Describe about a Report on Conference on Accounting and Management History ?
Best City Hotel Plc is a hotel company situated in London. It is a medium size hotel company. The management of the hotel company provides services to their customers by providing lodging facilities. The management of the Best City Hotel Plc has acquired the three-year contract with Sunset Holidays Ltd company to attract more customers towards the hotel company. The management has to pay £12 million to Sunset Holidays Ltd for acquiring a contract with the Sunset Holidays Ltd. But to accommodate all the customers in the summer season, the Best City Hotel Plc has to make additional rooms for their customers. This will help the Hotel Company to provide highest quality comfort to their customers.
To make additional rooms, the management of the Best City Hotel Plc need more funds to add more rooms for their customers. The operational manager of the company has decided to raise their funds by adopting leasing strategy. The operational manager of the Best City Hotel Plc has decided to increase their funds around £3 million to acquire new buildings. By raising the funds for the company, the operational manager of the Hotel Company has decided to take new buildings on lease to provide high quality comfort to their customers (18th Conference on Accounting and Management History, 2012). This is why, the financial manager of the Hotel Company has raised their funds by £3 million to acquire new buildings on lease to provide high quality comfort to their customers.
There are many sources of finance are present in the market to raise the financial funds in the company. The operational manager of the Best City Hotel Plc has decided to increase their funds around £3 million to acquire new buildings. By raising the funds for the company, the operational manager of the Hotel Company has decided to take new buildings on lease to provide high quality comfort to their customers. Being the financial advisor of the Best City Hotel, I should not prefer to take the building on a lease (Accounting and Business Research. Special issue on: “The societal relevance of management accounting”, 2012). There are plenty of options present in the market to raise the funds of the Hotel Company to construct new buildings. If the management of the Hotel Company takes the building on the lease, then after ending of the contract, the company has to leave the building. This will create lots of problems to acquire other buildings. This is because if the Hotel Company can provide high quality comfort to their customers, then the hotel will become renown in the market. The Hotel Company will attract more customers towards the hotel. If the Hotel Company purchases the building, then the management of the Hotel Company can increase their assets for the company. This will help the company to raise their assets value for the company itself (Bhimani, 2012).
There are many types of sources present in the market to raise the financial funds for the company. The types of sources present in the market are described in the following points:
a) Loans from equipment seller: It is short term loans. The company can get the loan amount from the market by selling the equipment of the company to the creditors and can take the loans amount from the creditors. When the company can pay back all the loan amount to the creditors of the company, the company can claim back the equipment from the creditors. The short-term bank loans mean the loan amount is given to the company for the small period (Chenhall, 2012). The interest rate on the short term loan is much less than the long-term loans.
b) Mortgage Loans: Mortgage loans can be short term loans or long term loans. The company can get the loan amounts from the creditors of the company in the market. While taking the loans from the creditors, the company need to mortgage their equipment to the creditors of the company. When the company can pay back all the loan amount to the creditors of the company, the company can claim back the equipment from the creditors. The short-term bank loans mean the loan amount is given to the company for the small period. The interest rate on the short-term loan is much less than the long-term loans. The long-term bank loans mean the loan amount is given to the company for a long period. The interest rate on the long-term loan is much higher than the short-term loans.
c) Bank Loans: In the modern days, the management of the small business company can increase their funds by taking bank loans for the definite period. The management of the company can keep some inventory to the commercial banks and can get the loans from the commercial bank. The company has to pay back the loan amount to the bank in a certain period and can get back the inventory kept with the bank (Bhimani, 2012). This is the best way to obtain loans by the company to increase the capital funds for the company. The company can take two types of loans from the commercial banks such as short-term bank loans and long-term bank loans from the commercial bank. The short-term bank loans mean the loan amount is given to the company for a small period. The interest rate on the short-term loan is much less than the long-term loans. The long-term bank loans mean the loan amount is given to the company for the long period. The interest rate on the long-term loan is much higher than the short-term loans. The most important things are commercial bank loans are easily obtainable from the market.
Being the financial advisor of the Best City Hotel Plc, I would like to prefer to take loans from the commercial banks. This is because if the management of the company takes loans from the commercial bank, they can have a choice to take short term loans or long term loans (Third Global Accounting and Organizational Change Research Conference 2012, 2011). And if the management of the Hotel company can take loans from the commercial bank and can acquire buildings for providing services to their customers. After paying back the loan amount to the commercial bank, the management of the Hotel Company can increase their asset value by adding the land and buildings on the balance sheet of the company.
