African Journal of Hospitality, Tourism and Leisure (Oct 2019)
Suitability of conventional management accounting practices to small and medium enterprises operating in the hotel sector of the Cape Metropole
Abstract
Underperformance of Small and Medium Enterprises (SMEs) operating in hotel sector has partly been attributed to their failure to adopt suitable Conventional Management Accounting Practices (CMAPs), given the lack of awareness of which of these tools are suitable to these entities. The broad aim of this research was to assess the management accounting information needs of SMEs operating in the hotel sector of the Cape Metropole and determine the CMAPs that are suitable for these entities. Data was collected from 100 SMEs using a questionnaire survey and analysed using descriptive and inferential statistics. The findings of the study revealed that the sampled SMEs needed accounting information for various purposes. Key among these were for: analysing risks and uncertainty, optimising utilisation of scarce resources, obtaining accurate data on costs, determining the break-even point, planning for sudden unexpected changes, minimising inventory wastages, assessing profitability of each service rendered and each customer, and planning for revenues and costs, among others. The findings of the study also revealed that most CMAPs were perceived to be suitable to most of the sampled SMEs. However, budgeting was perceived to be the most suitable CMAP for the SMEs, followed by forecasting, Cost, Volume and Profit (CVP) analysis, then variance analysis, followed by industry competitor analysis, financial and non-financial performance measurement techniques, ordering of optimal inventory and capital budgeting approaches. Other CMAPs perceived to be suitable to the SMEs were: cost plus pricing techniques, cost management and control techniques, theory of constraints, real time performance indicator dash boards, just in time system, working capital management techniques and what if analysis. This study not only fills in the gap in the literature on CMAPs that are deemed to be suitable for SMEs, but also invaluable insights on the management accounting information needs of these entities, which could be used to inform future government interventions meant to improve the performance of these entities. The findings may also aid SMEs to compare their own CMAPs to the ones deemed to be most suitable to these entities with a view to adopt the best of the practices.
