Hospitality Accounting - Hotel Accounting - Restaurant Accounting - Hospitality Finance - Hospitality Texts -Hospitality Management
JULY 2011 Edition

This site is produced and supported by Raymond Cote, author of these two texts:

 Basic Hotel and Restaurant Accounting: A principles and systems text based on the uniform system of accounts for hotels (AHLA) and restaurants (NRA). The text also contains several introductory managerial accounting chapters. An optional workbook is available. Click the HRA DESCRIBED tab at top of this page for more information.This text has been recently revised.

Accounting for Hospitality Managers: A managerial accounting and financial management text providing the student with the necessary skills and knowledge to analyze financial information to solve hospitality business problems and achieve profit objectives. An optional workbook is available. Click the AHM DESCRIBED tab at top of this page for more information

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 GENERAL NEWS OF INTEREST

·Appliance energy cost examination: http://smartblogs.com/restaurants/2011/06/06/how-to-extract-energy-savings-from-restaurant-appliances/ 

·10 reasons to buy afranchise restaurant: http://www.allbusiness.com/banking-finance/financial-markets-investing/15621231-1.html

 ·How Panera is handling menu labeling. http://smartblogs.com/restaurants/2011/05/24/case-study-how-panera-is-handling-menu-labeling/

 ·A Zagat Restaurant Survey again reveals that the No. 1 complaint was service. http://articles.boston.com/2011-06-01/ae/29609186_1_restaurant-splitting-orders-service 

·The right time to sell a restaurant? http://www.pizzamarketplace.com/article/181829/Commentary-Know-when-to-sell-your-restaurant

 ·Chains are re-evaluating their pricing strategies.http://www.burgerbusiness.com/?p=7479

 
UNITED STATES NEWS
 ·Applebee’s has revamped more than 80 percent of its menu during the past 18 months.The chain was acquired a few years ago by DineEquity Inc. 

·Jack in the Box has stopped giving toys with children’s meals; the nation's fifth-largest hamburger chain has posted signs in its restaurants stating that toys will no longer be included.
 
·KFC is promoting its 20% larger Kentucky Grilled Chicken.This non-fried chicken option has fewer calories and grams of fat and less sodium than the popular Original Recipe chicken. 

·Papaya King, since 1932, has been serving their special recipe, one-of-a-kind franks and tropical drinks to New Yorkers and visitors.It has expanded to Hollywood. The location is near a number of late-night clubs and plans to stay open until 3 a.m.Papaya King’s dogs start at $2.25, while a competitor’s offering begins at $3.45. 

·Quiznos had begun pilot eateries in nine Hess locations earlier this year and now has decided to expand throughout the Tampa area. All 53 restaurants should be operating by the end of the year.Quiznos, is the second-largest sub chain in America, it has about 200 locations including restaurants in about 100 independent convenience stores and at 25 Mapco Express gas stations in several Southern states. 

·Sonic introduced its hot dog menu in March, a selection of four six-inch hot dogs (New York, Chicago, All-American and Chili Cheese).Sonic is adding a cheese-topped Baja a new line of real-ice-cream shakes.The hot dogs are driving sales and store traffic.
 
 Tipping Notes
 ·Tipped employees under the Fair Labor Standards Act: http://www.dol.gov/whd/regs/compliance/whdfs15.pdf

 ·Restaurant owner cannot share in employee tip pool: http://www.wageandhourcounsel.com/2011/03/articles/minimum-wage/restaurant-owner-who-bartends-may-not-share-in-employee-bartenders-tip-pool/
 
·The DOL’s Final Regulations are at: 
http://www.gpo.gov/fdsys/pkg/FR-2011-04-05/pdf/2011-6749.pdf.

 
U.S. Corporations: International Report
 ·Baskin-Robbins, the world's largest chain of ice cream specialty shops, opened its 4,000th international location, in Novena Square, Singapore. 

·Quiznos will open the first of its 200 planned sandwich restaurants in Brazil. 

·Pizza Hut plans to open 300 delivery outlets throughout the United Kingdom. 

·Pizza Hut will open 300 exclusive outlets under its sub brand, Pizza Hut Delivery by 2015 in India.  

