Cost Control and Cost Reduction

A
Project Report
On
A STUDY OF COST CONTROL AND COST REDUCTION IN HOTEL

INDUSTRY SPECIAL REFERENCE OF THE PRIDE HOTEL PVT LTD
For
THE PRIDE HOTEL PVT LTD
SUBMITED TO
SAVITRIBAI PHULE PUNE UNIVERSITY
SUBMITED BY
KAVALJEETSINGH D PATTI
(ACADEMIC YEAR 2015 -17)
UNDER THE GUIDANCE OF

PROF. MANGESH ASAWALIKAR
DR. D. Y. PATIL PRATISHTANS

DR. D. Y. PATIL INSTITUTE OF MANAGEMENT STUDIES AKURDI
PUNE- 411044
1
DECLARATION
I, the undersigned, hereby declare that the Project Report entitled A STUDY OF
COST CONTROL AND COST REDUCTION IN HOTEL INDUSTRY SPECIAL
REFERENCE OF THE PRIDE HOTEL PVT LTD. Written and submitted by me
to the University of Pune in partial fulfilment of the requirements for the award of
degree of Master of Business Administration under the guidance of Prof. Mangesh
Asawalikar. This my original work and the conclusions drawn there are based on the
material collected by myself.
Place - Pune
Date- Kavaljeetsingh D Patti
2
ACKNOWLEDGEMENT
I am glad to acknowledge the numerous personalities involved in leading their help to

make my summer internship project a successful one.
Firstly, I would like to thank The pride Hotel Pvt Ltd. for providing me the opportunity
to work on this project. I would like thank my corporate guide Mr.Pravin Bhate and
all other staff The pride hotel Pvt Ltd. for helping the lessons of professional
management. His guidance and valuable inputs have helped me a lot in successfully
completing this project.
I express my sincere gratitude to my institute guide Prof. Mangesh Asawalikar who

took a lot of personal interest in supervising this project and guiding me. He has been a
great source of inspiration in the task of completion of this project. His profound
advice, timely guidance has been of immense value to me.
This acknowledgement would not be completed without extending thanks to my

parents and my friends, who helped me during my internship and for extending their
support to me during my period of internship.
Kavaljeetsingh D Patti
3
INDEX
SR. NO. Topic PAGE NO.
1 Introduction to the project 4-6
2 Theoretical Background 7-26
3 Company Profile 27-37
4 Research Methodology 38-41
5 Data Interpretation 42-61
6 Findings 62-63
7 Suggestions 64-65
8 Conclusion 66-67
9 Bibliography 68-69
4
1
INTRODUCTION
5
1.1 INTRODUCTION TO PROJECT
Project title is A study of COST CONTROL AND COST REDUCTION in hotel

industry special reference of THE PRIDE HOTEL PVT LTD Shivajinagar,
Pune
The researcher done project in The Pride Hotel Pvt Ltd Shivajinagar Pune. The
duration of my project was (16th May 2016) to (16th July 2016).
Theoretical concepts taught and discussed in the classroom prove useful if they have
to remain relevant. Practice orientation of management students is a must as it helps
generate competence to deal with issues at the grass root level. This training was the
mode of imparting practical training to me. The objective was to provide a deep
insight into practical aspects of the functioning of the organization. This project was
carried out for certain objectives which I had to achieve. In this project various
objectives are covered.
REASON FOR SELECTION OF TOPIC-
Cost control and cost reduction is important to the health of a company. Bloated
expense accounts can eat up profits quickly. The cost control & cost reduction is
important part of any industry because profitability depend on this two factors. A Cost
control is the practice of identifying and reducing business expenses to increase profits.
A cost reduction plan is one that focuses on lowering costs in every business activity.
The activities vary by type of business but the concept of cost control & cost reduction
does not vary. Companies that are losing money, need to increase profits, or must
become more competitive need to cut expenses in order to succeed. Knowing how to
implement effective cost control and cost reduction strategies can be the determining
factor in the survival of a business.
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1.2 OBJECTIVE OF THE PROJECT-
PRIMARY OBJECTIVE
To study the concept of Cost control and Cost Reduction.

To get information Regarding Food and Beverages through Cost control and cost
reductions why its important for Hotel.
SECONDARY OBJECTIVE
To study how to apply Cost control and cost reductions in hotel industry.
To study the process of Receiving & Storing of goods & Material.
To get an opportunity to get practical exposure to the corporate.
1.3 SCOPE OF THE PROJECT:-
1) Cost control procedures will serve as effective tools of management in Hotel to aid in
the control of costs.
2) Cost control help to control cost and tell management about a company's activities.
3) There are some techniques of cost reduction in some functional areas which will reduce
the cost and thereby increase the profits.
4) The most effective allocation of time is made to the planning, comparing and corrective
action phases of control, with the emphasis on planning.
5) Cost sheet will be useful for deciding the price of food and Beverages. It is observed
that cost sheet gives the information regarding cost of sale.
6) Researcher added some techniques of cost reduction in some functional areas
This will reduce the cost and thereby increase profits
7
2
THEREOTICAL BACKGROUND
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2.1 DEFINITION OF COST:-
Cost is defined as an amount that has to be paid or given up in order to get

something. (Business Dictionary, 2016)
THE GIVEN THING MAY BE:-
A tangible product such as job component or product obtained form a process.
A service such as Transport, repairs, research, etc.
A function such as Production, Selling, Distribution, etc.
The meaning of cost depends upon the purpose and the use for which it is incurred. The
cost may be fixed, Variable, semi variable, etc.
2.2CONCEPT OF COST:-
Cost is the amount of expenditure, actual (incurred) or notional (attributable), relating

to a specific thing or activity. The specific thing or activity may be a product, job,
service or any other activity.
NATURAL CLASSIFICATION OF COSTS:-
The term natural classification refers to the basic physical characteristics of the cost in a
manufacturing concern, generally, the following costs are incurred:
1. Direct material: - direct materials refer to the cost of the materials which are
conveniently and economically traceable to the specific units of output.
2. Direct labour: - direct labour is defined as the labour of those workers who are
engaged in the production process. It is the labour expended directly upon the materials
comprising the finished product.
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3. Direct expenses (chargeable expenses):- these include any expenditure other than
direct materials and direct labour directly incurred on a specific product or job. Such
special necessary expenses can be identified with product or job and are charged
directly to the product as part of the prime cost.
4.Selling, distribution and administrative overheads: - Selling and distribution

overheads usually begin with when factory costs end. Such expenses are incurred when
the product is in saleable condition. It covers the cost of making the sales and
delivering/ dispatching the products. (Kishore)
2.3COST SHEET:-
A cost sheet shows total cost per unit. Cost per unit obtained by dividing total cost by
the Number of units produced. A cost sheet will have separate columns for total and the
unit cost
of each element of cost. Cost sheet can be prepared on weekly, monthly or other time
period basis as desired by management. Specimen of cost sheet of the Hotel industry is
given below
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FOOD COST SHEET FOR THE PERIOD
MONTHLY FOOD COST REPORT
PARTICULARS AMOUNT
Opening Stock
Perishable Receipts
Stores Receipts
Cash Purchases
Staff Meal Provision
Gas & Coal
(a)
Less:
Closing Stock
Staff Meal Recovery
(b)
C=(a-b)Net Consumption
Add:
Issue To F&B Services
Issue From Bar
(d)
Cost Of Sales (e)=(c+d)
Food Sales
Add:
A/P Map Sales / Comp sale
Total Sales
Gross Food Cost (In %)

