Hospitality Industry in the US

The hospitality industry (excl. Travel) consists of companies that provide short-term accommodation, including hotels and casino hotels, motels, and inns dominated by large hotel chains. The industry continues to remain the bedrock of the American economy by providing accommodation to both the business and leisure travelers and thereby contributing to national GDP growth. Globally, the hospitality industry is experiencing a renaissance. Record high occupancy rates and pricing are widespread, and favorable economic and market conditions are projected to remain strong. While the market is providing exciting opportunities, most organizations are treading with caution due to the cyclicality of the market. In the US, the hotel assets continued to appreciate in 2016, but at a more modest pace due to slowing RevPAR(revenue per available rooms) growth and a rise in cap rates.

Uncertainty, both international and domestic, continues to weigh on US lodging industry performance. The RevPAR growth for the US Hotels decelerated to 3.2 percent in September 2016. The graph below depicts the turmoil in the lodging industry where 6 (Boston, Chicago, Houston, Miami, New Orleans, and New York) of the top 25 markets of US experienced a negative RevPAR growth for YTD Q3.



In such a market scenario, hotels chains will be well served by constantly looking for ways to keep costs under control and making their money work even more efficiently. Since finding those opportunities requires financial data, it’s crucial for hotels to always have books that are up to date. While current financial reporting is very important for hotels, that doesn’t mean it makes sense for this type of business to manage everything on their own. There are several issues that can arise when a hotel tries to handle all their accounting and tax planning on their own. The first is that work simply doesn’t get done. If keeping the books and other accounting practices are passed around an organization, it’s easy for things to start falling through the cracks. The second issue is even if accounting duties are assigned to a specific in-house team member, they’re not going to have the same knowledge level as an accounting professional. Optimal utilization of employee skill sets and time will help the hotel to improve their business profitability.

We have summarized below key focus areas for the US hospitality industry in 2017 as the hotel operators will need to exhibit financial prudence, leverage latest technology and streamline inefficiencies to ensure 2017 turns out to be a rewarding year for them. Focus areas include:

  • [1]. Adopting New-Age Technology: New advances in technology continue to alter the relationship between hotels and guests. From an ownership standpoint, advances in data analytics are transforming the hospitality industry with the potential to enhance a hotel’s financial performance. Insights from predictive analytics can also be used for long-term planning or to make rapid, on-the-spot, revenue-enhancing decisions. As the use of advanced analytics continues to thrive, technology has created new opportunities for hotels to drive operating efficiencies. In essence, transforming and automating hospitality finance and accounting operations will help hotel companies’ better target strategic outcomes; achieve greater agility and drive growth.

  • A hotelier’s ability to keep up with rapid technology changes and embrace the latest technology tools will also differentiate successful hotel chains from the laggards going forward.

  • [2]. Seeking operational excellence: Customer demand has been increasing and evolving with the changing times. And with the changing demands, consumer industries need to evolve too. Like every other industry, the hospitality sector has been adapting itself quickly to the new requirements so it can properly address and meet new customer demands. But running a full-fledged business is a huge task in itself. The hospitality industry needs to increase operational flexibility as well as enhance the overall customer experience while optimizing costs. When it comes to profitably running a business in today's economy, it is always recommended to partner with industry experts who can help take care of all the accounting related activities while the key decision makers concentrate on more strategic aspects of running the hotel.

  • [3]. Enhancing Financial Transparency & Business Profitability: Many of the finance and accounting processes in the hospitality industry remain disparate, non-standardized and misaligned with business goals, leading to operational inefficiencies. Additionally, lack of real-time visibility into key business metrics results in revenue losses for the hotel and motel owners. As a result, it becomes critical, more than ever, that hoteliers turn to experienced accountants and advisors who are equipped with understanding the nuances of hotel accounting and thereby help the hotels and motels to improve operational efficiencies.

  • As market forces drive the need for more agile, scalable operating models in hospitality, decision makers are looking forward to outsource their financial and accounting processes.

Not only does the outsourcing help drive new efficiencies, it can free up employees’ time to focus on more strategic activities. Some of the key benefits of outsourcing are outlined below:

  • Total cost savings up to 40%
  • Quality improvement through proven best practices
  • Enhanced financial transparency, quality and controls with "drill down" ability

Quatrro empowers hotel and motel owners with tailored accounting solutions through a winning combination of people, process and technology. Our comprehensive suite of financial reporting and business intelligence solutions will help you to overcome business challenges and drive revenues through improved operational efficiencies and enhanced visibility into key financial metrics such as wage cost by overall revenue, wage cost per occupied room and revenue/cost per employee to name a few. If you are a hotelier and want to reap our extensive experience of more than 24 years in helping hotel and motel locations similar to yours gain access to real-time, granular visibility into their financials, contact us.


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