Analyzing customer profitability in hotels using activity based costing
This paper investigates the use of customer profitability analysis (CPA) in four and five star hotels located in Algarve (Portugal). Traditional accounting systems have been criticized for focusing on product, service or department profitability, and not on customer profitability, thus failing t...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
University of Algarve, ESGHT/CINTURS
2018-07-01
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| Series: | Tourism & Management Studies |
| Subjects: | |
| Online Access: | https://tmstudies.net/index.php/ectms/article/view/1089/pdf_109 |
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| Summary: | This paper investigates the use of customer profitability analysis (CPA)
in four and five star hotels located in Algarve (Portugal). Traditional
accounting systems have been criticized for focusing on product,
service or department profitability, and not on customer profitability,
thus failing to provide effective information to marketing-related
decisions. Results are reported by operating departments, whilst
marketing activities focus on customer market segments. Recognizing
the growing emphasis on customer value creation, and to overcome the
mismatch between the provision and use of information in hotels, CPA
techniques have been suggested. Notwithstanding their benefits,
namely a strategic focus, hotels still apply traditional techniques. A
structured questionnaire collected through personal interviews showed
that CPA is far from widespread in hotel management; instead, hotels
accumulate costs in profit centers and in cost centers. None of the
surveyed hotels had adopted activity based costing, despite this
technique being viewed as the most appropriate to calculate individual
customer profitability. |
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| ISSN: | 2182-8466 |