Less:
Staff Meal Subsidy
Kitchen Meal
Directors
Entertainment, Comp
Executive Floor Amenity
Executive Meals
Wastage & Spoilage
(f)
Net Food Cost(g)=(e-f)
Net Food Cost %
(Figure 2.1)
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2.3.1 COST BEHAVIOR:-
(IN RELATION TO CHANGES IN OUTPUT OR ACTIVITY OR VOLUME)
1) Fixed cost: - Fixed cost is a cost which does not change in total for a given time period
despite wide fluctuations in output or volume of activity. These costs are also known as
stand by costs, capacity costs or Period costs. Examples of fixed costs are rent, property
taxes, supervising salaries depreciation on office facilities, advertising, Insurance, etc.
They accrue or are incurred with the passage of time and not with the production of the
product or the job. This is the reason why fixed costs are expressed in terms of time,
such as per day, per month or per year and not in terms of unit. It is totally illogical t
say that a supervisor s salary is not so much per unit. But it can be said that Supervisors
salary is so much per month.
2) Variable cost - A cost that varies with changes in the level of an activity, when
other factors are held constant. The cost of material handling to an activity, for
example, varies according to the number of material deliveries and pickups to and from
that activity.
2.3.2 Food and Beverage Cost-
Every Hotel Industry is concerned with Food and Beverage cost. It is very difficult task
to control Food and Beverage cost.
Food and Beverage costs in the majority of restaurant operations represent the largest
single expenditure of the revenue dollar.
Food and beverage costs are influenced by the way the various activities such as
purchasing, receiving, storing, issuing, and pre-preparation, preparation, and
accounting are performed
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2.4
COST CONTROL
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2.4 COST CONTROL:-
There is no exact rule or definition of cost control. The term, cost control, implies the
usage of policies and internal rules that help you to cut the cost of a particular
management process. Cost control methods target the reduction of cost, and
maintenance of quality and quantity of a particular production process or service
generation. (Kishore)
2.4.1 METHODS OF COST CONTROL:-
Any business or corporation has to encounter difficulties, which are practical, financial
as well as technical. The ones that survive these difficulties live to tell their stories of
success. The following are some simple successful methods to control costs. Review
and Modify Business Model There is a great, economically and commercially
successful business model, that is used to lay down the foundations of any company.
The business model must be however subject to small and big changes. It means as a
manager, you should subject the business model to changes according to your
competitors actions and markets status. By the term change, I also mean that you
should be upgrading and improving all possible business operations. You need to come
up with new process and procedures to reduce costs.
1. DAILY UPDATES:-
One of the best ways to start controlling costs it to have daily updates of production, all
possible long and short-term expenditures. Divide all these expenditures, even the ones
such cost of machinery or insurance, and sales, by the number of working days. This
will give you a concrete figure of the total amount that has been spent. Similarly after
sales of your goods or services, you may also divide the total amount of sales by the
number of working days. This will give you a micro figure about the daily expenditure
and sales.
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2. UNIFORMITY:-
Cost control management is all about deriving the best outputs in a least cost. Hence,
set up a highly efficient and specialized stores department which will oversee all
purchases. You may also take a risk and make long-term agreements regarding the
quality and quantity of materials that are being supplied to your manufacturing process.
This uniformity will ensure a timely, cheap and assured supply of materials.
3. TIME PLANNING:-
Time is money! Well divide the amount of wages that you give out with the number of
work hours per month. Explain to the employees per hour expenditures that you incur,
and hence the necessity for time management. You may also install good cost control
systems to help your employees to manage their work hours well. A cost control
software will also work wonders in the finance and accounts department.
In order to have a set of good cost control techniques at your disposal, you need to
think creatively and effectively. You will also need to think about all the dimensions of
expenditures such as time dimension, long and short-term expenditures, per capita
wage expenditure, etc. You can also consider all macro and micro costs. For example,
the cost of running one team in comparison to the cost of all teams, or the cost of
running one team compared to the revenue generated by the same team.
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2.4.2 STEPS INVOLVED IN COST CONTROL:-
There are a few steps that lead us to the corrective form of cost control and increase the
profitability of a company. All steps involved play an important role in framing a
company's policy to stand tall in the market. The steps include:
1. ESTABLISHMENT OF STANDARDS:-
The primary step that a company has to follow is setting up objectives and targets that
it wants to achieve in the near future. The set targets are the initials of the planning
stage and act as a reference line for appraisal of the actual performance. The targets
should not be set so high that they become impossible to achieve. Making proper
decisions is an important factor, which affects the achievement of targets in the long
run.
2. COST ANALYSIS :-
The second important step that a company has to take is cost analysis. This yields the
cost sheet and gives a detailed report of the costs obtained by the company at the cost
centres.
Cost centres are subunits of various departments in a company where costs are
incurred, i.e., purchase, production, administration, sales and marketing, distribution,
etc. The total cost is broken down into average price per unit.
3. COMPARISON OF COST:-
After determining the costs incurred in each department of the company, we compare
the individual costs of the company to that of the competitors. The main aim of cost
control exercise is to maximize the profits by reducing the cost incurred in production.
If the competitors' costs are lower than the company's, it means that the gap has to be
narrowed. The difference between a company's cost and the competitors' cost is known
as cost variance.
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2.5
COST REDUCTION
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2.5.1 COST REDUCTION:-
Definition:-
COST REDUCTION IS A PLANNED POSITIVE APPROACH TO REDUCE

