ACCT20001 Lecture Notes - Lecture 11: 5Star
16 May 2018
School
Department
Course
Professor
Budgeting Simulation
•Initial budget estimates and planning should be in line with the strategy of the business
- e.g. a 3-star vs a 5-star hotel
•Note the inputs/estimates required
-What are those to be based on? Occupancy rates, expenditure item
-How are these decided?
•Performance in one area in one year influences performance in another area the next year
-e.g. customer satisfaction in one year will influence brand, occupancy rates and revenue the
following year
•Key influences on actual outcomes (such as occupancy rates, expenditure items)
-Expected
-Unexpected
-Implications and causes of unexpected rates
-E.g. low customer customer satisfaction in one year is likely to reduce occupancy in the next
year
•Think about competitor behaviour, economic condition, failure of marketing campaign
•Chance - sometimes things just simply do not work out
Links to Other Topics
•Connections to other topics such as cost-volume-profit analysis e.g. determinants of
accommodation revenue
•Connection between items in the budget
•Connections from year to year
•Changing circumstances
What makes a ‘good’ budget
•Considers the connections between different components and eve different budgets
•Seeks to promote consideration of product/service additions/deletions
•Reliable estimates - more than just last years plus or minus a bit. Experience, trials and error and
learning, market analysis
•Considers likely influences - internal and external
•Use of rolling forecasts
1
Document Summary
Budgeting simulation: initial budget estimates and planning should be in line with the strategy of the business. E. g. a 3-star vs a 5-star hotel: note the inputs/estimates required. How are these decided: performance in one area in one year in uences performance in another area the next year. E. g. customer satisfaction in one year will in uence brand, occupancy rates and revenue the following year: key in uences on actual outcomes (such as occupancy rates, expenditure items) E. g. low customer customer satisfaction in one year is likely to reduce occupancy in the next year: think about competitor behaviour, economic condition, failure of marketing campaign, chance - sometimes things just simply do not work out. Links to other topics: connections to other topics such as cost-volume-pro t analysis e. g. determinants of accommodation revenue, connection between items in the budget, connections from year to year, changing circumstances.
