HILTON HOTELS AND RESORTS - Essay Example

? HILTON HOTELS AND RESORTS Hilton Hotels and Resorts The hospitality industry forms one of the largest industries that provideservices to people. The industry has a broad class of fields that constitute hotels and restaurants, sports bars, amusement parks, conference rooms, accommodations and so on. The tourism industry also falls in the hospitality. The hospitality industry is entirely dependent on the availability of individual’s leisure time and disposable income. The hotels and resorts seek to maximize the number of customers to their facilities in order to capitalize on profitability. To ensure a constant flow of customers, most of the hotels and restaurants today have engaged the services of hotel brokers. The brokers utilize business networks and other advertisement channels to create awareness of the hotels, restaurants and other fields of the hospitality industry’s services. Location and quality services are two essential factors that establish the competitiveness of any field in the hospitality industry. Other factors that helps the organizations gain and sustain their competitive advantage include dependability, professionalism and excellent customer experience. The Hilton Hotels and Resorts is an international organization from the hospitality sector that has existed for over 92 years today. This organization is well known to many people across the globe for its stylish, advanced thinking and an international leader in the hospitality industry. In addition, the organization is famous for its innovative and creative approach to their services, facilities and other products tailor made to suit a variety of needs for their existing and potential customers (Hilton Hotels and Resorts 2013). The Hilton Hotels and Resorts represent a hospitality organization committed to the global community in providing convenient services, reliable hospitality and smart designs. By the year 2013, the organization confirms the presence of their hotel brand in over 540 hotels and resorts in 78 countries across six continents. The hotel and resort provides the existing and potential customers with an easy way to search for available hotels from their website. It is also easy to select a region and sub region where the Hilton Hotel and Resorts are located. The organization also continues to expand by constructing new hotels properties in different parts of the world while maintaining their quality services (Hilton Hotels and Resorts 2013). The Hilton Resorts are an epitome of quality in the hospitality industry with the best customer experience in the world. The Resorts offer several services to the customers ranging from spas to excellent cuisines. The spa offers all unique services that create the urge in customers to always come back for more (Potter 1999). The Resorts also offer a wide variety of quality to the customer’s with an option of tailor made cuisines on demand. The Resorts also provide unique surroundings and perfect beachside views that form a suitable outdoor sight that is appealing to individuals who prefer relaxing outdoors. To create repeat customers and to enhance loyalty from the existing ones, Hilton Resorts invests on creating good memories of a single visit to their facilities. In addition, the Resorts also offer specialized treatment and services to periodical visits such as family gateways, romantic couple of vacations, business retreats. The need for such treatment is satisfied by the presence of a Hilton Resort within close proximity to their customers (Hilton Hotels and Resorts 2013). Just like any other organization, the Hilton Hotels and Resorts use an organizational chart that helps in giving all the stakeholders a clear overview of the reporting relationships at the workplace. The charts also provide a general idea of the division of work and levels of management within the organization. Hilton Hotels and Resorts current organizational chart portrays the structural dimensions taken by the management namely formalization, specialization, centralization, personal ration, and hierarchy of authority. The formalization dimension ensures that all the work at the Hotels and Resorts follow rules and processes with closely defined job descriptions. The management also ensures specialization where jobs are divided according to departments (Balakrishnan, Sivaramakrishnan & Sprinkle 2008). This enables ensures that each department concentrates on the assigned duties and processes. This helps in controlling the organization easily in all departments such as finance, marketing and accounting. Decentralization ensures that all orders are received from the head office. This helps the management to take and maintain the control of the organization. Under the hierarchy of authority, the subordinates in all departments take orders from the manager of that given department. The departmental managers receive their orders from the general manager. The personal ratio is a trainee program arranged by the Hilton Hotels and Resorts to ensure that all employees maintain quality. The personal ratio also gives the management the basis of promotion