In the hospitality space, there’s always a need for more and more financial management – especially given that the industry is growing by 6% each year. Cost pressures are everywhere in this sector, especially when it comes to staffing – and the risk of project overruns and other difficulties is ever-present. However, luckily there are some ways to cut down on the risk of this happening to your firm. Here’s how you can best use financial management tools to prevent problems from arising.
The maxim “time is money” is true in every industry – but in a heavily service-oriented environment such as hospitality, it’s even more true. Staff time is one of the biggest costs that a hospitality finance leader can face, in two distinct ways. First off, staff in this sector are often numerous due to the scale involved in serving lots of people or preparing lots of floor space, so salary costs can add up. However, staffing issues in the hospitality sector can take on an additional dimension too. There is high staff turnover in this industry, which means that there’s often a need to hire and train new people – which is in itself a cost-draining exercise. Keeping an eye on these sorts of costs using financial tracking tools is important, and can really help turn a hiring project around.
Hospitality businesses are heavily reliant on their physical environments for their functioning, and this means that building works or renovations are a fact of life. Everything from repurposed spaces being turned into new rooms is one example of a project, while building and opening up new venues from scratch is another. All of this costs money – and while it’s possible to plan to the tiniest degree, it’s also hard to keep a handle on cash inflow and outflow. As a result, using a tool that allows you to see project costs in real time is important – and can give you the space you need to find out where problems are occurring.
Planning the future
Hospitality is a sector in which standards are constantly changing. While 50 years ago, guest houses were in vogue, for example, the rise in self-catering and an increased taste for luxury means that providers have had to step up their game. The same goes for business models too. Many hospitality leaders now attempt to plan for the future at every turn, and using modelling software to see how consumer demand changes might affect your revenue in the coming years will give you the evidence you need for strategic planning.
Hospitality is an excellent industry to work in, though it is fraught with potential pitfalls at every turn. That’s why financial management is such an important task to carry out: by avoiding project overruns, helping staff to remain well-managed, and looking out for the future, there are all kinds of ways that finance leaders in this sector can transform their firm’s financial picture.