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DOCTORAL DISSERTATION SUMMARY: Quality cost accounting in the hospitality industry
Eda Ribarić Čučković
; University of Rijeka Faculty of Tourism and Hospitality Management, Croatia
Sažetak
Purpose
Changes in strategic management have affected management accounting as a support for strategic management. The primary strategic elements that differentiate an organisation from its competition are based on quality, cost and time. To respond to emerging environmental conditions and requirements, companies should implement new management accounting techniques, procedures and information that are turning to new measurement and control facilities, with quality costs playing a significant role. Emphasis is placed on the development of financial reporting that aims to meet information needs and increase the transparency of enterprise performance reports, especially considering the evaluation and presentation of quality-related costs as key factors of performance and competitiveness. Although quality assurance requires adequate costs, a lack of quality improvement activities results in much higher costs and losses due to poor quality, which can have serious consequences, such as damaged reputation, market share, productivity and profitability. Quality cost management seeks to optimise quality costs such that, with optimal investments in quality assurance, costs due to low quality are minimised. Accounting aims to build a concept that will provide preconditions for quality cost management to improve firm performance. Accordingly, the application of the concept of quality cost accounting will significantly contribute to the improvement of accounting information as a basis for business decision-making. In this context, identifying, evaluating and monitoring quality costs are prerequisites for managing quality costs and thus among the factors of a successful business. Quality cost accounting influences the successful implementation of a quality management system by ensuring adequate quality planning and quality control, which enable the detection and elimination of errors. Consequently, business process quality and overall efficiency are increased. Therefore, this study explores the methodological basis and relevant theoretical insights
and factors of quality cost management to determine the impact of quality cost
accounting on improving the business processes of hotel companies.
This research is based on the hypothesis that hotel companies do not sufficiently
implement quality cost accounting. However, hotel companies that implement quality
cost accounting as a quality management tool have an improved information base for
decision-making, which reduces non-quality costs and improves business processes by
increasing service quality.
Previous studies have identified a high level of awareness of the importance of quality
costs and an increase in the number of companies managing quality costs, but the
implementation of the quality cost accounting concept is mainly established in
manufacturing companies. Service companies execute quality cost accounting to a lesser
extent. Therefore, there was a need to examine the level of awareness of the importance
of quality costs in the hotel industry to understand the issues of quality cost management.
This research primary aimed to explore and analyse the possibilities of enhancing
accounting information by implementing a quality cost management model, which can
influence business performance improvement by enhancing the information base for
business decision-making. In other words, the purpose was to propose solutions that
would provide guidance for comprehensive quality cost management in the hospitality
industry.
Methodology
This study on the quality costs in the hotel industry was conducted in medium and large
hotel companies in the Republic of Croatia. Small and micro-hotel companies were
excluded, given the limited resources and insufficient managers’ knowledge of this issue.
This study sought to determine the level of quality cost accounting development and the
extent to which medium-sized hotel companies implement this concept in their internal
accounting.
Triangulation, a mixed approach combining quantitative and qualitative approaches, was
applied. The data were collected from questionnaires, interviews and secondary sources.
The response rate to the questionnaire requesting for participation in the survey was 45%.
The survey participants accounted for 21% of the total hotel capacity in the Republic of
Croatia (162 of 768 hotels and aparthotels), that is, at least 38.6% of the hotel
accommodations in the Republic of Croatia (23.133 accommodation units out of a total
of 59.936). The respondents’ interview data were statistically analysed using descriptive
and inferential statistics. Non-parametric tests, namely, Fisher’s, Mann–Whitney U,
Kolmogorov–Smirnov Z, Kruskal–Wallis H and Spearman correlation tests, were used
due to sample-related limitations. Findings
The research results indicate that the Croatian hotel industry generally remains at a low
level of quality cost management development. Nevertheless, a high level of awareness
of the importance of quality cost in the hotel industry was identified. Likewise,
preconditions for improving accounting information by implementing quality cost
accounting were found.
