Budgeting in Hotels: A Contingency – Based Study in Northern Cyprus

ABSTRACT: The aim of this study is to do an empirical research on budgeting in hotels regarding the relationship between the contingent variables (structure, strategy, technology and perceived environmental uncertainty) and budgeting practices and performance measurement. Management Control System is a valuable tool which is used by managers for decision making. Budgets are seen as a management control system since they can provide a basis for comparison between actual and budgeted results to rate their performance. However, due to the fact that little has been investigated about budgeting in the service industry, this paper aims to contribute to the existing literature by surveying the hotels in Northern Cyprus through a contingency-based research. In order to reach the aim of the study 124 self – administered (delivery and collection) questionnaires were distributed to General Managers, Accounting/Finance Managers, Human Resources Managers, Front Office Managers, F&B Managers, Housekeeping Managers and Sales and Marketing Managers of 4- and 5 star hotels. Out of the 124 questionnaires 109 were received. The sample was selected by using the non-probability judgmental sampling technique. This study has found that perceived environmental uncertainty, structure, strategy and technology are all positively related with budgeting practices. However, budgeting practices is negatively related with performance measurement. Moreover, the implications, limitations and direction for future research are provided. Keywords: Management Control Systems, Management Accounting, Budgeting, Performance Measurement, North Cyprus. …………………………………………………………………………………………………………………………