Against the backdrop of Brexit, PWC UK Hotel Forecast 2017 foresees a drop in travel budget – both for business and leisure segments. However, the growth story of regional budget hotels continues: PWC projects a growth of 0.5% in occupancy levels, 1.8% in average daily rates and 2.3% revenue per available room (RevPAR) for budget hotels in the provinces.
As the sector continues to grow, hotel managers and finance leaders need to stay on their toes and invest their energy in understanding and responding to future trends. In order to accomplish this, their finance and accounts (F&A) functions need to perform well – but it isn’t that easy.
Hotel accounting can be difficult
The day-to-day operations of any bustling hotel chain are enough to wear down even the most devoted of accountants. While your front-end systems may be good enough to record the transactions, a lot of time and effort is invested in taking care of invoicing, monthly statements, collections calls from vendors, reconciliations, maintaining an inventory of items, ensuring that the guests are charged correctly, and so much more.
With your key accounting personnel tied up in routine tasks, the strategic reporting activities that are required to improve business profitability and take decisions – year to date reports, consolidation, revenue recognition opportunities – can often take a backseat. In the case of franchises with multi-layered ownership and operations structure, it can be especially difficult to diagnose the financial health of the business.
Back office outsourcing – can it help?
Back office support can ensure that your business stays competitive and grabs the growth opportunities available today. While larger brands have been quick to seize the opportunities provided by cloud-computing and ease of secure data transfer to reduce bookkeeping and general accounting costs, many budget accommodation providers are unaware of the benefits that transitioning to an offshore back office model.
What benefits can outsourcing bring to businesses offering budget lodging? Apart from the obvious cost gains resulting from labour arbitrage (typically up to 50%), there are many other benefits that outsourcing your F&A functions can bring.
1. Process rigour
You get access to professional accountants who work as per set processes. When you choose a successful service provider, you get the benefit of all the process improvements they have implemented over the years of their operation. They will have processes, standards and systems in place for maximising operational efficiency. The accountant working on your project will benefit from the experience of the entire team and will be supervised by senior personnel. As a result, you are able to inject best practices in your process.
2. Dedicated staff focused on the job
Most accounting professionals working on sites are affected by the hustle and bustle of daily operations. Functioning in the midst of several distractions often leads to errors. Needless to say, on-site accounting teams could also be saddled with non-core tasks that shift their focus from the key activities. With an outsourced back office, you get a dedicated accountant or a team of accountants who are focused on specific tasks, surrounded by a team of accountant involved in similar tasks. This can lead to a higher level of accuracy – with all their attention focused on your accounting jobs.
3. Flexibility and scalability
Depending upon the type of agreement you enter into with a provider, you will have the freedom to increase the strength of your accounting team – with a short notice period. At the same time, you will have the freedom to direct your dedicated resources in the offshore location to tasks of your choice. At a time when we are witnessing rapid growth and consolidation in the budget accommodation sector, this form of engagement is highly valuable to your business.
4. Predictable outcomes
When you enter into an agreement with a reliable outsourcing partner, they agree to deliver as per set SLAs (service level agreements). This means that you know exactly what they will deliver, when and at what costs. In addition to this, you do not have to worry about downtime when the person working on your project is unavailable due to a vacation, sickness or any other reason – the service provider will provide a holiday cover. You also do not have to worry about hiring and firings; your work always gets done.
5. Focus on growth
An indirect but definite result of successful finance & accounts outsourcing for the budget accommodation industry is the freedom to focus on actions that drive growth. The outsourcing partner can not only take care of your AP, AR, payroll, reconciliations, and other admin tasks, but also help you with credit control, cash flow analysis, customised financial reporting, support for audits, and assistance during M&As. With all these areas taken care of, you have the freedom to direct your energies towards strategic decisions that help you succeed.
Can outsourcing be a quick win for your business?
Our answer would be a big YES. For over a decade, we have delivered the above benefits to satisfied clients across industries.
If you would like to find out how exactly we can help your business, please get in touch with us. Our budget accommodation experts would be happy to answer your queries.