Research on – ‘The Budget Setting Process within Maltese five star hotels’

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Research on - 'The Budget Setting Process within Maltese five star hotels'Opinion Piece – Jonaphin Spiteri is a University of Malta Executive Master of Business student, from Gozo, who is graduating on 25th November this year.

He has recently completed an original research entitled ‘The Budget Setting Process within Maltese five star hotels – A qualitative approach.’

Jonaphin said that “the dissertation aspired to research a crucial issue that is afflicting the tourism industry at the moment: profitability for hotels. MHRA the lobby group representing the interest of hoteliers and restaurateurs on the island has been telling authorities for quite some time that the hotel industry needs to return to sustainability, and it is with this in mind that I felt the need to explore how the budgeting tool contributes to a better sustainable future for the industry.”

Jonaphin’s original research dissertation is shown below:

STEPS scholarship delves into the budget setting process

“One of the main pillars of the Maltese economy is undoubtedly the tourism industry, and ensuring its sustainability is vital for job creation, output growth and the general economic wellbeing of the country.

In recent years, tourist arrivals, overnights and total expenditure achieved yearly growth records, but industry stakeholders reiterated on more than one occasion that factors such as economic viability and sustainability have to be given higher consideration.

The need for increasing return on investment for owners, in conjunction with escalating costs leads to an increased demand for the sector as a whole to improve productivity. There is a substantial amount of agreement among management in hospitality organisations and academic researchers alike that the budget process is a valuable performance control and management tool.

The effectiveness with which Maltese five star hotels manage the budgetary process and use it to obtain improvement in operational performance was explored in the dissertation “The Budget Setting Process within Maltese five star hotels – A qualitative approach,” Jonaphin Spiteri.

The data revealed two typologies of subject units: unified owner/operators and divorced owner/operators. The former were loyal to the owning company’s objectives, whilst the latter were more inclined towards fulfilling the goals of the management company. The study explored this misalignment by contrasting the views of the two typologies toward the phenomenon that emerged: budget games and the resultant measures participants undertook to break free from budget games.

Coherent with expectations induced by agency theory, data collected suggest that participants who had the owner’s interest at heart were more aware of budget games and took a more active role in counteracting its detrimental effects.

The study concludes that despite the gaming, the budget process is still considered as a valuable management accounting tool but hotel organisations need to pay particular attention to control measures, budget participation and work-related-values (humanised approach). In the right measure, these can contribute to a better implementation of the budget process and ultimately to a better-performing organisation.

Jonaphin Spiteri graduated with an Executive Master of Business Administration from the University of Malta following the award of a STEPS scholarship entitled ‘Empowering People for More Jobs and a Better Quality of Life,’ which was co-financed by the European Union Social Fund (ESF) under Operational Programme II Cohesion Policy 2007-2013.”

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