Managing a hospitality business has some unique challenges that aren’t present in other businesses (and a few of the same issues too). On the financial side, it’s not the easiest industry to do well in either.

In the ever-evolving landscape of 2024, managing your hospitality business finances effectively is crucial for success. Here are a few up-to-date tips to keep your finances on track!

  1. Adapt Your Budget: Flexibility is key. With shifting market trends, regularly review and adjust your budget to allocate resources where they are needed most. Example: Allocate funds for digital marketing to reach tech-savvy travellers in 2024.

  2. Embrace Digital Tools: Utilize cutting-edge technology to streamline financial processes. From automated invoicing to AI-powered analytics, leverage hospitality digital tools to improve efficiency and accuracy. Example: Implement blockchain technology for secure and transparent financial transactions.

  3. Prioritize Sustainability: In the environmentally conscious era of 2024, sustainable practices not only benefit the planet but also your bottom line. Invest in eco-friendly initiatives that reduce waste and lower operating costs. Example: Partner with local suppliers who prioritize sustainability and offer eco-friendly products.

  4. Strategize Growth Investments: With emerging trends reshaping the hospitality industry, strategic investments are key to staying competitive. Whether it is renovating facilities or adopting innovative guest experiences, allocate funds wisely for future growth. Example: Invest in virtual reality experiences to enhance guest engagement and attract tech-savvy travellers.

  5. Continuous Learning: Stay ahead of the curve by staying informed about the latest financial trends and practices. Attend industry conferences, participate in webinars, and engage in professional development to sharpen your financial acumen. Example: Enroll in courses on decentralized finance to understand emerging financial technologies.

For this article, we now provide in detail 5 tips on managing the finances of a hospitality business. 

 

5 Tips for Managing the Finances of Your Hospitality Business

 

Strictly Manage Payroll

Managing finance is a key part of effectively managing a hospitality business. Depending on how many locations there are for your hotel or other hospitality business, many staff will be involved in running the operation. They may come and go and work a variety of changing shifts from daytime to evening, or night shifts within the hotel industry. 

Accordingly, the pay rate for their work may vary, not just because of their tenure with the company, but also relating to the shifts they pick up. 

The payroll has to be strictly controlled to ensure that the sheer variety of work shifts and people doesn’t overwhelm the system. Given the number of moving parts, the actual cost of paying staff versus the budget may vary widely each week. Also, seasonal changes to staffing levels to reflect a lower occupancy rate with rooms is necessary too. 

 

Keep IT Systems Streamlined

It’s all too easy to end up with a myriad of IT systems and software apps to help with running different aspects of the business. The cost of maintaining these systems and training staff to understand how to use them is not inconsiderable.

Avoid spending too much on software and other systems, like key cards for hotel doors, that tie directly into the central system. While this may work for the larger hospitality chains, it’s overly expensive for smaller ones. Also, if there’s a hotel restaurant, use a single POS system that’s simple to manage and is compatible with the other financial systems.

Don’t overcomplicate on the technology side as it doesn’t always make people more productive and increases financial waste. 

 

Use Forecasting Models

Don’t get caught out with a seasonal drop in trade. If you’re new to the industry and the seasonal trends are not obvious to you, ask someone else in the industry for some pointers or check online.

Use forecasting models to establish hotel revenue levels, expected increases and sudden declines throughout the coming year. This can be done using Google Sheets and doesn’t necessarily require sophisticated software if budgets are tight. 

By understanding fully when cash flow will be substantially reduced, it’s possible to manage the expenditures more carefully during those times. This includes staffing and reducing capital expenditures in slower periods. 

The study published in Jetir sheds light on some of the best practices that might be applicable in the finance management of a hotel.

 

Borrow for Seasonal Dips or Unexpected Expenses

There are times when you get surprised by an unexpectedly high business tax bill, a need to refit some older rooms, or the seasonality has been particularly harsh this year. This can create a financial hole that you’re unable to fill at the time. 

If you’re in the hospitality trade, quick loans for hotels and B&Bs can be a great solution to plug the gap in the finances. Because the loans are at a fixed cost, the repayments are fully understood before going ahead. This makes future financial planning much simpler to do too.

 

Strategically Offer Package or Loyalty Discounts

Not all discounts help the finances of a hospitality business. What you should want are loyal customers who keep coming back. To encourage this, a loyalty program works especially well. It’s a good idea to offer a few little extras to encourage repeat customers, but these must be affordable to do. Ensure the loyalty program is a profitable one for the hospitality company.

Package deals in the hotel industry can be useful to get a large group of customers to book out an entire floor. Usually, this adds materially to the bottom line without a corresponding increase in expenses from the group booking guests.

Managing the finances of a hospitality business is very different from a shop, supermarket or construction business. As such, it has to be approached in a way that will deliver success. To this end, hiring an accountant experienced in the hospitality industry is often beneficial. 

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