The various types of costs involved in the Best City Hotel Industry are described in the following points:
a) Fixed Costs: The fixed cost involved in this type of industry are the cost of the land and building owned by the management of the Hotel Company. The assets purchased by the management of the Hotel Company to set up their business to provide the best quality services to their customers in the market. The other fixed costs of the Hotel Company are the salary paid to the permanent employees of the Hotel Company (Epstein and Lee, 2012). All this costs are known as the fixed costs of the Best City Hotel Plc. If the management of the hotel company takes loans from the commercial bank, then the interest amounts of the loan are treated as the fixed cost of the Hotel Company.
b) Variable Costs: The variable costs involved in Hotel industries are the expenses of the Hotel company to give promotions for the company in the market. The expenses made by the management of the Hotel company for advertisements for the company in the market is treated as the variable costs of the company.
The various methods of costs involved in the Best City Hotel Plc are described in the following points:
a) Job Costing: The meaning of job costing is the specific expenses of the hotel industry to provide best quality comforts and services to their customers in the market (Groot and Selto, 2013). Job costing helps the management of the Hotel company to record the expenses made by the management of the hotel company to provide the best quality services to their customers.
b) Contract Costing: The meaning of contract costing is to track the expenses made by the management of the hotel company to make a contract with the other companies to attract more customers towards the company. In this scenario, we have observed that the Hotel company have made contracts with the Sunset Holidays Ltd. In this case, the contract costing of the Best City Hotel Plc is £3 million.
c) Batch Costing: The meaning of batch costing is the specific expenses of the hotel industry to provide best quality comforts and services to their customers in the market. It can also be described as the total expenses made by the operational manager of the hotel to provide services to their customers. Batch costing is similar to job costing (Horngren and Horngren, 2012).
The management of the Best City Hotel Plc should adapt certain pricing strategies to attract more customers towards the organization. The pricing strategies adopted by the organization are discussed in the following points:
a) Penetrating Pricing: In this pricing strategy, the management of the hotel company can attract more customers towards the organization by setting the low price of their hotel rooms (Management Accounting Research Group Conference in Association with the Management Control Association, 2012). If the price of the hotel rooms is cut down by the management, then more customers will get attracted towards the hotel.
b) Predatory Pricing Strategy: In this pricing strategy, the management of the hotel company can set the low price for their hotel rooms to compel out the competitors of the Best City Hotel Plc.
c) Price discrimination: In this pricing strategy, the management of the hotel company can attract more customers towards the organization by segmenting their rooms in different classes and can set huge prices for their customers (Horngren, et al. 2012).
The role of management accountants within the context of a travel and tourism industry:
a) The role of the management accountants of the Hotel industry is to prepare the financial statements of the Best City Hotel Plc.
b) The role of management accountant of the hotel industry is to prepare the compliance audits of the Best City Hotel Plc.
c) The management accountants of the company also help to prepare the budget for the Best City Hotel Plc (Management Accounting Research (2012) 23 (1) 1-60, 2012).
d) The management accountants also help to assess the internal controls of the hotel industry.
e) The management accountants of the hotel industry also help to maintain budgets for the hotel industry.
f) They also help to perform the financial analysis for the hotel industry.
g) The management accountant handles to track the transactions of the hotel and to track the financial status.
h) The management accountants also maintain the good relations with the auditors and the investors of the hotel industry.
i) The accountants also prepare and analyze the monthly financial data for the management of the hotel industry (Nixon and Burns, 2012).
From the above scenario, it can be stated that the financial advisor of the Best City Hotel Plc should make additional rooms for their customers to provide the best quality comforts. The management of the Best City Hotel Plc needs more funds to add more rooms for their customers. The financial advisor of the Best City Hotel Plc should prefer to take loans from the commercial banks (Norman Belding Macintosh—A tribute, 2012). This is because if the management of the company takes loans from the commercial bank, they can have a choice to take short term loans or long term loans. And if the management of the Hotel company can take loans from the commercial bank and can acquire buildings for providing services to their customers. After paying back the loan amount to the commercial bank, the management of the Hotel Company can increase their asset value by adding the land and buildings on the balance sheet of the company. The financial advisor also stated the pricing strategies of the hotel industry to attract more customers toward the hotel and the costs involved in a business of Best City Hotel Plc (Seal, et al. 2012).
18th Conference on Accounting and Management History. (2012). Accounting History, 17(3-4), pp.517-518.
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Norman Belding Macintosh—A tribute. (2012). Management Accounting Research, 23(1), pp.1-2.
Seal, W., Garrison, R. and Noreen, E. (2012). Management accounting. London: McGraw-Hill Higher Education.
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