It’s no secret that hotel finances and accounting can be complex and come with their own unique sets of challenges. And those challenges often arrive during times when hoteliers are already stretched thin in terms of time and resources.
“Ownership is demanding more data, better data and faster data, which leaves operators faced with the timeless challenge of having to do more with less—in this case, doing a lot more with no increase in personnel or resources,” said Scott Watson, executive VP of sales and marketing for M3. “The same struggle applies when it comes to managing property finances and business accounts.”
Watson shared with Hotel Management four of the most common challenges he sees when it comes to hotel finances and accounting and offers advice on how to solve them.
1. Enterprise Resource Planning
“Every hotel company would like to build their own enterprise back-office system to manage the financial and accounting aspects of the business just as most drivers would like a custom-built Bugatti or Lamborghini,” Watson said.
But management companies work for multiple ownership groups that often have a variety of differing expectations and timelines. The real challenge then becomes how hoteliers can implement affordable and scalable solutions without enormous cost that will also meet owner expectations.
The solution: Partner up, Watson said. There are solutions available that invest in hotel-sector-specific technology.
“As a result, through month-to-month subscriptions, all hoteliers, from single-location owner operators to large-scale portfolio-management companies, can leverage best-of-breed accounting and financial technology at a fraction of the cost of ownership,” he said.
Watson said that hotel-specific solutions allow for minimal ramp-up and training because the functionality and language of the application is already in “hotel-ese,” including formulas for revenue per occupied room and per available room, average daily rate and so on.
“Adopting solutions that are developed by hoteliers exclusively for hoteliers gives users a critical leg up over their competition,” Watson said. “It’s like driving off the showroom floor in a shiny new model every single day.”
2. Staff Variations
From the front desk and housekeeping to security and management staff, it seems like hotels have infinite types of employees.
“These people can be part time, full time, for tips, etc. They may work at multiple locations and staffing requirements may vary from day to day depending on demand,” Watson said.
The challenge then becomes: How can hoteliers meet the labor demands of the peaks without overstaffing for the valleys and also stay within budget?
The solution: Real-time monitoring for labor, Watson said.
“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 help manage the monitoring and management process and give 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,” Watson said.
3. Data Overload
“Most hotels have access to an array of data sets, including STR reports, [property-management system] data, guest satisfaction surveys, comments and financial data from multiple properties,” Watson said. “With an overwhelming amount of data, many hoteliers suffer from paralysis by analysis.”
With the industry constantly claiming it must have data, the challenge then becomes how to best decipher that data to determine the story being told and then how to read the story to best react.
The solution: A centralized platform is key, Watson said.
“The average hotelier will drown in their data lake if they do not have the life preserver of an easy-to-use operational-management, dashboard and mobile platform,” he said. “With an overload of data, it is critical to have a business-intelligence and analytics tool in place to show where efficiencies can be improved and how to best reduce expenses.”
An operations-management platform that allows hoteliers to import data into a centralized dashboard can aid in identifying trends and making more informed decisions, he said.
4. Core Challenges
“Guest service, sales, operations, financial management, accounting, cash management, asset management, balance sheet performance, maintenance—these are just a few of the priorities on every hotelier’s to-do list,” Watson said.
How can hoteliers focus on the core competencies that drive revenue if there are so many irons in the fire that require attention?
The solution: Outsource it, Watson said.
“Many hoteliers cannot be all things to all people,” he said. “As hoteliers look at their core competencies and juggle volatile portfolios, mitigate the events of natural disasters, minimize turnover and training fees and right-size their organizations, outsourcing certain functions is an option.”
Managing the challenges of finances and accounting is no exception here, he said. While Watson said outsourcing isn’t for everyone, it can be an efficient and cost-effective solution for some.
“In some cases, it may only apply to certain duties, time frames or circumstances and in other cases, it may be a comprehensive and permanent solution,” Watson said.