ABSTRACT
Problems of managerial control inhibited the growth of hotel chains. The development of accounting and managerial information solutions to these problems was an important step in the transition to professional management in the hotel industry. The owners of an organization have a claim to the residual earnings after paying all expenses. Their interests are best served if the organization maximizes profit. The agency problems affect not only hotel chains, but also the organizational form they replaced, the independent hotel. However, independent hotels did not have to rely on accounting controls to solve agency problems. A different solution to agency problems was required to enable large professionally managed organizations to develop in the hotel industry. The solution that developed in this and other industries was internal control as part of an accounting system. Because large organizations require internal controls, it is not surprising that the first comprehensive hotel accounting systems were created by the earliest hotel chains.