EXPENDITURE INCURRED.
Cost reduction exercises are planned campaigns to cut the expenditure. It is a

continuous process with the object of getting a more or less permanent benefit.
Cost Reduction is a corrosive function by continuous process of analysis of costs,

functions etc. for further economy in the application of the factors of production. In the
Cost Reduction standards are set earlier are constantly challenged for further
improvements. Products, processes, procedures organizations and methods and
personnel are continually scrutinizing in order to improve efficiency
and reduced costs. It is based on the philosophy that every person can be improved by
continuous efforts. (Kishore)
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2.5.2 AREAS COVERED BY COST REDUCTION:-
Following are the critical areas of application of various cost reduction

techniques:
1. ORGANIZATION: -
A considerable amount of cost reduction can be affected by improvement in

organization. The organization can be improved by taking following steps: -
a) Defining each stage of responsibility. It should be ensured that there is No

overlapping of duties and responsibilities.
b) There should be well defined channels of communication between various

management levels.
2. PRODUCTION PLANNING AND CONTROL:-
Production planning and Control function is a very large area for cost reduction
scrutiny. It covers Planning, inventory control, and material handling and usage. An
efficient cost reduction plan should aim at reducing the per unit costs on these counts
by examining the following points-
a) Whether wastage of manpower and Food and Beverage is kept to the minimum.
b) Whether any scope is there for reducing idle capacity and increase in Productivity.
c) Whether efficient system of inventory, inspection and stock taking is there.
3. HOTEL LAYOUT AND ARRANGEMENT OF EQUIPMENT:-
An effective arrangement of Lobby, Kitchen and Beverage Departments a fundamental

requirement. A successful arrangement of Equipment shall contain following features-
a) Optimum use of space.
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b) Effective built in flexibility.
c) Efficient control of work flows with least disturbances.
4. UTILITY SERVICES:-
Utility services include power, water, steam, repair and maintenance and transport etc.
the following points of consideration can lead to effective cost reduction-
a) Whether the utilities are supplied at economic costs or whether there is scope for any
further increase in utilization.
b) Whether the proper system for preventive and curative maintenance is there.
5. MARKETING:-
The marketing function may not lead itself so easily to cost reduction as other business
functions. But a number of techniques do exist for reducing such costs and these can
result in substantial savings for business. This function includes selling function and
distribution function.
Following points may attract attention in his connection.
a) Whether there is optimum utilization of salesmen s working time.
b) Whether rearrangement of territories can bring about cost reduction.
6. FINANCE:-
The effective employment of capital in a business is of Paramount importance
Following points are relevant in this connection:
a) Whether the methods of funding capital expenditure are cost effective.
b) Whether capital is secured at economical cost; and
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2.5.3 COST REDUCTION PROGRAMME:-
Cost reduction Programmed for Food and Beverage cost carried out in Pride Hotel
consists of following functions.
1. Purchase function
2. Production planning and control
3. Marketing function
4. Stores management
5. Quality assurance function
There are other functions which the firm is performing like finance function, human
resource function but due to time constraint these functions are excluded from the cost
reduction Programmed. (LAL)
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2.5.4 THE PROCEDURE OF COST REDUCTION PROGRAMMED
RESEARCHER CARRIED OUT IS AS FOLLOWS:-
For few days try to recognize the operations carried out in the particular function then
see the various documents handled in the particular function and lastly point out the
weak areas of the particular function through help to reduce the cost.
1. PURCHASE MANAGEMENT:-
Basic Operating activities of Purchasing-

Receiving
Storing
Issuing
Receiving: Receiving Into obtain the quality and quantity of merchandise ordered and
at the quoted price.
Storing: to maintain adequate stocks of merchandise on hand, and to avoid loss

through theft or spoilage.
Issuing: Into insure proper authorization for the merchandise to be released and to
properly account for each days issue.
2.5.5 DIFFERENT TECHINQUE USED BY PURCHASE

DEPATMENT TO REDUCE COST-
1. Just In Time Concept(JIT): -
Just in time is also important method through which we can also reduce the cost of
product. JIT means that there should not be any intermediate stage like storekeeping.
Material purchased from supplier should directly go the assembly line, i.e.to the
production department. There should not be any need of storing the material. The
storing cost can be saved to great extent by using this technique.
22
(Figure 2.2)
In Pride hotel just in time is most important and very useful in daily activities. The
stock of material is not maintain because they are mostly using perishable goods for
making food.
They demand daily only that much stock which is sufficient to fulfill customers
demand. They are daily order raw material like, Vegetables, Fish, Chicken, Mutton,
Pannier, and all milk product because they cannot store them for long period and if
they try it will go in wastage and it will be big loss to the hotel industries because these
all items are very expensive.
Thus, hotel makes contract with the vendors on yearly basis and vendors provide
necessary quantity of material daily as per requirement of the hotel.
2. CONTRACT WITH THE SUPPLIER:-
This is the main area where Pride Hotel should concentrate. The Contract should
include the assurance to the supplier that the Hotel will not purchase the contracted
material from the competitors of the supplier.
Example of How to control inventory in Hotel using different methods of
inventory formation.
23
i. Inventory ValuationFIFO:-
This method assumes that the order in which materials are received in the stores is the
order in which materials are issued from the stores. Hence, the material which is issued
first is priced on the basis of the cost of the cost of material received earliest, so on and
so forth.
(Figure 2.3)
ii. Inventory ValuationLIFO:-
This method is opposite of the FIFO method; It assume that the material which is
acquired last is issued first. Hence, material issues are priced on the basis of the cost of
most recent material purchases.
24
(Figure 2.4)
LIFO is also one of the most important method through which inventory can manage in
proper manner and can also reduce the cost of product.
iii. Inventory Valuation :-Weighted Average takes into account the actual quantities of
each product in inventory purchased at different prices. Determines average price of
items received during the month & also Calculates inventory value by multiplying
average price paid by quantities in storage at the end of the month
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2.5.6 AREAS OF COST REDUCTION IN PRODUCTION
PLANNING AND CONTROL:-
As much of the production work is outsourced there is little scope in cost reduction.
1. MARKETING FUNCTION:-
Procure maximum profitable orders, reliable customer s base, and recovery in time and
feasible orders in time. To find new customers and recovery of payments after credit
sales are some of the functions of marketing.
Areas Of Cost Reduction In Marketing Are As Follows:-
i. Emphasis on recovery:-
Average credit period is 70 days and average debtors period is 45 days, so give
emphasis of recovery from debtors and try to reduce debtors period ultimately it will
reduce the annual interest paid in the bank against cash credit.
ii. Try to save expenditure on communication:-
Try to make contract with the supplier and if he can store some of the inventories in
his plant then it will reduce procurement time. Try to use email facility to the larger
extent as it is cheaper and faster medium to communicate.
2. QUALITY ASSURANCE FUNCTION:-
Quality assurance function is playing vital role in purchasing material and selling
finished goods.
Functions:-
Inspection of incoming material and comparing it with specified size, quality and
quantity. As Hotel is giving after sales service, therefore Hotel sometimes has to deal
with complaints received by the customers. The receipt of any complaint received from
any customer is affecting the reputation of the Hotel.
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3. AVOIDING CUSTOMER COMPLAINTS:-
The receipt of any complaint from any customer affects name and reputation of the
Hotel. But during the course of business the Hotel needs to give priority to solve the
customer s complaints. Every time after the receipt of the customer s complaints the
Hotel has to send Front Office Department. To check the intensity and correct the error.
4. WORKING CAPITAL REDUCTION:-
The investment in working capital is influenced by four key events in the production
and Sales cycle:
1) Purchase of material.
2) Payment of material.
3) Sales of finished goods.
4) Collection of cash for sales.
Pride Hotel begins with the purchase of material or bought out, which is paid for after a
certain time frame. This material is converted into finished goods and then sold to the
customer. Customer pays their bills sometime after the sales. The cycle completes with
payment made by the customer for the goods.
The faster the cycle is completed, faster are profits generated. Thus, main purpose of
working capital reduction is to have shorter inventory and receivable periods
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3
COMPANY PROFILE
28
3.1 NAME OF THE HOTEL:- THE PRIDE HOTEL PRIVATE
LIMITED
NAME THE PRIDE HOTEL SHIVAJINAGAR PUNE