·DInternational Dairy Queen Inc.Latest from The Business JournalsWorld's biggest DQ opens in Saudi ArabiaDairy Queen sues Iowa franchisee over alleged million extortion plotDairy Queen to expand to Saudi ArabiaFollow this companyairy Queen has opened its first three locations in Saudi Arabia.There are also Dairy Queen locations in Bahrain, Oman and Qatar in the Middle East. The company has opened 236 international stores since January 2010 and now has 841 locations outside the U.S. and Canada.
 
 ·Wendy’s/MacDonald’s/Burger King: See Russia in International News Section below
 
News of Interest

·For the first time, the U.S. consumed more wine than France.http://www.latimes.com/business/la-fi-wine-rebound-20110601,0,4682883.story

·A new venture in Utah is converting spoiled fruits and vegetable into garden compost.The company EcoScraps either sends trucks to pick up spoiled fruit and vegetables from retailers, or garbage haulers drop off the food.Retailers avoid the cost of disposal and the haulers avoid landfill tipping fees.EcoScraps converts the food waste to compost or potting soil certified for use in organic gardening.The product is free of chemicals, blood meal, bone meal or horse, cow, chicken, bat or any other type of manure.   

·SPECIAL REPORT ON COFFEE PRICES: The majority of coffee exported to the United States comes from about 22 countries such as, Costa Rica, Sumatra and East Africa.Coffee prices are impacted by the trader market place and hedge funds, index funds and others that have an effect on the market.Some of the increase was due to speculation.The latest: Poor weather in Brazil and Colombia may bring more price increases; together they provide 40% of world coffee production.Bloomberg predicts “Coffee prices may go up 40% after already jumping 60% in the last year.”Kraft foods and Smucker have increased prices on their respective Maxwell House and Folgers brands several times. 

Divestures and Bankruptcies

·Perkins & Marie Callender's Inc., (no relation to the frozen food company with similar name) has filed for bankruptcy in a Delaware.Food maker ConAgra has acquired the Marie Callender's trademark for $57.5 million, a deal sealed before the restaurant chain's parent filed for Chapter 11 bankruptcy.The company listed total assets at $290 million and liabilities at $440.8 million in its Chapter 11 petition. Eleven of its affiliates were included in the bankruptcy filing.Perkins operates or franchises 600 restaurants in the United States, Canada and Mexico.Recent development: The Company got court approval for $16 million in interim financing to help fund operations while in bankruptcy. It will also seek final approval of an additional $5 million from Wells Fargo Capital Finance, the agent for the lenders, for a total $21 million, at a hearing scheduled for July 11.  

·Sizzler Steak House company is being sold.http://fastfood.ocregister.com/2011/06/09/sizzler-sold-to-team-led-by-current-ceo/98031/
 

Accounting and Finance

·Lease Accounting Change:The Financial Accounting Standards Board (working with the International Accounting Standards Board) has developed a plan to potentially list lease costs on the balance sheet. In 2013, all businesses would have to follow this new accounting practice.Presently, lease costs are in the footnotes of the statements; they are not provided for in the income statement.In 2013, any lease that extends longer than a year will be shown in a new balance sheet category called “Right to Use Asset,” which will show the total lease payments over a given period.The objective comes from the basis of Generally Accepted Accounting Principles (gaap) which is to make company finances more transparent for investors.The potential impact is substantial; a Financial Accounting Standards Board estimate is that more than $1.2 trillion of leased assets and liabilities will now appear on U.S. company balance sheets. “Assets will be amortized over the life of the lease; the first few years will have a cost higher than the current rent payment, but as the lease continues, the cost should drop.

·The Federal Reserve voted to set the cap on debit card swipe fees at 21 cents (up from its previously proposed 12-cent cap).Previously, swipe fees had averaged 44-cents per debit card transaction.The Fed voted to delay implementation of the cap until Oct. 1.It was scheduled to take effect July 21.The new rule also allows financial institutions that comply with fraud prevention standards to charge a slightly higher fee; a maximum of 24 cents per transaction.

 


INTERNATIONAL NEWS

Africa

·Nairobi is in the midst of a hotel construction boom; at least 10 local hotels are under construction.The EastAfrican predicts about 2,500 new room capacity in the next year in Nairobi alone. The hotel capacity in the country is presently at 50,000 rooms but the growing international demand shows a need for more rooms.