Therefore, large hotel companies use quality costs as indicators of quality system
efficiency and effectiveness to a greater extent than do medium-sized hotel companies.
However, certain entities should improve their accounting system by executing strategic
approaches.
Strategic approaches to quality cost management emphasise a preventative quality-costoriented
approach while considering the opportunity cost of reputation losses. In this
way, quality costs are reduced by diverting costs resulting from errors and deficiencies
in prevention and testing activities. In addition, information about the consequences of
non-quality becomes the basis for assessing the impact of the business processes on the
overall performance and competitive position of a company. Quality costs should be
monitored at each value chain stage to identify those that contribute to the fulfilment of
customer desires and needs. With the monitoring of quality costs at certain stages of the
product or service life cycle, error prevention and timely responses will be ensured before
the product or service reaches the guest. Furthermore, since human resources are a key
factor of service quality in the hospitality industry, they should be developed and
stimulated to improve quality. These costs should also be counted as quality costs. The
implementation of a modern integrated information system with fully integrated quality
costs into an accounting system is a prerequisite for a strategic approach to quality cost
management. Moreover, a process approach and full implementation of the USALI
system (Uniform System for the Lodging Industry) are required. The highest level of
development of quality cost accounting certainly requires a high level of awareness of
the importance of these costs at all levels of a company. Quality cost reporting should
also be targeted at all levels of users in a hotel (both heads of departments and heads of
activities and processes) and should be conducted on an all-time basis (weekly, monthly,
quarterly, semi-annually and annually), with a comprehensive approach to monitoring
the impact of quality costs on hotel performance (revenue and EBITDA). Consequently,
continuous business improvement should be achieved. The studied hotel companies have
a high level of awareness of the importance of quality cost accounting and have created
preconditions for its implementation. However, they need specific knowledge on how to
monitor, measure, categorise and report quality costs to raise the practical application
level of the quality cost accounting concept in the hotel industry, which remains low.
The most significant limitations of this research are an insufficient knowledge of quality
costs application and consequently a poor application of the quality cost accounting
concept in the hotel industry. The researcher attempted to work around this limitation by
excluding micro and small hotel companies from the sample, that is, by selecting
exclusively large and medium-sized hotel companies that are likely to be implementing
quality cost accounting to secure and prepare information for strategic management
purposes (according to existing research and available literature). Furthermore, hotel
companies were not willing to provide internal financial information (because of
professional secrecy), hence it was not possible to analyse the behaviour and interrelation
of certain categories of hotel quality costs. Therefore, the following are recommended
for further research: 1) to examine the interrelation and behaviour of individual cost
components related to quality in different hotel segments, 2) to measure the impact of
quality cost components on hotel financial performance, such as RevPAR, TRevPAR
and GOP per available room, and 3) to explore the impact of hotel staff quality costs on
hotel performance (given that human resources are a key factor in achieving competitive
advantages in the hotel business).
Originality of the research
The contribution of these research results in applicative terms is reflected on the
dissemination of knowledge about the possibility of applying the concept of quality cost
management in hotel companies based on the identification, evaluation and monitoring
of quality costs. Costs that can be linked to hotel quality costs for individual segments
(such as accommodation, food and beverage, and wellness) were derived from the
available information about quality costs. Moreover, this study contributes to economic
science by suggesting the implementation of quality cost accounting methods and
techniques to enhance the quality of accounting information as a basis for making
effective business decisions. This work also advances economic science by developing
scientific thoughts on the implementation of the quality cost accounting concept to
improve the quality of business processes (and thus increase the business success of a
hotel). Such thoughts are particularly provided on quality investment monitoring and
reporting, emphasising a comprehensive approach to specifying quality costs by specific
hotel segments/processes.
Ključne riječi
quality costs; quality cost accounting; hotel industry
Hrčak ID:
238553
URI
Datum izdavanja:
3.6.2020.
Posjeta: 1.922 *