Should You Outsource Your Hotel Accounting?

By David Lund Hospitality & Leadership Expert, The Hotel Financial Coach | August 06, 2017

Outsourcing your hotel accounting is an unintelligent move, that is my opinion and I am going to make my case right here. When I refer to outsourcing, I am talking about a third party provider, not a centralized function.
Any good decision comes down to more pros than cons.

I often work with clients on decisions and we often make two lists. Good things that can come from a decision and how we can amplify them, then the bad things that could and would happen and how we can minimize them. Here goes my list on outsourcing your hotel accounting. Rather than two lists I will alternate between pro and con.

One good thing that comes from outsourcing is being trendy. Many brands are doing it and it is the trendy thing to do. I spoke with a CFO recently and he explained that the board had decided on outsourcing.

"Why would they do that?" I asked. He smiled a little and said, “We need to keep up with our competition, other brands are outsourcing so we are going to as well.” Inside his smile I detected a slight amount of political discouragement. My take on this exchange: It is a political thing and the CFO was going to pick his battles. This was not going to be one of them. Why should he care? His company does not own the hotels; they simply manage them for someone else. He knows ultimately if there is a service problem it falls on the hotel’s lap, not the management company’s problem really.

In business, especially one that has multiple stakeholders, the pressure to keep up with the Jones’s is stiff. Companies feel compelled to move, to innovate, and sometimes these changes are not in their best interest. There is a quote that speaks very nicely to this, “If you enter a market and don't know what to do, watch what everyone else is doing, and then do the opposite. The majority is almost always wrong. " ~ Earl Nightingale

A negative aspect of outsourcing is the reduced level of service. Good service in a hotel is everything, not only for external guests, but also for internal guests. In a full-service hotel, the accounting department provides a long list of services: receivables, payables, payroll, revenue control, cash management, systems oversight, audit, food and beverage controls, purchasing, receiving, general accounting and budget/forecasting to name but a few. When a hotel outsources they typically outsource payables, some parts of purchasing, general accounting, sometimes accounts receivable and almost always the daily audit and revenue functions.

Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.