Financial Analysis - Novotel Case

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Financial Analysis - Novotel Case

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Themes

Novotel, business, hotel, restaurant, financial strategy, budget

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Abstract

The budget is a tool for the management to make sure the hotel reaches its yearly goals and follow the financial strategy. Every month, the heads of departments meet to present their figures, and discuss on the differences between the budget and the reality of the business.
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The budget can also be used as reference to compare the hotel figures to another Novotel all around the world and see how the Gothenburg Novotel is positioned.

Explain the process of budgeting at Novotel and how is it implemented in the business?
How the budget is used to manage the hotel?
Explain whether the management experiences the use of the budget in the same way as the departments, kitchen and restaurant departments?

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[...] The budget is analysed on an hour basis, which allows the departments to evaluate their employee need regarding the expected activity in the hotel during next year. As the Novotel's French owners want the global budget for the end of October, the financial controller has to finish it this month. They approve the budget in November. Once it is approved, it cannot be changed. The budget is the conduct line for the year, and any differences with it is analysed and corrected. How the budget is used to manage the hotel? [...]

[...] They also use these meetings to talk about all the activity happening in the hotel. They can exchange feedback on the past month activity. This way, the teamwork can be more effective. Different reports are builded to help the department in managing the hotel, like the hour report and the result report. The hour report is the best report to make sure the budget is under control: "the budget is very detailed and goes down on hour level so those who are responsible are able to react quickly". [...]

[...] Financial Analysis - Novotel Case Explain the process of budgeting at Novotel and how is it implemented in the business? (900 words) In Novotel, the budget is divided in 3 parts: Sales budget Costs budget Employees budget The process to determine the budget for next year starts in April with the Sales budget. The Sales Department reviews the market plan and does an analysis of the business concept. In summer, the budgeting process is stopped because of the increasing activity in the hotel. [...]

[...] The main concerned for the management is the contained of the employee costs. The hour level budget is the most effective tool to keep this cost under control: "when Novotel does the accrual accounting, they use their time scheduling system where all the hours have been inputted and that makes it possible for the financial controller to accrual the hours exactly every month". For the kitchen and restaurant departments, the use of the budget is very specific. They don't use all the numbers in it, but only those who can help them plan the activity of the days to come. [...]

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