Hospitality Specificity as a Variable for Implementing the Target Costing Method into the Hotel Industry

Abstract

Hotel companies are market-oriented,ćwhich implies that their selling pricesćare dictated by that very same market.ćTheir selling prices being thus set,ćhotel companies need to give emphasisćto cost control and they have to focus onćthe implementation of a methodologyćthat would allow such a control. One ofćthe methods most common in the economyćfield is the target costing methodć(TC), which has been applied in theoryćand in practice in industries for over thirtyćyears. Some Japanese companies havećbeen applying the method effectivelyćsince it offers competitive advantagesćcontributing to higher growth if comparedćto companies not using the methodćat all. Our estimation is that the TC method,ćproperly adjusted, can be successfullyćimplemented in the hospitality industry.ćThis paper’s goal, as one of the firstćpapers to analyze the implementation ofćthe target costing method in the hospitalityćindustry, is to present the main specificsćof the hospitality industry as well asćthe main characteristics of implementingćsuch a method into practice. Further on,ćour aim is to call attention to and explorećreal possibilities of implementing thećTC method into the hospitality field.Thećfirst part of our analysis is focused on thećspecifics of hotel management, which isćthen followed by an accurate presentationćof the TC characteristics, only thenćto be rounded off by our estimations of implementing the TC method into thećhospitality sector.