within the organization (Balakrishnan, Sivaramakrishnan & Sprinkle 2008). The Hilton Hotels and Resorts responsibility centers include the cost center, the investment center, revenue center and the profit center. The cost center is a sub unit in the Hilton Hotels and Resorts referred to as a department. The manager of this division of the organization is responsible for all the costs incurred during its operations and activities. This center is financed using the profit margin that also adds to the costs incurred by Hilton (Balakrishnan, Sivaramakrishnan & Sprinkle 2008). However, the center also contributes indirectly to the profits made every financial year. Some of the costs accounted for include funds directed to the research and development section, marketing of new and existing products and improved customer services such as contact centers. These sectors of the Hilton Hotels and Resorts can be classified under the cost responsibility center because they fall under controllable costs in the department. Moreover, this center measures the inputs other than the outputs in monetary value. Activities ran by the hotel on research and development adds to the cost of the organization and does not give direct profit output but adds to the costs incurred. In addition, marketing and customers services are operations that do not produce profits especially in the short run. The Hilton Hotels and Resort also provide excellent customer services and an alert customer contact center that assists existing and potential customers. However, the cost centers eventually add to the revenue of the organization indirectly after successful research and development, marketing and customer services. The main challenges facing the cost center in this organization its negative impact on profit in the short run, which makes it a target for layoffs when budgets are cut (Hilton 2002). The revenue center at the Hilton Hotels and Resorts is the organizations operation responsible for creating its sales revenue. The revenue centers are departments that are directly involved with the customers through selling of their services. The rooms division, the food-and-beverage division, bed and breakfast section, and spa sector are classified under the revenue center. Hilton Hotels and Resorts breaks down its operations into revenue centers in order to establish the profitability of each service offered to customers (Hilton Hotels and Resorts 2013). The organizations operations include all the activities carried out in order to produce the services offered to customers of the Hilton Hotels and Resorts. The organization focuses on creating efficient operations in order to reduce costs and enhance customer service and satisfaction. The use of a simplified and customer friendly platform to search for hotels or resorts with respect to their regions, sub-regions and the closest locations (Ahrens & Chapman 2004). Making reservations and other types of bookings in advance helps the management o f the hotel to make the necessary arrangements to enhance efficiency in services requested. This helps in increasing the sales made and the profitability of the organization. Additional sections of the hotels that include sports bars and gyms also contribute to the potential profit to the organization. Starting of new hotels by the organization also creates new revenue centers. However, the new centers may take time to recover the costs and expenses incurred in their setup and commencement of services. Therefore, all the above operations of the business are classified as revenue centers because they add to the potential profitability of the organization. This also adds to the overall organizations profitability since increased revenue leads to enhanced profits (Drury 2000). The Hilton Hotels and Resorts create business units that utilize capital to contribute to the overall organization’s profitability called investment centers. All the investment centers set up by the management are assessed based on their performance to determine the revenues attained after investing on capital assets less the expenses incurred. In addition, the investment centers uses capital to purchase additional assets. Therefore, the Hilton Hotels and Resorts management uses various metrics such as return on investment to assess performance (Hilton Hotels and Resorts 2013). The organization has invested on new hotels and resorts in different parts of the world as part of their investment centers. These new hotels invest on capital assets as part of their startups and operations. After commencement of business, the new hotels are expected to grow and start making profits. Their performances are measured using their return on investments made on capital. On the other hand, the profit center is a division formed by the management of the Hilton Hotels and Resorts that focuses on profit calculation. The special events, weddings, meeting packages and specialized events such as family getaways are classified as profit centers for the Hilton Hotels and Resorts. The organization optimizes profits on these centers and allocates more resources to them because they attract