (EOQ), Appendix (4) of our study given a mathematical breakdown of the standard costing, which can be found in any hotel establishment, computation of our maximum, minimum and re – order level, we recommend that there should be, so as to reduce excessive investment in inventory.
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