·The government plans to sell its stake in 11 hotels (included are the Intercontinental and Hilton Hotels) through partnerships or shares.Most of these hotels are in bad repair and financially weak. News of the impending sale of these hotels has generated interest from major hospitality management companies and private investors.

·The Belgium based Rezidor plans a 126-room hotel in Westlands, Nairobi, to be complete by 2012, and several hotels are under development in East Africa, including one in Addis Ababa, Ethiopia, set to be open before the end of this year. Also under construction is a 256-room hotel in Upper Hill, Nairobi and another in Kigali, Rwanda.

·Best Western International, Inc. (USA), one of the world’s largest hotel chains with more than 4,000 hotels in 90 countries will set up a 96-room hotel in Hurlingham.

·The Korean HwanSung Group plans to open a HwanSung Hotel with 150 room capacity near the Jomo Kenyatta International Airport.

·Ibis an international hotel brand owned by Accor Hotels will open a 140-room-hotel in Nairobi.

·Nairobi Upper Hill Hotel opens in September 2011 with a capacity of 50 rooms and five conference halls.

·Malezi Group is constructing a 70 room four star hotel in Upper Hill at an estimated cost of Ksh1.1 billion ($12.2 million).

 Bahrain
·Bahrain investment firm Investcorp has acquired a 176-room hotel property in Los Angeles for $40m; the present franchise agreement with Marriott will remain.The acquisition is the company’s fourth US property acquisition this year; in April, the company had purchased Coral Palm Plaza in Florida.

·The Bahrain Grand Prix has been rescheduled for October 30, which has originally the date for the first ever Indian Grand Prix. Formula One race brings around $110 million to the tourism industry.Over 100,000 people attend the Formula One race.

 Canada

·Fast food restaurant firm Priszm Income Fund has closed 30 underperforming locations in Ontario and B.C.It also has received court approval to sell 204 of its restaurants to Soul Restaurants Canada Inc. for $42.8 million.The court also approved a plan by the company — which owns more than 400 KFC, Taco Bell and Pizza Hut locations in Canada — to seek buyers for the rest of its restaurants.

·Carl's Jr. (CKE Restaurants Inc.) made its first entry in Canada with a restaurant located in Kelowna, British Columbia by franchisee Jove Franchise Development Corp; it is the first of five Carl's Jr. Locations that the franchise group plans to open in Canada.

·Hozpitality group launched its dedicated hospitality website http://www.hozpitality.ca for the North American market in Canada. One part of the website offers opportunities for experienced and entry-level hospitality professionals.

Caribbean

·Wyndham Hotels and Resorts, LLC has opened its first Wyndham Garden property in Puerto Rico; a 107 room hotel located at Palmas del Mar in Humacao.Puerto Rico because of its easy accessibility and a more competitive advantage than any other Caribbean island is a strong focus of Wyndham.The government of Puerto Rico exempts U.S. citizens from having to produce a passport. 

 China

·Starbucks now has full ownership of Starbucks 250 retail outlets in six Chinese regions, gaining control of its operations in the world's second-largest economy. The six regions are in the provinces of Guangdong, Hainan, Sichuan, Shaanxi and Hubei, as well as the province-level municipality of Chongqing, Starbucks said.Hong Kong-based Maxim's previously had owned a 30% stake in those operations since 2002.The agreement also provides Maxim's full control of 110 Starbucks in Hong Kong.  
 
·Starwood Hotels & Resorts Worldwide, Inc. will open seven more hotels in China before the end of September. In the next 2 years, about 50% of all new Starwood hotels to open in China will bear the Sheraton name. This summer, Sheraton will open its second hotel in Beijing and in Xian, and its first in Chongqing, Yantai, Guangzhou, Zhenjiang, Wanning and Hangzhou. With these seven hotels, Sheraton will then have 42 hotels in China by year's end.Starwood’s goal is to have 100 hotels in China by the end of 2012. 

France

·The average hotel occupancy in Alicante for June was 71.18 per cent, slightly lower than the predicted 72.43 per cent; but similar as the same month last year, according to data from Alicante’s Provincial hotel association (APHA).The tourist components were 70 per cent Spanish and 30 per cent foreign(primarilyfrom the UK, France, Italy; however there was a significant increase from the USA and Algeria). 

