Achieving a Competitive Management in Micro and Small Independent Hotels

Introduction

Hotels incorporated in hotel chains benefit of a multi-level management support structure. This is not the case of independent hotels acting alone but competing at the same level, that is, on a global scale.

In many countries, the hospitality industry is mostly composed by micro, small and medium-sized companies. Given this reality, it is crucial to provide these hotels with management tools for support decision-making in order to increase their competitiveness.

In this way the two main objectives of this chapter were established:

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  To propose an adapted management accounting system, based on USALI (Uniform System of Accounts for the Lodging Industry), to apply on micro and small-sized hotels, which does not need to contain all schedules and items of the original USALI (a simplified version);

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  To propose an operating scorecard that includes the most important operating indicators to support decision-making and to allow comparability as well.

To achieve these objectives, the background of the research is supported in literature review, which allows the authors to proceed to the USALI theoretical framework and to figure out the key operating ratios and indicators. In both cases, before proceeding with the proposals, different opinions and limitations in the use of these tools were considered.

At the end, new lines of research are opened giving continuity to this work. In terms of methodology, it is important to refer that books, scientific articles and research work of the authors were used.

Background

SMEs have got a simplified organizational structure, thus the application of change in these organizations is easy (Mitchell and Reid, 2000 cited by Lopez and Hiebl, 2015). Nevertheless, the SMEs exhibit lack of resources and the impossibility of competing with economies of scale (Jarillo, 1989 cited by Lopez and Hiebl, 2015). However, it is known that SMEs are competing in a global world and the same happens with micro and small-sized hotels that are competing with international chain hotels. In order to obtain success, hospitality managers need to optimize the decision-making process for which they use relevant information provided for management accounting (Nunes and Machado, 2014). The utilization of more complex methods by hotels belonging to a chain is referred by Nunes and Machado (2014).

SMEs do not have the opportunity of use the management accounting skills of large companies (Mitchell and Reid, 2000 cited by Lopez and Hiebl, 2015). Several factors influence management accounting systems in SMEs, such as environment, staff and organization factors (Lopez and Hiebl, 2015). Lopez and Hiebl (2015) found out a difference in the use of management accounting comparing larger companies with SMEs. They refer that the performance of SMEs gains if they have got a suitable management accounting. “Adapting management accounting practices that were designed for larger firms to SMEs needs”, it was indicated by Lopez and Hiebl (2015) as a future research.

The hotels’ flexibility is an important factor given macroeconomic adjustments and customer preferences changes with the emergence of new products. This requires a management taking in consideration changes as a constant. Managers should develop the ability to monitor these changes in order to avoid financial decline. This situation is applied to micro and small-sized hotels, thereby justifying the need of hospitality management accounting adjustment.

In fact, the case of small independent hotels is specific (Melia & Robinson, 2010:2). The findings of this study indicate that small and medium independent hotels need an adapted structure to measure their performance. Thus, it will be necessary to adjust the complexity level of USALI as well as at the usefulness of the operating ratios and indicators. To achieve a competitive management, hoteliers need to apply simplified tools based on USALI and summarized scorecard.