Question

Lezinah Ncube has just taken a new job as regional manager of a limited-service hotel chain. Her region includes six hotels, with each hotel consisting of approximately 100 rooms. Each hotel also offers a small amount of meeting space and provides its overnight guests with a complimentary breakfast. Prior to this job, Lezinah served as a district manager for a national pizza company, where she was responsible for the supervision of ten stores. At the end of her first month's work, Lezinah receives seven income statements; one for each individual hotel, as well as one consolidated income statement summarizing the overall financial performance of her six properties. Lezinah's supervisor has asked her to comment on the financial results achieved by her region. 1. What specific differences will exist between the monthly income statements Lezinah must now analyze and those she likely reviewed in her previous food service job? 2. In food service, restaurateurs evaluating revenue levels are concerned about guest counts and check averages. Hoteliers are concerned about occupancy levels and average daily rates. Explain the similarities between these two sets of concepts, and their affect upon the revenue section of her income statements. Lezinah was very good at P&L analysis in her previous job, but is a bit nervous about the same task in her new position because she has never reviewed a hotel income statement. As her good friend, list and explain for her six specific characteristics of hotel income statements that are identical to those of restaurants, and thus would strongly suggest that her analysis skills as a restaurateur would likely carry over into her new career as a hotelier.

Answer 1

Refer to the below images for the above asked questions, in a detailed way of explanation.

trement From her food service experience, this manager is most likely accustomed to working with income stateme prepared thing the uniform system of Accounts for Restaurants (USAR). The USAR focuses on revenue generate and the costs associated with producing and selling food and beverages. There are significant differences between income statements prepared for restaurants ar and hotels. V restaurants The USAR is divided into the categories of sales prime costs, other controllable expenses, non-controllable expenses, and restaurant Operating income. Hotel income Statements, no ose the uniform system of Accounts for the lodging Industry COSALL) format. In the normal case, the USALE income starts at by identifying several property speatic operating Statistics, followed by operating revenue departmental expenses, undistributed operating expenses, gross operating profit, other non-operating income & expense categories and earnings before interest, taxes , depreciation and amortization (EBITDA) @ Realuxement expenses to be Typically continually maintained in both restaurants and hotels, operating increase . As a result for proft levels (or) increased revenues must also be increased. Restaurateurs seelling to increase revenues do so by attempting to increase the number of guests served and for by increasing the average amount Spent by each guest (guest check average).

Hoteliers seen to increase The number of rooms Sold average daily sate (ADR) ther guest rooms. their revenues by increasing and for by increasing the actieved from the sale of Thus, both restauraters & hoteliers we Proasting Strategies (increases in units prices) to help ensure revenue increaks increases in operating expenses- similor revenue sold Cor) in selling kleep pace with Regluitement 6. In any industry, including the hospitality industry, The income Statements produced have a similar purpose. they are designed to identity revenues, expenses as profits. As a result, the similarities between income Statements used in the restaurant segment and the hotel segments of the hospitality industry are many. They include: hotels Information on the income and restaurants are arranged controllable by management Statements in order to least of both from most controllable. - Deprecation which lowers reduces taxes. income on both income statements - a when amount companyes revenues exceed of loss os presented on the its the expenses, statement. Negative numbers, or "lossess on the statement by a minus the number or by use of a (often red ink). can be represented sign, brackets around different color inte

process of porpose of three Following - For both restaurants and hotels the preparing an income Statement for the Profit is loss analysis consists of the Steps: i identification of accounting period. (i) Documentation of revenue data. City Documentation of expense data. - All for profit restaurants and appropriate amount of income hotels taxes must if they pay the earn a profit. These several examples are presented simply to help students recognize that the basic procedores used to analyze an income statement are the same regardless of the specitic format that was used to prepare the income stakement they will be analyzing. - - -