India

·Hotel chain Marriott plans 10 hotels under luxury JW Marriott brand at various locations across the country by 2015; for example, Bangalore, Delhi Airport, Chennai, Kolkata, Pune, Mumbai etc.These new hotels will have 200-250 rooms on sites of 3 to 5 acres.
 
·Marriott International's second JW Marriott brand hotel in India has started operations in Chandigarh. The Rs 350 crore property has 165 rooms with four suites and one presidential suite.  

·Appu Hotels, owner of Le Meridian Hotels in Chennai and Coimbatore, plans three more hotels in the next two years with an investment of Rs 500-600 crore. 
 
·Pizza Hut will open 300 exclusive outlets under its sub brand, Pizza Hut Delivery by 2015 in India. 

Malaysia

·Hyatt Hotels Corporation will open the currently under construction Grand Hyatt Kuala Lumpur in 2012; Bahagia Investment Corporation, Malaysia will manage the hotel.The 412-room hotel will have 33,000 square feet of meeting and event space, a 228-seat café, a 298-seat specialty restaurant, a 74-seat Sky Lobby Lounge, a 102-seat poolside restaurant and bar, a spa with 11 treatment rooms, and a swimming pool.

 Mexico

·Mexico in Guadalajara at a cost of $110 million; the 550-room hotel has a penthouse, two restaurants, a bar and a swimming pool.

Netherlands

·The Grand, Sofitel's historic Amsterdam hotel after 2 years of renovations officially became Sofitel Legend The Grand Amsterdam; the brand's second Legend property in the world and first in Europe. Legend locations are housed in registered buildings with at least 100 years of history. This five-star luxury hotel features 177 rooms including 52 suites, seafood restaurant and an urban So SPA.The Imperial Suites include butler service, a spacious lounge, a bedroom with adjacent guest room, two bathrooms, a Hammam, and a large dining area.Guests can also enjoy the hotel's library and refurbished So FIT fitness center.

Russia

·Wendy's opened its first restaurant in Russia on June 14 in the food court of the Kapitoly shopping center on Prospekt Vernadskogo in southwestern Moscow.Plans are to open at least 180 restaurants, franchises and sub-franchises in Russian regions over the next 10 years. The restaurant offers an American menu of hamburgers, cheeseburgers, salads and roast beef sandwiches. The average sale is estimated to be $9 (250 rubles), about $3 to $4 more than in the United States. Wenrus projects annual revenue of $1.5 million to $1.6 million per store, roughly 40 percent higher than at a store in the United States.Higher menu prices due is due to the high cost of food and high cost of living.Wendy's is the world's third-largest burger chain, after McDonald's and Burger King.MacDonald’s has been doing business in Russia for 20 years.Burger King opened its first Russian restaurant in January 2010. 

Saudi Arabia

·Accor's first Novotel hotel in Dammam has r opened.It has 159 rooms,all rooms feature IDD telephones, satellite flat screen TV, high speed Internet and WiFi connections, as well as 24-hour laundry service and an all-day snack service.

 ·Starwood Hotels & Resorts Worldwide will open two hotels in the fourth quarter of 2012.The Sheraton Madinah Hotel will have 297 rooms.The Four Points by Sheraton Madinah will have178 rooms. 

·Golden Tulip Hospitality Group has signed a management agreement with Dana Bay Tourism Company to open Golden Tulip Dana Bay — Half Moon bringing the total number of Golden Tulip and Tulip Inn Branded hotels in the kingdom to 19.Golden Tulip Dana Bay offers 251 beach front villas and chalets rooms with private swimming pool, with fully equipped kitchens and amenities. 
 
·Accorhas rebranded the Novotel Abu Dhabi City Centre to Mercure Abu Dhabi City Centre.The hotel has 215, four restaurants, two bars, 8 meeting rooms as well as a temperature controlled swimming pool, a fitness centre and sauna, steam room and jacuzzi. 

 Switzerland

·Qatari Diar Real Estate Investment Company has reopened the 150-year old Hotel Schweizerhof Bern in Switzerland following a two year restoration.Famous guests such as Grace Kelly and Elizabeth Taylor are part of its history.

 ·The Swiss franc has gained 25 per cent in value against the euro and the dollar over the past four years.Swiss tourism strongly targets high-spending tourists who are less concerned of the exchange rates.

Taiwan

 ·California Pizza Kitchen has signed a franchise agreement to open at least six restaurants over the next five years. 

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