Issue of allocation of overheads - the practice of the Hungarian hotel industry

Abstract

As a result of the changing business environment, decision-makers need more and more information. For businesses to successfully compete in our globalized world, an in-depth analysis of their business processes and product structure is the basis for their decisions. Competition to meet consumer expectations forces managers to constantly monitor the cost of their products and services, changes in the cost structure, and review their pricing policies. The value of available information about the company's internal processes, products, and service characteristics has increased among the company's external and internal stakeholders as well. After the First World War, there was a need for a uniform accounting system to be put together by the participants of the sector with specific characteristics. As a result of these efforts, the Uniform System of Accounts for the Lodging Industry (USALI) was created, which serves to satisfy the information needs of managers involved in the hospitality industry. The document builds on the content framework of cost accounting, but at the same time, it does not take a firm position on the question of the distribution of overheads. This study explores the issue and practice of the distribution of overheads among participants in the Hungarian hotel industry.  The basic population of the primary research was represented by hotels with a legal relationship with members of the Hungarian Hotel and Restaurant Association (HHRA). Data collection was carried out using a questionnaire, ended in December 2016 with the participation of 74 respondents. At the time of the closing of the questionnaire survey, the number of hotel units with HHRA membership was 398. The willingness to answer was, therefore, 18.59% among the members. Consequently, the proportion of the sample population is 7.75% compared to 955 operating hotels. To refresh the conclusions from the survey, a repeated questionnaire was carried out in May 2022 within the focus group formed by the management of AHHR (president, general secretary) and the six prominent regional leaders. A total of 6 people participated in the repeated survey through written or oral responses. The results of empirical research with a sample show that the participants of the Hungarian hotel industry mainly rely on the traditional cost allocation methods to formulate the practice of dividing overheads, but at the same time, they seem to be in the direction of adapting modern procedures efforts made.