Financial Pain Points in Hospitality Industry

STR and Tourism Economics has released a revised forecast on the hotel industry in the US is expected to continue to post record breaking performance levels through 2019 at the NYU International Hospitality Industry Investment Conference.

Revenue in the hotels segment amounts to US$46,557 million in 2019. Revenue is expected to show an annual growth rate of 3.8% resulting in a market volume of us$54,002 million by the end of 2013. In global comparison most of the revenue is generated in US.

It is really good to hear this staggering report. Every successful business requires a strong financial management to support its growth otherwise the whole system will fall apart due to mismanagement. We know that finance department of any hotel industry is the back bone for the success. Unless it is run right nothing will move right.

Financial management policies play a very important role in the success of hotel industry like any other industry. The key responsibility consists of preparing annual budget, detailed financial tracking model, ongoing audits and reporting structure, financial forecast. Other than this the financial head will have pain points in the area of cost center reporting, product profitability, customer target profitability, center profitability and so on. Other than this considerable time has to be spent on cost control in the area of beverages, booking and administration.

It becomes imperative for the finance team to hold weekly and monthly meetings with key departments. They should involve everyone in analyzing profit and loss results, short term and long term financial objectives and planning and should act as a financial consultant for other department heads and direct them in to revenue generation and cost cutting.

In this lengthy and pain stacking process we can understand how many process heads, departments, branches in other locations are involved. Heavy volume of data be created, published, distributed. So many contracts and agreements are created and be sent to various departments for requests and approval and at last for signature. It is really hard to wonder how many manpower is involved working in the back office for weeks and months together to get collect data, compile, document them and send emails, forget to remind and again sending. It was so tedious tasks for any one where human error and lengthy delay is unavoidable.

A recent study shows that every year companies around the globe spend, on average, approximately half a million dollars and nearly 3,000 hours correcting errors in expense reports. The average cost to process an expense report for a single night hotel stay is $58, however 19 percent of expense reports contain errors or missing information costing an additional $58 and 18 minutes to correct each expense report.

While it is good to hear that the growth in hospitality segment amounts to US $46,557 million in 2019, the hotel industry also spends half of it on correcting human errors.

Conclusion:

It is time to rethink to reduce manual work and automate most of the process for a better profit. Most of the current business process workflows should be streamlined and automated for a good growth. We should think to minimize the manual effort on repetitive tasks and involve them in to more productive work for the betterment of the organization. If we do not convert our workflow in to digital then we will be left behind since technology is moving so fast.

Psychological Contract

A recent study shows that 25% of employees feel positively engaged with their employer while 60% are only passively engaged, and 15% feel disengaged on various reasons.

The above study shows the percentage of commitment or the psychological contract between employer and employee and how it will affect their relationship and the business directly in turn.

What is Psychological Contract:

Psychological contract can be defined as an unwritten mutual expectations of commitments from employee to employer and employee to employer. In other words psychological contract is an individual’s belief in the two way obligation between employees and the organization. It takes a strong hold when the employee believes that the employer owes them what they own in return to the employer.

Importance of Psychological Contract:

This has become increasingly a relevant aspect of workplace relationship expected between the employer and the employee. The mutual trust is otherwise an investment on the better outcome. Present day scenarios shows that both the employer and the employee do not want to get in to any personal relationship between them. A mutual business relationship alone prevails within the four walls of the jungle that – you work I pay and I work you pay. Other than this no one wants to foster any false relationships and stick to that. Loyalty becomes old fashion and the commitment to the work is directly proportional to the extra money. Morality in businesses is diminishing hazardously and the trust in people as well.

We need to look closely and rediscover this psychological contract since it will help to bring more benefits both to the employer and the employee. Most of the recent researches struck on that the organizations which has the high number of positively engaged employees will result in higher customer satisfaction.

In the current business situation, this mutual contract agreement cannot be ignored or taken for granted. With the express transform in today’s workplace, this contract can not be ignored or taken for granted.

Breach of contract:

When either of them is breached, employers will see negative emotions from the employee such as anger, betrayal, or sadness. It spoils the relationship between the two and when it comes out, most of the other employees will lose hope as well. Commitment from them will be go down drastically and the employee will not work over time, share ideas.

Conclusion:

To conclude, the psychological contract is the responsibility of both the employee and the employer. Even though both have different responsibilities, both should value this and try to stick to them. Rewriting or re-establishing the psychological contract could bring a sense of renewal and reinvigoration on both sides.

Employee Engagement

A survey by Glassdoor states that 53% of employees are confident enough to get a better job within six months if they quit their current job. If an organization did not find a way to effectively engage and retain the best resources, it will lose both the resource and the business as well.

What is Employee Engagement?

Employee Engagement can be defined as a workplace culture which makes employees to develop real commitment to their organizational goals, its objectives and values. In other words it is a method which can improve an employee’s feelings and emotional attachment to the company, their roles and responsibilities. An organization should know how to inspire its workforce and reward their efforts

Company Cultural Fit:

To build a strong employee engagement relationship one should find the best resource for the available job. During interview itself the HR manager should explain about the organization culture and check if the resource is ready to adjust with it and learn to grow with the culture. To make a candidate to stay committed to the culture, we need to continuously communicate company values to employees.

HR Staff plays a vital role in promoting engagement by creating a culture to recognize and reward employee’s hard work. Engagement surveys can serve as a valuable tool in finding where employees stand when it comes to performance, and recognizing employees regularly can provide a general good feeling at the office, as well as motivation for other employees to improve their performance. HR staff should encourage employees to show appreciation for their co-worker’s contributions in order to create better personal as well as working relationships in day-to-day business. Through various measures, initiatives, and approaches, employee engagement encourages all members of a company to put their best foot forward, day in and day out.

How to create an Engaged Organization:

Organizations should find a true purpose to engage its employees. It is a written statement that clearly communicates to your team what your company does, who for, and why. If we can able to create a true engaged team, it will automatically bring in engaged customers.

An organization should be keen enough to conduct employee engagement survey once in a year. It should also show that the engagement is a permanent focus and not just a passing trend. Leaders need to be clear and intentional about their commitment to improving engagement and supporting the well-being of their employees. If your employees believe the new engagement program is just the fad of the moment, you run the risk of disengaging them further.

Organizations should listen to its team and provide them with a safe environment and mechanism that enables them to provide insights and feedback confidentially and anonymously.

Once you get a feedback use that employee engagement survey report to identify some simple actions you can take to show that participation does, in fact, create change. You’ll get the momentum you need to go after longer-term action plans.

Conclusion:

In the present scenario employee engagement is very crucial. It has become one of the prime factor that an organization worth to spend time on to the employee. If any organization fails to work towards it, the real progress will get hurt very badly in the long run.