Group Pride Hotels
TYPE 5-star Hotel
FOUNDED In 1988
HEADQUARTER Mumbai
WEBSITE www.pridehotel.com
3.2 :-
VISION STATEMENTS
To position The Pride Hotels as the No.1 Hospitality Company in India, Managing
mid-market and upscale hotels & resorts and setting up a service culture to impart
service excellence in all spheres of guest interactions & surpassing guest expectations.
MISSION
A focused hospitality enterprise managing and owning hotels & resorts and giving our
customers warm & caring hospitality which creates value for all stakeholders. For the
community, support for activities that enhance the quality of life.
VALUES
Respect for individuals, Honesty, Integrity, Fairness, Trust, and Responsibility. The
means are as important as ends. The hotel firmly believes that the quality policy
objectives can only be achieved through the direction given by its management and the
support of its people. The policies and procedures of the company are committed to
achieve the objectives. (THE PRDE HOTEL LTD )
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Corporate Profile of "The Pride Group of Hotels
History:-
The Pride Group of Hotels owes its genesis and successful growth to Mr. S. P. Jain A
young Chartered Accountant from a remote town in Madhya Pradesh who arrived in
Mumbai in the year 1975 with a vision, ambition and determination to make it big. He
ventured by starting a Management Consultancy Firm, S. P. Capital Financing and later
diversified into construction. Mr.Jain steered his conglomerate into the Hospitality
Sector, after carrying out a thorough study in the year 1988 by inaugurating the group's
first hotel in Pune, Maharashtra. (Hospitality Bizindia, 2008)
Making presence in hospitality:-
Within a short span of time the Pride Group positioned itself as an eminently successful
chain with fully owned Five Star Luxury Hotels making their mark in Ahmedabad,
Nagpur, Chennai, Kolkata, Pune, Bangalore, Pune, and a few more properties in Goa,
Jaipur, and Pride Tiger Woods Resort Kanha, are the latest addition to their list hotels
across India. The Pride Group is currently undertaking a massive expansion plan with
an objective to emerge as a National Hotel Chain, with a presence in almost all regions
of the country, offering world class hospitality standards, combined with excellent
ambience and quality service.
Pride Brands and Hallmark of Quality:-
The Pride Group has also launched the Brands "Pride Biznotel" and "Pride
Resorts"
Offering moderately priced, upscale, full-service Business and Leisure hotels, under
Marketing and Management Agreement. All our fully owned hotels are clubbed under
the Brand "The Pride Hotel" at the following destinations:
Ahmedabad
Bangalore
Chennai
Nagpur
Pune
Kolkata
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Under the "Pride Resorts" Brand 2 Resort hotels have been commissioned at the
following destinations:
Amber Vilas Resort, Jaipur

Tiger Woods Resort, Kanha
Pride Sun Village resort and Spa, Goa
Today, the Pride Group operates twelve hotels under the above Brand names,
aggregating over 1000 rooms with a host of F & B and Banqueting / Conferencing
facilities.
Brand Management:-
All our fully owned hotels are clubbed under the Brand "The Pride Hotel". We are
also operating Hotels under Marketing and Management Agreements under the Brand
names.
"Pride Biznotel" and "Pride Resorts". These Brand names are used extensively byes
in all our advertising campaigns, promotional activities, direct mails, press and public
relations, sponsorship programs and the website. A major effort is directed towards
establishing the brand names throughout the country, as a hallmark of the quality
hospitality services provide.
Pride philosophy: Quality lead to success:-
Our philosophy veers around providing Quality Service at affordable rates to our
esteemed customers and in attending to their requirements and needs. This is achieved
through carrying out a constant review and upgrade of the facilities offered at our
Hotels. The Pride Hotel chain stands out for operational excellence. In the words of the
Founder Promoter Mr. S. P. Jain, "Our success is attributed to a combination of
multiple things, including hard-work and perseverance, positive thinking, sincere
approach and a desire to serve and social responsibility. This philosophy is sought to e
percolated at all levels of the employees, to ensure delivery of complete customer
satisfaction.
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This has led to our Company to retain its position as a profitable player in the highly
competitive hospitality market despite adverse market conditions at various time.
3.3 Organizational Chart
(Figure 3.1)
SUMMARY OF BUSINESS:
(BRANCHES OF PRIDE HOTEL):
We operate and manage a chain of hotels under the brand name The Pride Hotel in
major cities in India. These include The Pride Hotel, Pune and The Pride Hotel,
Nagpur in the state of Maharashtra; The Pride Hotel, Ahmedabad, in Gujarat, The
Pride Hotel, Chennai in TamilNadu and The Pride Hotel ,Bangalore in Karnataka.
We also undertake the management and operation of hotels on a management contract
basis under the brand Pride Biznotel and Pride Resorts. We currently manage four
such hotel that Ranipet, Salem, Gurgaon, and Jaipur. All together, we operate 9 hotels
offering 834 rooms across 9 cities in India. Of which, 5 hotels(2 owned and 3 on long
term lease) offer 584 rooms across 5 cities in India while 4 hotels are on a management
contract basis comprising of 250 rooms. Most of our existing hotels cater to the
business class travellers while some of our hotels under management cater to leisure
travellers. We plan to further expand our presence and are in the process of setting up a
hotel in New Delhi comprising of 386 rooms.
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3.4 THE PRIDE HOTEL-BRANCHES AND THEIR LOCATION:-
(Figure 3.2)
33
Pune
Nagpur Ahmedabad
Chennai Bangalore
Jaipur Kolkata
(Figure 3.3)
(Google, 2006)
34
3.5 INTRODUCTION TO THE PRIDE HOTEL SHIVAJINAGAR
PUNE:-
(Figure 3.4)
35
3.6 ACHIEVEMENTS OF THE COMPANY:-
Achieve growth through a combination of new hotels and increasing capacities at

