Critically analyse and evaluate the informational requirements of management, particularly in relation to decisions involving revenues, costs and other financial criteria using appropriate methods and techniques;

Module Learning Outcomes (from module syllabus)

Upon the successful completion of this module, the student should be able to demonstrate the ability to:

1. Critically analyse and evaluate the informational requirements of management, particularly in relation to decisions involving revenues, costs and other financial criteria using appropriate methods and techniques;

2. Demonstrate a critical understanding of how to monitor and evaluate financial performance within the Hotel Industry;

TASK DESCRIPTION

The Continental Hotel Budget Planner The Continental hotel is a 15-room hotel situated in London. The hotel charges £250 per night per room. The hotel also has excellent quality restaurant.

From the following information that relates to the Hotel, you are required to prepare a month-bymonth cash budget forecast for January 2022 to December 2023.

On the 1st January 2022, the business bank account was in credit by £6000. If the business is overdrawn on the last day of any month, the bank charges interest at the rate of 6.5% per month based upon the month end balance. The interest is withdrawn on the 10th day of the following month. The account is paid interest monthly on positive balances on the 15th day of each month at an interest rate of 3% based upon the balance at the end of the previous month.

On the basis of past experience and taking account of predicted future developments in the market, the hotel’s management believes that the average nightly demand for the coming year will be:

All room payments are received in cash/debit card, as the hotel does not currently offer business credit facilities to guests.

The hotel has ten employees and the total monthly wage bill is £6,000. The hotel pays its utility bills monthly at an estimated cost of £700. Business rates are estimated at £300 per month, although no payments are made in September or May.

The Hotel subscribes to ten different magazines for use by the guests at a quarterly cost of £250. The first payment being due in February 2022. The cost of complimentary in-room beverages is estimated to cost the hotel £350 per month and is paid every two months starting from April. Daily delivery of The Guardian, The Times, The Financial Times and The Telegraph newspapers are paid for in the month following delivery. The average monthly cost to the Hotel is £150 per month.

The hotel pays annual building insurance at a cost of £2500, which is due in September.

The hotel purchases a custom made wardrobe at a cost of £7,000, the payments are due in four installments. The first installment is due on May 30th . The hotel has three vehicles on lease from Days, at a monthly finance cost of £275. The estimated cost of petrol for these vehicles is around £500 per month. Also, third party insurance is paid for the vehicles at a cost of £4000 per year, which is due in December 2022.

The hotel also has the vehicles valeted on a weekly basis at an estimate cost of £35 per week.

The hotel does not currently have a gym or swimming pool, however guests are given a pass to use the these facilities at Virgin Active which is situated opposite the hotel. The use of the facilities costs the hotel an estimate £1500 per month and is paid on the 15th of each month.

All rooms at the hotel have Sky Sports and Sky Movie available, which costs the Hotel an estimated £250 per month, which is due for payment on the 20th of each month. Also, the hotel has to pay a license to the Premier League to show live televised matches in public areas.The total annual cost of the license is £3000 and is due in April.

Each room has a mini bar that includes a plethora of alcoholic beverages, soft drinks and snacks. The purchase of these items costs the hotel an average estimated cost of £3000 per month which is payable the month following receipt. Guests are charged for each item used. The average estimated income from the sale of these items is £6800 per month, which is received at the time of guest check out. Guests rarely stay at the hotel for more than a few nights at a time.

Requirement

Please use Excel template provided by your lecturer.

Prepare the budget planner (cash flow forecast) for the hotel for the forthcoming year. This should show the budgeted income and expenditure clearly categorized. It should also clearly show the net monthly income/expenditure and the opening and closing balance on the hotels bank balance.

Work to the nearest £, using the template provided. Assume 4 weeks in a calendar month.

Task 2 (1500) words

The Regional Accounts director has asked you to provide details of the zero-base budgeting technique with a view to implementing this type of budgeting approach in the future.

You are required to prepare a report for the Accounts directors:

1. Your understanding of traditional based budget and zero-base budget
2. The process of zero-base budget and how can this be implemented
3. Can budgeting control support sustainability Please note that template will be provided by your lecturer.

Guidance specific to this assessment:

You should write a report in a recognised format. All writing should be academic style, formal, focused, concise and subject specific. It should use a font of Arial 12 point or Times New Roman 12 point, and be 1.5 or double spaced. All graphs, charts, and figures in the main body must be clearly referenced beside or beneath. Where possible they should not be on separate pages but should be incorporated within the text.

Guidance specific to this assessment:

You should show a wide level of reading, a minimum of 20 references, from a variety of sources including textbooks, academic journals and academic based websites. You may cite company information and newspaper/magazine articles but take care with issues of reliability and validity.