The ability to send and store data securely “in the cloud” has transformed the way that all types of business can be conducted, and the hospitality industry is certainly no exception. Dramatic changes have taken place in our industry over the last couple of decades; hosted back-office technology, integrated reservations systems, mobile technology enhancing the guest experience, analytics upon analytics. Technology continues to enable hotel owners and operators to streamline their operations and visualize new ways to complete back-office tasks, allowing more time and dedication where it should be placed, upon the guests. However, all of the new technology, new demands and new deliverables can sometimes put a strain on the human resources functions and senior staff oversight of asset management, hotel management and owner/operators. It becomes more and more difficult to be all things to all people—top-notch recruiter, all-encompassing trainer, leading edge sales producer or manager, comprehensive operator, SSAE-16 compliant IT leader… and world-class guest services provider!
So, what’s next? One emerging business opportunity that is making itself available to hoteliers is transitioning their back-office hotel and even some corporate accounting functions to an outsourced business model. This option can be delivered with minimal time investment from senior management and typically produces a tangible, and often immediate, return-on-investment and bottom-line-savings. In addition to having more time to focus on your guests, here are seven other reasons why outsourcing may be a great option for your hotel portfolio.
Process and Personnel Expertise
Outsourcing offers a great opportunity to have highly-qualified team members who take experience gained outside of your operation and apply it to serve your needs in a fresh, uninhibited, repeatable and very effective manner. The old guard of “we’ve always done it that way,” may not rush to outsourcing; however, innovation and process improvement are just as important in the back-office functions as they are in guest-facing products and services. Strict focus on performance aberrations and financial procedures is the only way to maintain, if not grow, bottom-line margin contributions. To hire a CPA in-house is an expensive proposition, but with an outsourced accounting team, you will have a shared resource that often includes one or multiple CPAs overseeing your account. An outsourcing partner can typically recruit locally, regionally and even nationally when searching for the right talent and spread the investment of the search and hire process over many customers, eliminating the direct costs that you would have to incur to build the same talent pool in an in-house accounting environment.
Hotel accounting requires focus and precision, and when the job is done at property, in the corporate office environment or a combination of both, it comes with many distractions that dramatically increase the possibility for error. With a focused, off-site accounting team, you are assured more accurate, thorough bookkeeping output. In an outsourced environment, accounting, YOUR accounting, is the only activity and primary focus of your outsourcing partner; provided their services are delivered in a “pod” or team deployment, so that you deal with the same team members each and every day. .
Accounting Team Versus Solo Associate
Using an outsourced hotel accounting model, you have a team of accountants and supervisors checking each other’s work to ensure you receive the best services possible. Two sets of eyes are always better than one. This arrangement also takes the concern out of an individual associate being responsible for accounting tasks and the potential security risks involved with too much authority given to any one person. Unfortunately, there have been instances in our industry in recent history where the cookie jar was not monitored through proper internal controls and oversight, which resulted in vulnerabilities and associate theft. Outsourcing allows you to maximize production, standardize process and customize authority privileges at all levels. There is also the added value of no downtime due to sickness, leaves of absence, vacation or staffing changes; your outsourced accounting team is always on the job. Imagine how productive it would be to have all of your staff work all day, every day without sick days or vacation days, hirings and firings? Outsourcing makes the HR nirvana a reality.
Access to Top Hotel Accounting Tools
By outsourcing accounting in your hotel, depending on the partner you choose, you are assured access to the top tools in the industry; tools that are designed, deployed and updated specifically for the hospitality industry. Of course, there are always options to go with the large, sophisticated, ERP solutions that are marketed to every industry; however, those solutions must be customized first to hospitality and then to your company and culture. Because of system complexity, it almost mandates an in-house deployment. This avenue not only dramatically increases your costs related to IT infrastructure, information back-up and restoration, network operations, software licensing and maintenance, and personnel management, but does not allow you to enjoy the financial and performance benefits of outsourcing. The right outsourcing partner should assume all liability for software, as well as service. Outsourcing is all about consistency combined with flexibility; not managing upgrades and enhancements. With an outsourced model, your off-site team is perpetually trained and up-to-speed in the latest releases and features of these tools, eliminating the need to have in-house personnel invest countless hours in training, when they could be focusing on production and guest service.
In an age where hotel portfolios ebb and flow, scalability is probably the most attractive benefit of the outsourced hotel accounting model. If you buy or sell hotels or manage a fluctuating portfolio, your accounting team likely does not expand and contract with the workload, unless the change in assets is significant. And, in today’s world, this often means that you are staffed for the peak demand, not the valley, resulting in inefficiencies and inflated labor costs. Outsourcing minimizes disruption with your teams due to hiring sprees and layoffs that may come with a company’s growth or reduction in force. Your corporate accounting team remains constant, as the back-office production associated with the growth or decline in the portfolio is the responsibility of your outsourcing partner. In addition, we’ve all seen the double-digit percentage increases in the cost to provide healthcare coverage to our employees. Those increases and the unknowns associated with the future of healthcare costs and other benefits are mitigated in an outsourced model.
Not all outsourcing is created equal. Many outsourcing engagements can be “all or nothing” propositions, which is a shame, as no two hospitality companies are created equal. When selecting an outsourcing partner, it is critical to find a partner that can provide services in line with your culture, your vision and your needs. While outsourcing should introduce best practices and process improvement opportunities, you should never have to change YOUR culture to match THEIR services. While fully outsourced accounting can create undisputed value and cost savings, in some cases your organization may be best served by only receiving functional assistance in certain areas. You may only need assistance with sales and use tax filings, daily bank reconciliations, balance sheet reconciliations, corporate A/P entry and processing, check writing/payment issuance, etc… Find an outsourcing provider that will listen to your needs and customize your engagement to deliver the greatest value to your organization. Listen to what they have to offer, but trust your gut when it comes to the services rendered. It may be time for a full revamp; however, in many instances, small tweaks can deliver tremendous results.
You should inevitably experience a cost savings by employing an outsourced business model for hotel accounting services. The cost savings will be generated through greater efficiencies and lower overhead and can support a redeployment of many of your in-house accounting staff responsibilities (at property and most likely at some level corporately). This can often be the most challenging aspect of adopting a new way of doing business, because it can cause a temporary disruption to your team. However, if you select the right outsourcing partner, it can be implemented at a pace you are comfortable with and over a timeline that will allow for displaced or redirected team members to learn new skills, fill new roles or seek new career opportunities.
Outsourcing is not for everyone; but it seems to be a fit for more and more companies, every single day. It is possible to protect your culture and outsource certain responsibilities. By outsourcing back-office accounting, your financial operation can be held to the same standards as your operational and sales teams. Remember, cash is still “king” and money still “talks”, so any potential outsourcing partner should be able to make you money or save you money through their services. As with any major business decision there are always other benefits and considerations to contemplate, as discussed above. If you find the value and benefits realized from one or more of the seven areas listed above are significant, it may be worth your while to take a look at an outsourcing alternative for your back-office accounting needs.
Republished from an article by Hotel Executive.