our existing properties
In line with our strategy for increasing capacities, we have recently acquired 50%
shareholding in Rohan Hotels Private Limited. Rohan Hotels has entered into an
agreement for sale with Bengal Greenfield Housing Development Company Limited
and West Bengal
Housing Board to acquire property which houses 81 service apartments. Rohan hotels
plan to convert this property into a 144 room hotel subject to receipt of regulatory
approvals. We also plan to expand our properties at Pune and Nagpur subject to receipt
of the necessary building approvals. In this regard, we have applied for additional FSI
for our Pune hotel and made an application for approval of building plans at our
Nagpur hotel.
Focus on Corporate Clients:-
We will continue to maintain primary focus on providing business class hotels both for
domestic and foreign corporate clients. With the growth in the Indian economy and our
experience in successfully managing business class hotels we will continue to expand
in these categories, while at the same timekeeping ourselves open for assessing and
evaluating opportunities in other categories like resorts, budget hotels, etc., as and
when they arise. Our tie-up with Best Western International for our Pune hotel over the
past five years, has led to increasing revenues from foreign clients. We have been
awarded the status of One Star Export House on account of our foreign currency
earnings.
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Build image and awareness of the The Pride brand:-
All our existing hotels are operated under the umbrella brand of Pride, while the
hotels Under management are operated under the brand Pride Biznotel and Pride
Resorts Our vision is to build are put providing premium class hotels thereby creating
brand loyalty. We also publish a newsletter on a quarterly basis by the name of Pride
Trends which is sent to our corporate customers providing the man update on our
business ,achievements and events
Focus on cost control leading to operating efficiencies:-
We believe that one of the most important aspects of our strengths is our focus on
bringing cost efficiency each level. Our main source of revenue is room rent. Due to
our strategy of taking over existing hotels and turning them around, we have relatively
lower capital cost per room as against constructing new properties. We believe this
places us in an advantageous position to offer similar standard of facilities at relatively
lower rates without impacting our margins.
37
3.6 AWARDS:-
In the 2013 Pride Group of Hotels bags The Golden Star awards for the second
Consecutive year. Ms.Moumita Mukhar JiGeneral Manager, Sales (west), received the
award. Pride Group of Hotels bags the Golden Star Award for second consecutive year.
Award-Pride Hotels wins the World Travel Brand Award.
Pride Hotel wins the Best fast Emerging 5-Star Luxury chain in India at the World
Travel Brand Award 2013,held in Radisson Blue, Dwarka on 19th December2013 Mr.
Satyam Jain CEO of Pride Hotels is receiving the Award.
Mr Satyam Jain, Director and CEO of Pride Hotels Ltd received 5th Golden Star Award
2012-2013for emerging the best hotel of the year.
Pride Group of Hotels won Leading Luxury Hotel Chain of the Year award in India
at Brand Achievers Award 2015, held in Radisson Blue, New Delhi on 30th May,
2015.
Pride Group of Hotels won Most Promising Upscale Business Hotel Chain in India
for the second consecutive year at World Travel Brand Awards 2014, held in Radisson
Blue, New Delhi on 31st January 2015. (Pride Hotel, 2006)
.
38
4
RESEARCH METHODOLOGY
39
4.1 RESEARCH METHODOLOGY:-
Research in common parlance to a search for knowledge. One can also define Research
as a scientific and systematic search for pertinent information for a specific topic. In
fact, research is an art of scientific investigation.
Research is an academic activity and as such the term should be used in a technical
sense. Thus, research is an original contribution to the existing stock of knowledge.
Research is being defined as systematized effort to gain new knowledge. It is a
pursuit of truth with the help of study, observation, comparison and experiment. In
short, the search for knowledge through objective and systematic method of finding
solution to a problem in research.
4.2 TYPES OF RESEARCH-
i. Analytical Research:-
Researcher choose analytical research model because informations already available
and analyse to make a critical evaluation. Research concerning some natural
phenomenon or relating to pure mathematics are examples of fundamental research.
ii. Quantitative Research:-

Researcher choose Quantitative Research model Measured and expressed in terms of
quantity.
Quantitative research helps in -
- Precise measurement.
- Knowledge trends or changes over time.
- Comparing trends or individual units.
iii. Qualitative Research:-

Involves quality or kind.
Helps in having insight into problems or cases. (Wikibooks , 2016)
40
Researcher is concerned with Analytical research, Quantitative & Qualitative research
because researcher have used the informations which is already available with the
Hotel executives or the employees of the Hotel.
4.3 RESEARCH DESIGN:-
A research design is the arrangement of condition for collection and analysis of data in
a manner that aims to combine relevance to the research purpose.
Research design was Descriptive, Analytical and exploratory in nature.
4.4 SOURCES OF DATA:-
The data in this Project is collected from Primary and Secondary Sources.
i. Primary Data Sources:-
Primary Data in this mainly includes information collected from the cost
controller executive and by personal observation the information about the Hotel is
gathered from the discussion with the employees.
ii. Secondary Data Sources:-
Secondary data sources is public reports of hotel, hotel policies, published

academic research, annual report and the internal documents produced by the hotel.
(Pride Hotel, 2006) (Quaterly report, 2014)
41
4.5 TECHNIQUES USED :-
Quantitative:-
- Monthly Cost Sheet

- Annual Cost Report Analysis
- Labour Cost
Qualitative:-
- Personal Discussion with the employees

- Market Information
- Industry
- Knowledge
- Analytical Skill (C.R.Kothari)
42
5
DATA ANALYSIS &
INTERPRETATION
43
5.1 DATA ANALYSIS:-
1. COST CONTROL-
In this part the researcher is finding cost control of food costing on monthly basis. This
cost control shown for the month of April-2014. The researcher does the data analysis
of control of food cost which is shown below-
44
MONTHLY FOOD COST REPORT-APRIL 2014
PARTICULARS AMOUNT
(Rupees)
Opening Stock 89,438
Perishable Receipts 11,61,708
Stores Receipts 3,99,275
Cash Purchases 627
Staff Meal Provision 83,905
Gas & Coal 2,27,014
(a) 19,61,967
Less:
Closing Stock 92,989
Staff Meal Recovery 50,950
(b) 1,43,939
C=(a-b)Net Consumption 18,18,028

Add:
Issue To F&B Services 36,054
Issue From Bar 572
(d) 36,626
Cost Of Sales (e)=(c+d) 18,54,654
Food Sales 62,70,803
Add:
A/P Map Sales / Comp sale 0
Total Sales 62,70,803
Gross Food Cost (In %) 29.52

