How Hotel Franchises Can Leverage Technology to Better Manage Their Finances
In the hotel industry, margins mean everything. Once cash flow from a single location scales beyond expenses, it’s possible to acquire additional properties in an area, influence local rates and lower overhead costs by purchasing in higher quantities. As your business grows, it’s important to track your revenue properly, calculate those larger vendor purchases and negotiate better prices. To do so, you’ll want to upgrade your accounting and finance processes – and that requires an investment in good technology and people.
So where does a hotelier start? Let’s consider the state of the industry.
Where Technology Is Working in the Hospitality Industry
Travelers are extraordinarily tech-savvy, so the industry has found that it needed to respond in kind. Hotels were some of the first to adopt iPads, touch kiosks and check-in counters. Some have even installed touchless key cards and in-room Alexa units. Investing in the guest experience with perks like these can solicit positive feedback, reviews of hotel experiences and more.
Additionally, travelers today are looking for a better experience. As an example, when one of my recent flights was delayed, I had to stay overnight and found a hotel about two miles from the airport. When I called the front desk to ask for a ride, the hotel had no courtesy van or shuttle. But the didn’t hesitate to pay for and send an Uber. Two minutes later, a car showed up to take me to my hotel. It was such a pleasant, seamless experience. Most guests, I think, welcome the tradeoff of long waits and cramped rides on a complimentary shuttle to paying a small fee that integrates a fast-arriving Uber with their travel apps and hotel rewards programs.
More and more, hotels are connecting with third-party tech to create better experiences for their guests. Previously, a basic, ground-level communal gym for visitor use might be available. Today, many hotels offer digital, in-room Peloton bikes as a personalized experience – just enter a username and password to connect to all your standard plans. At some hotels, your Netflix account connects to the TV in your room the moment you slide your keycard in the door. Building a better guest experience can help hotels save money.
Where Tech Is Failing the Hospitality Industry
For all the front-office and consumer gadgetry bolstering the hotel guest experience, the technology in the back office tends to be lacking. Many hotels are still using punch cards for housekeeping and Windows XP machines. Behind that posh front desk you’ll often find a back office with a broken chair and a cathode ray tube monitor.
Even if you can’t see it, decades-old back-office technology can result in problems for both the hotel and guest at the end of a stay. Sometimes a guest finds an additional charge for a service or item they didn’t order. More often than not, this is a data integration issue. Consider: When you request room service, multiple back-end systems have to speak to each other. Someone took an order on your phone from the room and punched it into the point-of-sale system at the restaurant downstairs. Multiple systems have to communicate with each other to pass on the purchase history that leads to an accurate bill. When that doesn't happen, mistakes are made.
Hoteliers are similarly limited by their technology options when managing chargebacks. Hotels lose about 1-2 percent of their revenue to chargebacks. Even though we live in a digital world, many hoteliers are still using an old-school paperwork approach. Printouts for every guest, that could range anywhere from 50 to 200 sheets of paper nightly, are stored in a backroom with multiple years’ worth of stored records. To dispute a chargeback, a hotel employee is forced to dig through files to find the exact signature from an order.
The brands themselves are partly responsible for this issue. Hotel franchise owners and operators are left to vet and select their own vendors – which software or service to use for time tracking, payroll and revenue tracking. Hoteliers often aren’t offered enough helpful tools to manage their operations.
Technology on the Horizon for Hoteliers
The hospitality industry should be looking to technology for three things specifically: simplification, standardization, and automation. By optimizing existing systems with new and innovative software, hotels are equipping themselves to do more with less.
Some ideas are still being workshopped. On the labor side, imagine an Uber or Instacart for hotel housekeeping – a push-button service that calls on a pool of background-checked, skilled gig workers. Contractors who value flexibility can work a two-hour shift here, a five-hour shift there, and get paid immediately. Hotels can modulate labor with hotel needs in real time. On the revenue side, hotels can take another page from the rideshare playbook, using technology to adjust their rates – surge pricing – when demand or other situations change.
Other technologies are already here. Artificial intelligence is automating accounting software and providing real-time visibility into a hotel’s cash flow, empowering hoteliers to make instant adjustments and encouraging more productive collaboration among back-office teams. In an environment of rising inflation and economic instability, consider upgrading your back-office technology, renegotiating with vendors and rethinking expense allocation. Knowing precisely when and how much to increase rates to offset costs is mission critical.
Many of the folks who have left hotel work in recent years are not coming back, meaning that hoteliers will increasingly need to turn to technology out of necessity. That may range from room-service robots to AI-powered accounting automation software that frees up their back-office staff from manual bookkeeping to focus on the guest experience.
ABOUT THE AUTHOR
Sugam Pandey is the co-founder & CTO of Docyt, an accounting automation software platform.