How Hospitality Brands Can Scale Operations and Get Back to Growth, at the Right Cost

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The hospitality industry has faced extreme hurdles over the past year and a half, yet there have also been rapid advances in digitalization to help ensure survival. Due to these tech advancements, the hospitality business will be in a totally different place than it was pre-pandemic once we’re the other side of recovery. As a result, “riding it out” is not an effective strategy to make it through the turbulent months ahead.

Property-level finance and back-office operations are quickly becoming obsolete, unable to handle information overload and keep up with the demands of the global, 24/7 business cycle. Hospitality companies need more agile, resilient, and cost-effective processes that position them to be able to react quickly to today’s unpredictable travel market and make data-driven decisions that will propel them forward in the future economy.

“CFOs in particular are frustrated with the inability to manage standardization, and there’s a huge amount of leakage in value, particularly in disaggregated organizations,” said Mike Tansey, managing director, Travel Growth Markets, at Accenture. “Intelligent back-office operations provide the data, tools, organizational structure, and agility that hotel companies need to become future-ready.”

Accenture and SkiftX have identified several ways that hospitality brands can implement intelligent automation systems to centralize, standardize, and scale operations, turning volatility into predictability amidst the evolving travel climate.

Centralization and Automation Drive Intelligent Operations

The wake-up call dialed in by Covid-19 was partially a result of the operational climate in the years leading up to the pandemic. With the travel industry booming, record growth in revenue and profit led many organizations to ignore underlying costs, as long as they were being outpaced by top-line increases. When faced with not just reduced revenue, but in many cases no revenue at all, hospitality companies had to shift their mindsets rapidly.

“Virtually every travel company has had to reduce its back-office costs over the past 18 months,” said Tansey. “The pandemic suddenly shone a very bright light on the size and, more importantly, the inflexibility of those costs.”

After initial lockdowns were lifted and hotels were able to reopen, hospitality companies have needed to remain agile in an ever-changing market. But because many still have back office operations at the property level, they can be very slow to gather and parse critical data.

“Any ability to gain quality insights in the period of time they need to do so is nearly impossible in a decentralized organization with geographically diverse locations and hundreds of pockets of finance teams,” said Tansey. “Traditionally, they’re each using systems at a local level, and it’s very difficult to bring that data back together.”

Data centralization can provide insights with speed to help manage resources more effectively. For example, a hotel that pays commissions to online travel agencies (OTAs) up front based on reservations often pays for stays that are canceled or cut short. To mitigate this leakage, automation tools can match reservations, bookings, and actual commissions owed across an organization, potentially saving millions of dollars a year in overpaid commissions to the OTAs.

This real-world example from a global hotel client can only work with a centralized data platform, Tansey said. It would take weeks for each property to aggregate and submit that data, not to mention the analytics expertise required on staff to make sense of it all.

Automation systems are also ideal for standard, repeatable transactions — which helps humans free up their time so they can focus on other activities that add value — due to the simple facts that automation is by and large 100 percent accurate and machines can work 24/7. As another example, most hotel staffing is done manually based on experience and local knowledge. But even then, due to factors outside the hotel’s control, it’s not uncommon to manage nights at a hotel restaurant with 300 customers and two staff members, or 20 staff members and four customers.

The ability to combine internal scheduling plans with aggregated, automated external data around factors like weather forecasts, passenger traffic, road work, and more, can be fed through machine learning algorithms to understand what the staffing rotation should be. With these types of tools deployed uniformly across a portfolio, there is huge savings potential on payroll costs. There’s undeniably a customer experience benefit which could also provide a preferred alternative to reduced headcount.

“The greatest fear with automation is the lack of control, particularly as a manager,” said Tansey. “This is not about taking humans out of the equation. Instead, it’s about giving that operations director more insight in real time to make those decisions.”

From Volatility to Predictability

There’s little argument that centralized technology is useful and efficient, and that the benefits are worthwhile. However, implementation, from upfront costs to training, is a  huge concern for finance chiefs who are already caught up in a whirlwind.

“The true advent of cloud technology is probably the single biggest game changer,” said Tansey. “We’re in a world now where hotels simply need to have an internet connection. Since the core applications are remote, updating software or processes can all be done with ease, instantaneously across the organization. You’re no longer sending somebody around to each property to do these manually.”

Following initial implementation, change management, and training, which can be handled in a matter of months, hotel companies can put themselves into a position where everybody’s using exactly the same processes, protocols, and controls.

“There’s no value in customizing standard processes — and that can actually decrease value, because this not only costs more, but can be slower and inaccurate,” said Tansey. “You drive value in today’s world by using standardized processes across the organization for speed, efficiency, and accuracy, and then you create the value on top of those processes through the data that you’re able to centralize.”

Looking forward, the ability to implement back-office agility will combine with automated systems in the front of house. As pandemic waves continue to rise and fall in all parts of the world, aggregated, predictive systems allow companies to look across their portfolios and consider their options. With centralized, intelligent operations, they can explore creative and pragmatic paths toward a less inhibited hospitality finance function of the future by bringing business agility and predictability together to match the volatility.

“In countries that still have closed borders, some hotels may decide to bear the cost of staying open so they can be ready whenever the government lifts those restrictions,” Tansey said. “They’re making conscious, insight-driven decisions, rather than ‘fingers-crossed, let’s hope everything will be alright in the end’ decisions, which is no way to run a business.”

This content was created collaboratively by Accenture and Skift’s branded content studio, SkiftX.