Less:
Staff Meal Subsidy 1,77,257
Kitchen Meal 12,480
Directors 782
Entertainment, Comp 11,972
Executive Floor Amenity 7,452
Executive Meals 17,550
Wastage & Spoilage 1,276
(f) 2,28,769
Net Food Cost(g)=(e-f) 16,25,885
Net Food Cost % 25.93
45
MONTHLY FOOD COST REPORT- MAY 2014
PARTICULARS AMOUNT
(Rupees)
Cash Purchases 1,822
Gas & Coal 2,29,266
(a) 19,14,304
Less:
(b) 1,50,689
C=(a-b) 17,63,615
Add:
Issue From Bar 502
(d) 31,043
Add:
Gross Food Cost (In %) 31
Less:
Kitchen Meal 9,920
Directors 672
(f) 2,31,508
Net Food Cost % 27
46
MONTHLY FOOD COST REPORT-JANUARY 2015
PARTICULARS AMOUNT
(Rupees)
Opening Stock 1,12,400
Gas & Coal 2,78,278
(a) 19,21,646
Less:
(b) 1,28,920
C=(a-b) 17,92,726
Add:
Issue From Bar 569
(d) 36,537
Add:
Less:
Kitchen Meal 16,640
Directors 1,329
(f) 2,31,995
\
47
MONTHLY FOOD COST REPORT- FEBRUARY 2015
PARTICULARS AMOUNT
(Rupees)
Gas & Coal 2,48,656
(a) 17,59,567
Less:
(b) 1,08,820
C=(a-b) Net consumption 16,50,747

Add:
Issue From Bar 950
(d) 43,950
Add:
Less:
Kitchen Meal 13,440
Directors 390
(f) 1,80,517
48
%CHANGES IN NET FOOD COST
NET FOOD % CHANGES IN

MONTHS COST(Rupees) NET FOOD COST
April 2014 16,25,885 3.85
May 2014 15,63,150 -2.18
January 2015 15,97,268 5.20
February 2015 15,14,180 9.03
% CHANGES IN NET FOOD COST

10
2 % CHANGES IN NET FOOD

COST
0
1625885
1563150
1597268
1514180(1377303)
-2
-4
Apr-14 May-14 Jan-15 Feb-15
49
INTERPRETATION:
The above Chart shows that the Change in Net Food Cost. During the Apil-2014 it was
3.85%. In the May-2014 it was decrease with -2.18%. During January-2015 there was
5.20% increase Net Food Cost compared to May-2014 .
In February-2015 change on Food Cost9.03% it was increasing. To increase in Net

Food Cost is not good sign for business.It is increase in Net Food Cost due to changes
in expenses.(complimentary expenses)
When Net Food Cost increases it means they providing more coplementary to their
employees. Which is not increase sales but increase in cost of food or cost of
production.
Hotel need to take care of these things to avoid unneccesary expenses because these are
internal expenses which are controllable .
50
SUMMARY OF THE FOOD COST FOR THE FOLLOWING
YEARS
1. FOOD COST REPORT FOR THE YEAR 2014
GROSS FOOD COST NET FOOD COST

MONTHS IN % IN % DIFFERENCE
January 25.55 22.45 3.1
February 29.3 26.35 2.95
March 30.25 26.55 3.7
April 29.58 25.93 3.65
May 31 27 4
June 31.6 27.05 4.55
July 31.46 27.93 3.53
August 33.08 28.85 4.23
September 35.28 30.18 5.1
October 35.29 29.37 5.92
November 36.19 30.82 5.37
December 32.04 28.53 3.51
(Annual Report, 2013-14)
51
INTERPRETATION:
The above Chart shows the Changes in Gross Food Cost and Net food Cost .During the
January,February, March, April, July and December-2014 there was changes of 3.1%,
2.95%, 3.7%, 3.65%, 3.53% and 3.51. It shows that there were no more difference in
Food Cost it is acceptable to Hotel.
In the month of May, June, August there were changes of 4%, 4.5% and 4.23%. As
compare to above months there was 1% increase in difference of Food Cost. It is also
acceptable.
In the month of September, October and November there was changes of 5.1%, 5.92%
and5.37%.In these months there were higher changes in the Gross Food Cost and Net
Food Cost as comparing of other months in the year 2014 which is not acceptable
because it shows that they are providing more complementary to their staff which is
not good for the Hotel.
Cost Reduction and Cost Control is nothing but reduce the unnecessary expenses.
52
2.FOOD COST REPORT FOR THE YEAR 2015
GROSS FOOD COST NET FOOD COST

MONTHS IN % IN % DIFFERENCES
January 31.57 27.56 4.01
February 29.77 26.6 3.17
March 35.32 30.68 4.64
April 36.25 32.29 3.96
May 40.5 35.28 5.22
June 34.8 30.43 4.37
July 38.34 33.24 5.1
August 34.79 29.52 5.27
September 44.35 35.23 9.12
October 39.05 32.22 6.83
November 34.6 29.76 4.84
December 35.49 31.29 4.2
(Annual Report , 2014-15)
Food Cost
50
45
40
35
30
25 GROSS FOOD COST IN
20 %
15
10 NET FOOD COST IN %
5
0
December
July
August
October
April
May
September
November
January
June
March
February
53
INTERRETATION:-
The above Chart shows the Changes in Gross Food Cost a.During the February and
April-2015 there was changes of 3.17% and 3.96% It shows that there were no more
difference in Food Cost and it is acceptable.
In the month ofJanuary, March, June, November, and December there were changes of
4%, 4.64% and 4.37%, 4.84% and 4.2%. As compare to above months there was 1%
increase in difference of Food Cost which is also acceptable upto a certain limits.
But in the month of May, July and August there were changes of 5.22%, 5% and
5.27%.In these months there were higher changes in the Gross Food Cost and Net Food
Cost as comparing of above months in the year 2015 which is not acceptable.
Similarly in the month of October, September there were changes of 6.38% and
9.12%.In the month of september there was a difference of 9.12% which was highest
amonge all the months of year 2016. It was not good sign for the Hotel. It shows that
there are certain expenses which need to be reduce because when they occurs, there
where no increase in sales but increase the cost of Food.
Cost Reduction and Cost Control is nothing but reduce the unnecessary expenses.
54
5.2. COST REDUCTION:-
In this part researcher shows cost reduction part. Through outsourcing hotel reduce
their cost. Hotel uses ODC (Out Door Catering) for Banquet Department and through
using different technique hotel reduce cost of labour.
55
LABOUR COST:-
ODC CONCEPT (Out-Door-Cateress)
BANQUAT (BANQUET) DEPARTMENT

