“With the upswing of development and competition in the industry and rising demands from potential guests and online travel agencies, hotel operators are being asked to deliver bigger, better data faster—without the increase in personnel and resources they need,” said Scott Watson, EVP of sales and marketing with hospitality cloud-based financial technology provider M3. “The same struggle applies when it comes to managing property finances and business accounts.”
There are a variety of challenges when it comes to managing financials. The first is timely and accurate reporting. From the beginning, hoteliers have been tasked with the juggling act of maintaining accurate and timely financial statements, while figuring out who needs what information and when.
“Even with complex reporting requirements, closing dates usually remain unchanged, which forces operational staff to pick and choose which accounts and sections to focus on due to a lack of time and resources,” said Watson. “Over time, this race to the finish line can leave a bigger dent in business profitability than most hoteliers realize.”
He cited income statements as an example. “A hotel’s income statement is a critical tool for the operations team, as major business decisions are based on the results. If the statement is not complete or accurate, it could negatively impact the brand’s financial strategy in the long run. Similarly, if all invoices applicable to a certain period haven’t been entered or accrued, the results will suffer.”
Scott Watson, M3
He continued, “The same goes for unreconciled items left on the balance sheet, which can inhibit managers from seeing truthful performance results on the income statement. Ultimately, without a timely financial reporting process in place, hotel operations teams are unable to make the adjustments needed to improve results for the given time period, so the same potential costs or inefficiencies will continue.”
Another challenge is data overload. Advances in technology mean that hotels no longer have to deal with paper tickets and physical logbooks. Instead, they now have access to numerous data sets at every turn, from STR reports to PMS documents and guest satisfaction surveys. “But without a standardized reporting process in place, many hoteliers suffer from ‘paralysis-by-analysis’—they have an unlimited supply of information at their fingertips, but little idea how to apply it or at least how to apply it in a way that positively impacts their bottom line without sacrificing guest experience, the very culture of their organization or the lives of their people in the trenches,” he said.
The variety of hotel staff roles can also be a challenge. Unlike businesses made up of the same type of employees, hotels consist of a unique collection of roles. These areas include maintenance staff, housekeeping, pool cleaners, front desk, gift shop, restaurant, café, bar, back office, IT staff, security teams and management staff. “Within each rank, certain individuals are employed on a part-time, full-time or contractual basis with multiple locations and tasks assigned based on varying demands,” said Watson. “Without the ability to keep track of daily labor costs and payroll transactions, it’s nearly impossible for hoteliers to gauge true employee productivity and forecast hiring needs for the ‘peaks’ without overstaffing for the ‘valleys,’ all while staying within budget.”
So how can hotels handle all of these challenges? Watson said that hotels have a number of ways at their disposal.
Assembling the right team is important. “First and foremost, hotels should have an accounting team that understands the unique demands of the industry and can recognize and diagnose variances within financial reports that could negatively impact the hotel or brand’s profitability,” he said.
Adopting a centralized platform can also help. “The most sensible long-term solution to these challenges (and most other obstacles within the industry) is a scalable accounting, reporting and analytical software that can grow and flex with ever-changing business and industry needs,” said Watson. “To maximize the tidal wave of data out there, it is critical to have the right hotel-specific platform in place that can import and interpret data from multiple properties and time zones into one easy-to-use, centralized dashboard. This makes hoteliers’ lives easier by providing a snapshot of financial performance (including GSS, STR and other financial statements) that allows them to identify key trends to make more informed business decisions down the road.”
Real-time labor monitoring is also key to handling financials. “It is critical for hoteliers to establish a balance between monitoring daily labor costs, managing overtime, overseeing daily payroll transactions and accessing simple reporting functions,” he said. “Cloud-based reporting tools can offer seamless labor monitoring and management from clock-in to paycheck, while giving hoteliers on-demand management of earnings to manage transactions in real time. Adopting a solution that incorporates job standards, in addition to budget numbers, allows operators to ensure that proper staffing is in place based on the previous night’s stay and circumstances. Most systems will show overtime. But isn’t it better to manage to standards and activities within the hotel and eliminate overtime before it happens?”
This article was sourced from Hotel Business