How Automation Is Rewriting the Rules in Hospitality
In the age of COVID-19, hospitality firms are facing financial pressures that are absolutely without precedent. Every aspect of operations and finance is under a microscope as organizations strive to pare costs and gain new efficiencies in response to a crisis that threatens their livelihood. As a result, many hospitality organizations are turning to automation in order to gain insights into their business and determine how to best respond during this pandemic.
Unfortunately, however, important infrastructure deficits and persistent organizational gaps are hampering these efforts. A recent survey by Sage (CFO 3.0 – Digital Transformation Beyond Financial Management), found that only 16% of hospitality companies characterize themselves as being on the cutting edge of emerging technology. They’re grappling with several misconceptions about how to prepare the workforce and the projected ROI of their initiatives. Ultimately, this resistance to new technologies could actually present more risk than waiting to implement because competing organizations can leverage new data and insights to increase customer satisfaction and streamline time-consuming processes.
Notably, the Sage survey shed new light on the challenges hospitality executives face – all of which can be addressed by digital transformation initiatives and upskilling. This includes items, such as time management, usability of tech tools, and the digital skill gaps within and across their departments and teams. The fact is, an overwhelming 96% of survey respondents indicated that their staff lacks the knowledge and skills to take advantage of game-changing advances in AI, machine learning, predictive analytics, and other technologies that drive efficiency in finance.
For hospitality companies to achieve meaningful gains in these initiatives, they must undertake broad-based efforts to incorporate and ingrain these technologies into their daily practices. With the right technologies, they will be better positioned to address the pain points they experience on a near-daily basis.
An Abundance of Data
Across the entire customer engagement lifecycle, hospitality firms are finding that new technologies can unleash an extraordinary amount of information and insight. That creates an imperative to optimally leverage that data by focusing analytics and AI efforts on the key operational and financial challenges within the organization that can potentially “move the needle.”
At present, many hospitality systems lack universal integration, resulting in data silos that isolate key insights behind difficult-to-use, special purpose tools. Without the proper aggregation of high-quality, accurate data, executives are unable to gain a properly holistic view of their business and see where changes are needed to capitalize on opportunities and respond to threats.
Consider, for example, the transformative importance of third-party delivery for restaurants in 2020. Pre-coronavirus, 44% of restaurant sales came from off-premises orders and one-fourth of those were for delivery (source: Technomic’s On Demand Delivery Study). Today, of course, the COVID-19 pandemic has radically changed consumer preferences and expectations, leaving most restaurateurs unable to predict trends or forecast demand. With the right tools and data, CFOs can better understand the delivery channel and exploit opportunities for increased volume and greater profit margins to ensure business sustainability.
Getting Smarter About Automation
In that same Sage study, 91% of finance executives reported their company processes are automated. But when we dig a little deeper, we see a critical issue: a digital skills gap. At a tactical level, that’s characterized by a lack of knowledge about what automation can bring to the organization and how it can be leveraged to accelerate and streamline tasks, increase throughputs, and improve outcomes. Hospitality finance executives must take the lead in this area as the driving force for technology education throughout their organizations.
Here’s an example of one important area where that’s rapidly taking shape. As Millennial-aged customers become increasingly dominant in the market, their expectations for engagements that don’t require human-to-human interaction are reshaping the way hospitality companies engage with customers. Hospitality firms are increasingly adopting platforms and systems that respond to those preferences. For example, in a recent study, Booking.com found that 75% of customers prefer self-service options for basic tasks and processes. These kinds of goals will be the hallmark of automation deployments.
In the back office, cloud financial applications can also make important improvements by helping hospitality companies manage multi-entity finances, streamline the monthly financial close, and gain better visibility into critical KPIs. For example, using cloud financials, Benchmark Hospitality achieved $800,000 worth of time savings while managing financials across 50 properties. Brett Atkinson, the firm’s senior vice president of finance, attributes those savings directly to the cloud financial software they put in place. “Using Sage Intacct, we can quickly assess how we’re performing against budget and forecasts, or comparative pricing across locations, and what levers we might be able to pull to improve a certain metric,” he said.
Naturally, digital innovation can also present demands on time, resources, and budget that merit careful consideration, and customer satisfaction and ROI are not guaranteed outcomes. However, by embracing financial automation, hospitality firms gain a greater opportunity to surpass competitors, enter new markets, and appeal to a broader set of customers, ultimately leading to greater profitability.