FUNCTIONS..
BANQUAT DEPARTMENT REQUIRED FOLLOWING STAFF FOR ARRANGING ABOVE

FUNCTIONS
DESIGNATION QTY
MANAGER 1
RECEPTIONIST 1
SALES & CO ORDINATOR 1
BANQUAT ASSISTANCE 15
TOTAL 18
WE CALCULATE NORMAL SALARY AND SALARY WHILE APPLYING ODC METHOD FOR BANQUAT
DEPARTMENT.
TOTAL
SALES & TOTAL
BANQUAT
CO- BANQUAT BANQUAT
PARTICULAR MANAGER RECEPTIONIST SALARY
ORDINATE Asst. SALARY
for
PERSON for Year
Month
NORMAL SALARY
(In Rs.) 35,000/- 15,000/- 22,000/- 2,02,500/- 2,74,500/- 32,94,000/-
SALARY
(APPLYING ODC
METHOD) 35,000/- 15,000/- 22,000/- 90,000/- 1,62,000/- 19,44,000/-
Pride Hotels Ltd reduced Labour Cost/Salary by applying ODC Method of Rs.--->(Per
Year) 13,50,000/-
(Annual Reports , 2013-15)
56
INTERPRETATION:-
When we talk about COST SHEET there three cost are very important namely material
cost, labour cost, and expenses.
In Pride Hotel to reduce labour cost they use one important method i.e. ODC concept
(Out-Door-Cateress ).
We observed that BANQUAT Department of Pride Hotel arrange average 20 functions

per month and it hire temporary employee or ODC as per the requirement of the
functions.
If they hire employee on permanent basis then they have to pay salary of Rs. 274500/-
per month and Rs.3294000/- annually.
And if they hire ODC employee then they have to pay salary of Rs.162000/- per month
and Rs.1944000/- annually. Through this method they reduce labour cost of
Rs.1350000/- yearly.
57
Working note for Normal Salary ###
No. of BANQUAT Assist. 15

Average Salary per BANQUAT
Asst. 13500
Total 202500 ###
Working note for Salary (Applying ODC Method)***
Pride Hotel' Management Classify above required employee as following,
Fixed Employee :-
BANQUAT Manager
Receptionist
Sales & Co-Ordinator
Temporary
Employee/ODC :-
BANQUAT Asst.
We Observed that BANQUAT Department of The Pride Hotel arrange 20 Functions

averagely per month pride hotel hires temporary Employee/ODC when
they required for Functions
Calculation for month,
No. of Functions 20
No. of ODC 15
Wages per Function (Rs.) 300
Total 90000 ***
58
OUTSOURCING:-
PART -1
1)
NORMAL
SALARY :->
AVERAGE SALARY PER
DEPARTME NO. OF PER PER MONTH ANNUM
NT EMPLOYEE EMPLOYEE(Rs) SALARY(Rs) SALARY(Rs)
LAUNDRY
DEPARTME
NT 12 12500 150000
SECURITY
DEPT. 10 10000 100000

1 .(
TOTAL---> 250000 2 3000000 I)
2)OUTSOU
RCING :->
ESTIMATED BILL PER
OUTSOURC VENDOR/CONTR NO. OF (PER MONTH) ANNUM(Rs
ING DEPT. ACTOR EMPLOYEE (Rs) )
LAUNDRY
DEPARTME
NT WASH LINE 12 65000
RADIANT
SECURITY SECURITY GUARD
DEPT. PVT. LTD 10 72000
1 ..(I
TOTAL---> 137000 2 1644000 I)
Pride Hotels Ltd reduced Labour Cost/Salary by applying Outsourcing Rs.-- (I) -
->(Per Year) 1356000 (II)
59
INTERPRETATION:-
The Pride Hotel outsourcing Laundry department and Security department to save
money and time and to reduce cost of final product or services.
In Laundry department 12 employees and in Security department 10 employees are

required. If Hotel hires these employees by its own, it takes more time and more money
because for these 22 employees Hotel will have to pay salary of Rs.250000/- per month
and Rs.3000000/- per year.
But if it outsource these functions or activities to the vendors or contractors it save their
more time and they have to pay salary of Rs.137000/- per month and Rs.1644000/- per
year on contract basis.
Again Pride Hotel reduce labour cost or salary of Rs.1356000/- per year by
outsourcing.
60
PART2
PRIDE HOTELS MANAGEMENT REDUCES EMPLOYER

CONTRIBUTION IN PROVIDENT FUND & ESIC BY USING
OUTSOURCING AS FOLLOWS,
ESIC:-
BASIC
+D.A. PER TOTAL BASIC Employee Employer Employer
EMPLOYE EMPLO +D.A. PER CONTR CONTR Contribution
E (AVG.) YEE EMPLOYEE (AVG.) (1.75 % ) (4.75%) (Per Annum)
6000 22 132000 2310 6270 75240
PROVIDE
ND FUND
:-
BASIC Employer
+D.A. PER TOTAL BASIC CONTR Employer
EMPLOYE +D.A. PER Employee (12.00 Contribution
E (AVG.) EMPLO EMPLOYEE (AVG.) CONTR +1.61%)( (Per Annum)
(Rs) YEE (Rs) (12.00 %) Rs) (Rs)
6000 22 132000 15840 17965.2 215582
TOTAL REDUCED EMPLOYER CONTRIBUTION IN ESIC & PF IS Rs.

(Per Annum) 290822
***PRIDE HOTELS LTD MANAGEMENT REDUCES TOTAL

LABOUR COST PER ANNUM FOR 2 DEPT. IS (PART 1 +PART 2 )
BY USING OUTSOURCING METHOD 1646822
(Annual Reports , 2013-15)
61
INTERPRETATION:-
The most important advantage of outsourcing is that Hotel need not pay Provident Fund
and ESIC to the employees because in outsourcing process hotel have to make contract
with the vendors on yearly basis and total contract amount is also decide.
Through this, Pride Hotel management reduces employer contribution in Provident

