Looking back at 2000, Highgrove Manor Hotel was exercising a year of declining total occupancy rate and short on revenue. From the data table, it appears that hotel management had over-estimated the amount of money guests who would spend on the bistro, health club, and other income sources. Despite the private room occupancy are stabilized, the hotels still runs short of their total revenue. Increased interest rates of the loaner seem to aggravate that situation. By now, the budget should have been developed to estimate all the revenues in order to run the operation effectively and achieve the desired profit goals. Budgeting is part of the planning function of management. Preparation of budgets ensures management to plan ahead, forecast and control.
THE USES OF BUDGETING
Budgeting is being drawn up to serve two main purposes in most of the business. The first objective is financial planning, which involves the adapted plan for the whole organization to achieve its goals. The co-ordination plan for each department is one important characteristic of the planning. For example if the top management decide to increase conference room booking in a period of time. Highgrove Manor Hotel would have to increase probably the use of overtime attendant for the service. And the bistro, bars and health centre would have to improve their facilities and stock with more goods to fulfill the increase human flow. Such function of budgeting is "to co-ordinate the various activities of an organization in order to achieve company rather than divisional or departmental objectives." (Glautier and Underdown, 1998). The second objective of Budgeting is the financial and management control. The budget represents the control which is exercised through the budget makes events fit in with it. Control involves in comparing actual performances with plan and determining whether the plan should be revised in view of the comparison.
THE PLANNING AND CONTROL PROCESS
According to Berry and Jarvis (1997), "planning involves the determination of objectives and expressing how they are to be attained. The control process is the means of ensuring that the plans will be achieved." The planning and control process have been identified as several stages: determine the business objectives; make strategic and operating decisions; monitor and revise plans. Although planning and control are two distinct concepts, they should not be examined in isolation because a good budgeting system must provide for both planning and control. Good planning without effective control is time wasted and only when planning is laid down is it possible to implement control. (Ray H. Garrison, 1991)
PROCESS OF SETTING BUDGET
The process rivets on short-term budgeting aspects, that is, one year. According to McLaney, E. and Atrill, P.(2002, pp 366 - 369), the following step provides the tasks which management should take into account within that period to achieve Highgrove Manor Hotel's goals.