Understanding the Importance of Management Accounting Practices in Indian Hotel Industry

Abstract

Since the 1990s, there has been a rapid shift towards the application of management accounting techniques for business processes. Today, accounting is recognized as a significant driver of management for business success in a competitive environment, especially in hospitality industry. Thus, hotels can take advantage of the pervasiveness of management accounting systems to advance some of their operations and assist management to achieve performance. This paper seeks to assess the importance of management accounting practices (MAP) in Indian hotels and to analyse the factors that influence a hotel’s ability to adopt MAP. Data were collected from the financial managers of hotel enterprises in India. A survey methodology was chosen because it was deemed to be the most efficient way of reaching a large number of respondents, whereas the data required facilitated the use of a mail-administered questionnaire with close-ended questions. A set of 28 management accounting practices items was initially generated from a review of accounting research. The study shows that there is a large variation in the importance of MAP among the hotels in the industry. The study concludes by arguing for the greater impetus to promote MAP adoption among hotels due to its impact on reducing the level of leakage. The paper further makes recommendations to hotel operators and policymakers on the use of MAP in hotels.

Keywords: Accounting, Management, Hotel, India

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