more profits. Therefore, these profit centers enhances the organization’s profitability and overall income (Ahrens & Chapman 2002). The classification of costs in the hotel industry entails distinguishing between direct and indirect costs, controllable and uncontrollable costs and fixed and variable costs. The process of classification of the costs is essential to the organizations because it aids in the management process of all operations. In addition, the classification of costs also depends on the purpose of the actions. An organization such as Hilton Hotels and Resorts classifies the costs to either determine inventory valuations and costs of services offered or classification that aids decision-making process (Weygandt, Kieso & Kimmel 2010). However, this process is not mutually exclusive thus; a given cost can be put in different classes. The direct costs are the expenses directly connected to the operations of Hilton Hotels and Resorts in menu-item creation. The direct costs include expenses incurred in foodservice activities that entail food, labor paper, and necessary contractual services and so on. All the other costs incurred and do not affect the production activities directly are not considered as direct costs. They include marketing, taxes, rent, depreciation and others (Drury 2007). On the other hand, the indirect costs are expenses that are not directly connected to the production activities of the Hilton Hotels and Resorts. Such costs include the management, employees and security expenses. Some overhead costs are classified as indirect costs. In addition, the indirect costs are divided into fixed and variable costs. The fixed costs of the Hilton Hotels and Resorts represent the costs that are not influenced by the dynamism in occupancy of the hotel facilities and sales volume. This classification shows all costs that have minimal connection to the business volume. Moreover, they do not change irrespective of the number of sales made in a month or financial year. Examples of fixed costs incurred by the Hilton Hotels and Resorts include wages, land and buildings, security services, fixed internet plans, audit costs and so on. The occupancy and the business volume of the Hilton Hotels and Resorts directly affect variable costs. This shows that the variable costs are directly connected to the organizations activities (Drury 2007). Therefore, when the business volume in the Hilton Hotels and Resorts increases, the variable costs also increase. Examples of variable costs include housekeeping, cleaning, room amenities, newspapers, water treatment plants and so on. The direct costs are also classified as controllable or non-controllable costs. Managers of the Hilton Hotels and Resorts identify these categories of costs in order to make informed decisions. Therefore, a manager from a responsibility center may identify the controllable prices and take the responsibility to adjust them accordingly. The controllable costs are expenses that can be influenced by activities undertaken by the responsibility center’s manager. However, some of the controllability of the costs is dependent on several managers and other factors that are likely to affect the organization’s activities (Lucey 2003). An example of a controllable cost with various limitations includes average cost per night that is usually dependent on the number of clients, the workers in charge of cleaning among other factors. Therefore, the management of the Hilton Hotels and Resorts influences controllable costs. Conversely, the non-controllable costs are the expenses, which the managers cannot control in the short term. Non-controllable expenses such as rent, property taxes, insurance and depreciation are subtracted from gross income to obtain the net income. The manager does not have any power to control such costs incurred during the operations of the Hilton Hotels and Resorts. The revenue center at the Hilton Hotels and Resorts is the organizations operation responsible for creating its sales revenue. The revenue centers are departments that are directly involved with the customers through selling of their services. Various costs should be included in evaluating the performance of this center. The rooms division, the food-and-beverage division, bed and breakfast section, and spa sector are classified under the revenue center because they earn additional profits for the organization. The direct costs should be used in evaluating the performance of the revenue center because they are the expenses directly connected to the operations of Hilton Hotels and Resorts in menu-item creation (Ahrens & Chapman 2002). The direct costs include expenses incurred in foodservice activities that entail food, labor paper, room services, and other necessary contractual services. Other costs that can be used in evaluating the performance of the revenue centers include the variable costs. These include costs influenced by the occupancy and the business volume of the Hilton Hotels and Resorts. The variable costs are directly connected to the organizations activities that generate profits. Therefore, when the business volume in the