Fund and ESIC by using outsourcing method. It reduce total employer contribution in
ESIC and Provident Fund of Rs.290822/-Per Annum.
It means that Pride Hotel Ltd management reduces total labour cost per year for 2
department is (PART -1 + PART -2) Rs.1646822/- Per Annum by using outsourcing
method.
62
6
FINDINGS
63
FINDINGS:-
In the year 2015 it was founded that in the month of September there is huge
difference between Gross Food Cost and Net Food Cost i.e.9.12% which is not good
sign to the hotel.
Pride Hotel provides more subsidy or complementary to its employee which increase
cost but not increase sales which affect the cost of production.
In Pride Hotel, optional vendors are not available, so bargaining is not possible and
hotel have to accept price which decides by vendors.
There is lakhs of communication between Banquet department and main kitchen and
also have lakhs of proper food planning due to this huge food wastage happens.
Food cost was increased in 2012 because the invoices in these months were missing.
We observe that pride hotel have total 10 cars, they are too old more than 10-15 years
so due to this vehicle repairing & maintenance expenses is nearly about of Rs. 2-3
lakhs per annum.
64
7
SUGGESTIONS
65
SUGGESTIONS:-
If Hotel do proper planning in Banquet department there is good scope for cost
reduction of production which will ultimately increase their profits.
As seen in 2014,in July the Percentages of food cost was increased due to the missing
of invoices in these months , so the researcher have suggest the Hotel that they have to
get the invoices in on time before the closing period.
Try to control fluctuations in Food and Beverage cost.
To increase the sale of Food & Beverages, Hotel has to reduce their cost without
affecting the price and quality of product and services.
We observe that pride hotel have total 10 cars, they are too old more than 10-15 years
so Due to this vehicle repairing & maintenance expenses is nearly about of Rs.2-3 lakhs
per annum .And driver's salary + vehicle fuel expenses is around of Rs.9.60 lakhs +
8.00 lakhs per annum Respectively. I.e. Total expenses of travel desk dept. Is 19 lakhs
(approx.)
So, we suggest that if pride hotel is taking decision about to make travel desk
department into outsourcing dept., they can reduce total vehicle expenses. &
departmental cost by Of Rs. 10-12 lakhs per annum.
66
8
CONCLUSION
67
CONCLUSION:-
According To Researcher Cost control & cost reduction is an essential part of any
Hotel or organization. Every organization has mainly two objectives one is Profit
maximization & another is wealth maximization. Cost Reduction Techniques will help
the Hotels to maximization not only profit but also Wealth. Pride Hotel using ODC
concept to reduce Labour Cost which is important element in Cost Sheet which is good
for the Hotel Industry. They can also do more better. Cost control and cost reduction
will help the Hotel to achieve its objectives.
Various solutions and strategies are used by the Hotel industry to overcome the
Difficulties in preserving the environment along with managing their wastage of
Resources in attaining the mission & vision of the Hotels in a cost-effective manner.
68
BIBLIOGRAPHY
69
BIBLIOGRAPHY: -
Google. (2006). Retrieved 07 09, 2016, from www.google.co.in:

https://www.google.co.in/search?q=history+of+the+pride+hotel+pune+wikipedia&biw
=1173&bih=558&source=lnms&tbm=isch&sa=X&sqi=2&ved=0ahUKEwi2g_y-
7Z3PAhVTv5QKHQSiAxwQ_AUIBigB&dpr=1.09#tbm=isch&q=+pride+hotel+
Pride Hotel. (2006). Retrieved 07 09, 2016, from www.pridehotel.com:

http://www.pridehotel.com/awards.php
Hospitality Bizindia. (2008). Retrieved 08 25, 2016, from www.hospitalitybizindia.com:

http://www.hospitalitybizindia.com/detailNews.aspx?aid=2428&sid=11
(2013-14). Annual Report. Pune: The Pride Hotel.
(2013-15). Annual Reports . Pune : The Pride Hotel.
(2014). Quaterly report. Pune : The Pride Hotel .
(2014-15). Annual Report . Pune : The pride Hotel.
Business Dictionary. (2016). Retrieved 08 16, 2016, from http://www.businessdictionary.com:

http://www.businessdictionary.com/definition/cost.html
Wikibooks . (2016, 05 06). Retrieved 07 15, 2016, from https://en.wikibooks.org:

https://en.wikibooks.org/wiki/Research_Methods/Types_of_Research
C.R.Kothari. (n.d.). Research Methodology. In C.R.Kothari, Research Methodology. [New

Age International].
Kishore, R. (n.d.). Accounting and Financial Management. TAXMANNS PUBLISHERS .
LAL, P. (n.d.). Cost Accounting. In P. LAL, Cost Accounting. Tata McGrew Hill.
THE PRDE HOTEL LTD . (n.d.). Retrieved 07 16, 2016, from http://www.pridehotel.com.
70
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A STUDY OF COST CONTROL AND COST REDUCTION IN HOTEL

THE PRIDE HOTEL PVT LTD

UNDER THE GUIDANCE OF

DR. D. Y. PATIL PRATISHTANS

I am glad to acknowledge the numerous personalities involved in leading their help to

I express my sincere gratitude to my institute guide Prof. Mangesh Asawalikar who

This acknowledgement would not be completed without extending thanks to my

SR. NO. Topic PAGE NO.

1 Introduction to the project 4-6

2 Theoretical Background 7-26

3 Company Profile 27-37

4 Research Methodology 38-41

5 Data Interpretation 42-61

Project title is A study of COST CONTROL AND COST REDUCTION in hotel

REASON FOR SELECTION OF TOPIC-

To study the concept of Cost control and Cost Reduction.

1.3 SCOPE OF THE PROJECT:-

Cost is defined as an amount that has to be paid or given up in order to get

THE GIVEN THING MAY BE:-

A tangible product such as job component or product obtained form a process.

A service such as Transport, repairs, research, etc.

A function such as Production, Selling, Distribution, etc.

Cost is the amount of expenditure, actual (incurred) or notional (attributable), relating

NATURAL CLASSIFICATION OF COSTS:-

4.Selling, distribution and administrative overheads: - Selling and distribution

MONTHLY FOOD COST REPORT

Gross Food Cost (In %)

(IN RELATION TO CHANGES IN OUTPUT OR ACTIVITY OR VOLUME)

2.3.2 Food and Beverage Cost-

2.4.1 METHODS OF COST CONTROL:-

COST REDUCTION IS A PLANNED POSITIVE APPROACH TO REDUCE

Cost reduction exercises are planned campaigns to cut the expenditure. It is a

Cost Reduction is a corrosive function by continuous process of analysis of costs,

Following are the critical areas of application of various cost reduction

A considerable amount of cost reduction can be affected by improvement in

a) Defining each stage of responsibility. It should be ensured that there is No

b) There should be well defined channels of communication between various

2. PRODUCTION PLANNING AND CONTROL:-

c) Whether efficient system of inventory, inspection and stock taking is there.

3. HOTEL LAYOUT AND ARRANGEMENT OF EQUIPMENT:-

An effective arrangement of Lobby, Kitchen and Beverage Departments a fundamental

a) Optimum use of space.

c) Efficient control of work flows with least disturbances.

Following points may attract attention in his connection.

a) Whether there is optimum utilization of salesmen s working time.

b) Whether rearrangement of territories can bring about cost reduction.

The effective employment of capital in a business is of Paramount importance

Following points are relevant in this connection:

a) Whether the methods of funding capital expenditure are cost effective.

b) Whether capital is secured at economical cost; and

2. Production planning and control

5. Quality assurance function

Basic Operating activities of Purchasing-

Storing: to maintain adequate stocks of merchandise on hand, and to avoid loss

2.5.5 DIFFERENT TECHINQUE USED BY PURCHASE

1. Just In Time Concept(JIT): -

2. CONTRACT WITH THE SUPPLIER:-

Example of How to control inventory in Hotel using different methods of

ii. Inventory ValuationLIFO:-

proper manner and can also reduce the cost of product.

Areas Of Cost Reduction In Marketing Are As Follows:-

ii. Try to save expenditure on communication:-

2. QUALITY ASSURANCE FUNCTION:-