Let's combine accounting with hospitality....sounds logical enough?

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Ever wondered why would someone combine management accounting with hospitality, tourism and so forth? Will someone be able to produce an interesting research if he/she applies an established knowledge in a totally different area? People are often apathetic when someone starts talking about accounting and its core terms. However, as soon as the context takes a turn and there are expressions like brands, competition, market, strategy, tourism and hospitality they tend to become more attentive and listen to you. Correct?

If so why not make a tiresome topic more interesting and at the same time more insightful? Let me tell you this has been done in the research paper I am talking about!  This paper is almost an interesting read with some pretty insightful findings in terms of using management accounting systems (MAS- an accounting software) specifically by the hotel managers. How will these managers at different levels perceive the information availability on such a software and what could be their level of satisfaction related with it? Furthermore, which indicator type (either financial or non-financial) derived from this system will the top management prefer in evaluating their subordinates performance? And will those chosen methods be really effective in boosting up the subordinates morale? The paper has the answer. Curious to know them? Wait! The climax is meant to be at the end. You need to read a bit further. No spoiler alert!

A mild shock-wave might pass through the head if we observe the fierce competition existent  within the hotel industry at present. The so-called 'cat-fighting' is indeed already up-to its par but how does that even mean the customer's needs are fulfilled? Dummies wouldn't accept that! In any case, customers are always going to ask more.  Someone at the corner then might turn up with a brilliant idea; well the key to success is to use an effective information system which will help identify the potential customers and understand their expectations.  Simple as that isn’t it? However, the authors say there's a catch. As stated in the preceding paragraph, it is about manager's perception towards the system and how they value it. The idea's however, worth considering!

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Another curiosity: what has motivated the authors to write this paper? They are as usual straight forward in answering it. The lack of experimental evidence on the existence of positive relationship between manager’s use of MAS and performance within the hotel industry despite the industry’s growing economic importance. If so, were they able to find any relationship? Let's find out.

I am sure you must be desperately waiting to know all the answers at this point. Without any further delay here we go-
 The quantitative analysis shows that both General Managers and Departmental managers (subordinates) made equal use of all MAS information in making short-term as well as long term decisions. However, there is a different story to share when we compare the type of information they were choosing in making decisions. General Managers were more interested in using the information that were related with sales promotion, referrals, pricing and profitability. The departmental managers, on the other hand were focusing on the information related to pricing, referrals and customer satisfaction. This means both of them were making equal use of information, however, the nature of information they were retrieving was different. The paper strongly suggests that these findings be taken into account while designing a new or upgrading existing MAS systems in hotels.

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            The result also highlighted on the fact that General Managers compared to Departmental managers were more satisfied with the availability of system information. Authors predict this could be because the General Managers generally tend to have more authority in vesting power to use system information than the departmental managers. Or this could be the case wherein the system has been designed in such a way that it best serves  the General Managers. Maybe or maybe not! The paper raises the possibilities but remains silent on the reasons. This is indirectly hinting towards future research area. Think about it if you want your PHD :) Important to note: The relatively low satisfaction level of subordinate managers should be seriously taken into account as this could lead to dysfunctional behavior of the managers which could ultimately affect their performance.

Another interesting finding of the paper relates with the use of performance appraisal indicators (either financial or non-financial) by the General Managers in appraising their subordinates. Results indicate that General Managers put more emphasis on financial indicators. The paper however, states that this should not be a desirable option in the given industry context which  demands for highly customized nature of service. Authors recommend that the hotels could benefit more if the managers give a balanced emphasis (use of both financial and non-financial indicators) while evaluating their subordinates’ performance. Furthermore, despite of steep competition prevailing in the industry, findings state that the use of MAS information by the hotel managers in decision making process is quite low. In addition, low emphasis has been placed upon the subordinates’ effort of improving quality service in the organization. This could consequently hamper the competitive edge of the industry.

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                                                                                         The results, though being insightful, are not much encouraging. Taking into account the fact that most of the hotels provide similar physical facilities (size, food, amenities); the only area which separates them from their competitors is the area of ‘customer service’, which has been neglected in a way or other.. More focus on this part is recommended.

To conclude, the research findings highlights the necessity of understanding accounting information need among managers in decision making process and putting more emphasis on using balanced method of performance evaluation which would subsequently increase the productivity of subordinate managers. In the meantime, the most important question has also been answered by the paper- they could not find relationship between manager's use of MAS and performance within hotel industry because of highly customized nature of the industry thus reconfirming the claims of previous authors. 

Happy reading!

Research paper reference: Mia, L., & Patiar, A. (2001). The use of management accounting systems in hotels: an exploratory study. International Journal of Hospitality Management,20(2), 111-128.

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