The marketing-finance link in the corporate management of 4 and 5 star hotels : an investigation

Abstract

Purpose: This study aims to explore the link between the marketing and finance functions and to identify the communication levels between the two departments that surround such a link. Design: A preliminary interview with an industry specialist was held first which allowed the researcher to get an understanding of the two functions within the hospitality industry. Semi-structured interviews with the Chief Financial and Marketing officers of eight local 4 and 5 star hotels were held separately which allowed for the analysis of the inter-functional relationship between the two departments Findings: In all eight participant hotels, a link between the two functions was found to be present. This occurs mainly through the cost management function which was the fundamental activity which connects the two in all participant hotels. However, low levels of communications were found in five of the eight participant hotels which resulted in a number of knowledge gaps between the two functions. Conclusions: A stark contrast was observed between the roles that the two classes occupy in theory as opposed to what they actually do in practice. This difference arises mainly due to cost control. Although the literature does not propose it as being part of the activities conducted by the finance function, it is nonetheless performed by every finance department within all participant hotels. This, coupled with sales credit and pricing, are the fundamental activities which link the two departments together in all of the eight participant hotels. Thus, from whichever point one observes it, either marketing and finance as departments, or, as functions, a link still appears to exist between the two. Furthermore, low levels of communications were found between the two departments in the participant hotels. This is mainly due to the limited involvement that the two have within each other’s functions. Deficiencies in both communication and information channels often result in a number of knowledge gaps between them. Implications/Value: Despite the many calls for the financial officers to move away from their traditional accounting activities, the majority of the CFOs from the participant hotels still aim to control the marketing function rather than support it. Both functions need to understand the advantages that may be gained from better information sharing as well as those obtained from the involvement of the marketing department in the decision making process. This could be done through enhanced training and learning.