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.