Challenging Road Ahead for the Hospitality Industry: Critical factors shaping the future of the industry

December, 2017 – The world of hospitality and travel has entered a new era of transformation. A combination of forces, including shifts in the global economy, game-changing innovation, geo-political turmoil, natural disasters, pandemics, and rising consumer demands have been reshaping the marketplace for years. Concurrently, the industry is anticipating a RevPAR growth of 2%, the lowest increase since the beginning of the economic recovery.

Graph: RevPAR growth, US and chain scales


With several factors disrupting the hospitality industry, a plethora of challenges erupts for the hospitality companies operating in such a dynamic business landscape.

This article talks about critical challenges that the hospitality companies such as hotels, luxury resorts, caterers and travel agencies might face and the best practices for the owners of these organizations to overcome each of these challenges.

Challenge # 1: Continuous Tech Advancements

In the world of constantly evolving technology, tech-savvy travelers, especially millennials, are extremely comfortable using apps or mobile sites for hotel bookings and other services. Some hotels are even providing a virtual reality experience to their customers. It is not only the guest experience that is disrupted by the technological advancements, internal operations of the hospitality entities are also witnessing a seismic shift due to rapid explosion of technology. As a result, automation is rippling through transactional accounting processes such as accounts receivable and payable, purchase to pay etc. Hospitality entities who are not equipped to cater to the technological needs of their organizations, might lag behind in the race and suffer losses in their customer base.
Best Practice: According to the ‘2017 Lodging Technology Study’, published by Hospitality Technology magazine, more than half of hotels (57%) plan to spend more on technology in 2017. Large hospitality companies are investing in upgrading the technology of their organization, while the small and medium hospitality groups are finding that partnering with third party service providers that offer cost effective accounting and payroll services enable them to gain access to best-in-breed technological platforms without making any upfront or recurring investments to get it. These third party service providers not only offer transactional services but also Business Intelligence tools that aid key business stakeholders by providing state-of the-art analysis, reporting and report designing capabilities, enabling hospitality operators to make better informed decisions faster.

Challenge #2: Unfavorable Supply vs. Demand Dynamics

According to Smith Travel Research (STR), for the first time in five years, supply growth, at 2%, is expected to overtake demand growth, at 1.7%. As such, STR expects hotel occupancies to dip by about 0.3%, which may pressure hoteliers to raise room rates to achieve their expected RevPAR growth. This frequent change in the room rates can also add complexity to the overall accounting function of the organization.
Best Practice: Third party service providers offering end to end financial and accounting services, can leverage their years of experience and help hospitality businesses to combat the accounting challenges arising due to frequent revision in the prices. This kind of partnership also allows hotels to return to their roots as a people-first industry. Instead of performing routine behind-the-scenes tasks, staff can work to maximize their impact on the customer experience, driving up quality, consistency and customer experience.

Challenge #3: Rising Operating Costs

The costs required to run a hotel have climbed since 2014, which means that operators that need to compete on price with competitors risk eating into profits. The largest single expense at a hotel—and the one that’s been driving much of the rise in overall operating expenses—is labor, which represents 45 percent of expenses.
Best Practice: When hospitality organizations are grappling with large operating costs, their focus may shift from other pivotal aspects of their business including finance and accounting. Even in the finance and accounting domain, while their front-end systems may be good enough to record the transactions, a lot of time and effort is invested in taking care of invoicing, monthly statements, collections calls from vendors, reconciliations, maintaining an inventory of items, ensuring that the guests are charged correctly, and so much more. All these tasks require staff – which is going to cut into the profits and increase operating costs for the hospitality companies. The perfect solution to the problem of properly maintaining the finance and accounting activities while also tackling labor shortage is to leverage an outsourcing partner. Outsourcing finance and accounting activities that require skilled and highly-paid staff to affordable third-party service providers, can help hospitality business owners maintain their operating costs and divert their capital back to their core business.

Quatrro is a one-stop solution to all the challenges business owners in the hospitality industry are facing. A market leader in providing cost-effective finance and accounting outsourcing solutions, technical support services and a range of affordable business support services for small and mid-sized businesses across many industries, Quatrro enables hospitality industry players to substantially reduce their overall costs and stay ahead in the race of becoming a leading name in the hospitality industry. Quatrro utilizes best practices to streamline labor intensive processes, resulting in significant cost savings and improved business insight for their clients.

Some of the benefits realized by Quatrro’s existing clientele are as follows:

  1. Process rigor: Our clients get access to professional accountants who work as per established processes.
  2. Flexibility and scalability: Our clients have the freedom to increase the strength of their accounting team – on short notice and at affordable costs. At the same time, clients have the freedom to direct their dedicated resources to the tasks of their choice. At a time when we are witnessing rapid growth and consolidation in the hospitality sector, this flexibility is highly valued by our clients.
  3. Predictable outcomes: When a client enters into an agreement with Quatrro, we agree to deliver as per set SLAs (service level agreements). This makes it certain what services we will deliver, when and at what costs.
  4. Reduced Overall Costs: Our finance and accounting outsourcing services enables our clients to reduce overall costs by up to 40% by streamlining F&A processes for efficiency. Outsourcing F&A services allows business-owners to redeploy their staff, especially financial professionals, on more productive, strategic objectives.

If you are looking to shift focus off the routine tasks in your business and back to building your core business, then Quatrro can help share the burden of your finance and accounting services to empower you to scale your business in a cost-effective way. If you would like to find out how exactly we can partner with you, visit .


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