Hilton Hotels and Resorts increases, the variable costs also increase. Examples of variable costs include housekeeping, cleaning, room amenities, newspapers, water treatment plants and so on. An increase in these costs directly affects the organization’s revenue both in the short run and in the long run. Therefore, the direct and variable costs can be used in assessing the performance of the revenue center in the Hilton Hotels and Resorts. Large organizations such as the Hilton Hotels and Resorts have extensive operating activities. Consequently, responsibility centers are created to ease the operations and enable effective control of authority and responsibility. This form of decentralization creates divisions within the organization responsible for specific functions of the organization. The management accounting systems in organizations encourages the responsibility center managers to work towards attaining the set organizational goals and objectives (Drury 2000). Achievement of set goals can be referred to as responsibility accounting where the decentralization of responsibility centers to facilitate control is attained. Responsibility accounting falls into the management accounting system that helps in allocation of all organizational activities, items of income, expenditure and capital in respective responsibility centers. This effort makes the responsibility manager efficient in conducting his or her responsibilities and utilizes the organizations resources to attain profitability. Increased profitability is an ultimate organizational goal that is easily achieved through responsible accounting (Drury 2000). The independence of the responsibility centers enables the managers to work on specific tasks without disruptions. Moreover, the responsibility centers enable the managers to avoid any loopholes in the operations hence achieve their set targets. In addition, the overall organizational goals are communicated to the responsibility centers with ease in order to keep the operations synchronized. This also helps to achieve both the departmental and organizational goals simultaneously. This also facilitates consultations and guidelines from the top management to the department managers. The top-level management also assigns definite and realistic goals to all responsibility centers thus motivating employees to work towards achieving them. The contribution from the employees and their confidence in handling the tasks enable the manager to guide the center to success in attaining the set targets (Lucey 2003). In conclusion, the hospitality industry is one of the largest industries that offer services to people. The industry constitutes of hotels and restaurants, sports bars, amusement parks, conference rooms, accommodations and so on. The hotels and resorts seek to capitalize on the number of customers to their facilities in order to capitalize on profitability. The Hilton Hotels and Resorts is a global organization from the hospitality sector that is well known to many people across the globe for its stylish, forward thinking and an international leader in the hospitality industry. The Hilton Hotels and Resorts have responsibility centers that include the cost center, the investment center, revenue center and the profit center. Responsibility centers are established to ease the operations and facilitate effective control of authority and responsibility. The management accounting systems in organizations encourages the responsibility center managers to work towards attaining the set organizational goals and objectives. References Ahrens T., & Chapman C. S., (2002). The structuration of legitimate performance measures and management: Day-to-day contests of accountability in a U.K. restaurant chain. Management Accounting Research, Vol: 13, Pp: 151 – 171. Ahrens T., & Chapman C. S., (2004). Accounting for flexibility and efficiency: A field study of management control systems in a restaurant chain. Contemporary Accounting Research, Vol: 21, Pp: 271-301. Balakrishnan, R., Sivaramakrishnan, K., & Sprinkle, G. (2008). Managerial accounting: models for decision-making. Hoboken, N.J., Wiley. Drury, C. (2000). Management and Cost Accounting. 5th edn. London: Thomson Learning. Drury, C. (2007). Management and cost accounting. London, Thomson Learning. Hilton Hotels and Resorts. (2013). Events that Share the Same Thing- Success. [Accessed 06 May 2013] Available at: http://www3.hilton.com/en/events/special/index.html Hilton Hotels and Resorts. (2013). Hilton Hotels and Resorts. [Accessed 06 May 2013] Available at: http://www3.hilton.com/en/about/new-hotels/index.html Hilton, R.W. (2002). Managerial Accounting: Creating Value in a Dynamic Business Environment. 5th edn. Boston, MA: McGraw-Hill/Irwin. Lucey, T. (2003). Management accounting. London, Continuum. Potter, G., Schmidgall, R. S., (1999). Hospitality management accounting: current problems and future opportunities, International Journal of Hospitality Management, Vol: 18, No: 4, Pp 387 – 400. Weygandt, J. J., Kieso, D. E., & Kimmel, P. D. (2010). Managerial accounting: tools for business decision making. Hoboken, NJ, Wiley. Read More