How to avoid money leaks from your hotel
It is common to find that leaders and hotel owners invest more energy in obtaining new and better income than in controlling the way in which that same money leaves their pockets. With the outflow of money, we refer to small expenses that are not easy to identify, unless you have real control over “money leaks”. The big expenses are controlled by themselves, but the “ant expenses” really make the difference.
Controlling money leaks requires a comprehensive strategy. The hotel’s operation, management, and staff of the hotel must be committed to the same goal of care and control of money. If any of the parts are not working properly, the negative financial results will be clear to see. Do not forget that a hotel software such as LobbyPMS, which centralizes the operation and administration of the hotel, helps control money leaks through multiple functionalities that we will see later.
What are the key points to control to avoid money leaks in your hotel?
To better understand where these inefficient outflows are coming from, we created two large groups: Operational Leaks and Administrative Leaks. Once again, the effective alignment of these two groups depends on the success of the non-existence of money leaks. We will start with the operational part of the hotel:
- Control of inventories and supplies: Generally the storage of inventories and supplies should be in one place (this may vary according to the size of the hotel). For greater control, only 1 person should have access to this place. This person must have certain procedures and policies under which they must abide and work. The result? Effective control of the products you buy and use in the hotel, the budget, and of course, zero leakage.
- Review of final products for sale: There must be controls within the hotel to record everything that is sold to the final customer. For example alcoholic and non-alcoholic beverages, dishes already prepared in their entirety, among others. Everything must be recorded at the time of delivery of the product to the end customer.
- Definition of user permissions: Not all people can control the inventory stock, or sales through the direct channel, or the definition of rates. The more people can modify the same item, the more possibility of leaks there can be. Providing the correct permissions to each team member is key to being successful at this point.
- Efficient control of sales channels: We receive reservations through different sales channels, and part of the success is defining the correct rates for each of them. Selling below or above the real price is a loss from a monetary or demand point of view. A correct definition of rates for each channel and a person who dedicates his time to correctly manage this part of the business will ensure that we can have the best possible income. On the other hand, and no less important, it is key to have defined where the money from the reservations will enter through the different sales channels.
- Review of the type of payment used by the client: Credit card, debit card, cash, or any other types of payment, it is important to define how and who receives the money at the hotel. Defining the policies, responsibilities, and processes will ensure that we have the minimum amount of money leakage possible.
- Attack the ant theft: Controlling the money handled by each person in the hotel in a thorough way is almost impossible. However, we can create control policies and processes that minimize these events. Ant theft is what can unbalance our box the most, so never forget to pay close attention to this point.
- Pay attention to the night audit: Do not review charges, returns, income, expenses, etc. of the hotel is awful. There is nothing better than a good night audit to know that everything is done correctly. Having a trusted person who performs the processes correctly will be key to avoiding many money leaks.
- Control of employee shifts: Controlling the schedules and responsibilities of our employees will allow us to monitor each movement within the hotel. Tracking each action and its responsibility is to establish control and generate new strategies for the future.
- Inefficient productivity: Each employee’s time is money. If the objectives and processes of, for example, the hotel cleaning staff are well defined, we will hardly ever waste time. After defining times, responsibilities, conducting good training, and creating certain control processes, you will have as a result a reduction in time leaks, and with it, money leaks.
- Lack of software to centralize the operation: There are many fronts to be covered manually. Hotel software, such as LobbyPMS, will help to systematize and centralize processes. Communication will be more effective between all areas. Not counting on it would expose the hotel totally to money leaks and a lack of control in every sense.
It is important to understand that since the operation there are the greatest leaks of money. However, most of them can be avoided if the correct policies and strategies are established by the administrative team to control them. Here are some ideas from where you can work to avoid money leaks from your hotel. We group them into four subgroups:
Have clear processes
- Establish operational and control processes for each of the hotel areas. No matter the size of the hotel area, the system will always help to establish rules and controls.
- Review the way the money generated is managed through the different sales channels such as Booking, Expedia, the hotel’s main page, among others. How do the platforms pay? What account? Who gets the money?
- Define and properly train accounting and operational staff on how tax collections and payments work. This varies according to nationalities, age, type of products, etc.
Non-existent or wrong strategy
- Every hotel must have a strategy, a north, an idea that directs the ship to the final port. With the absence of it, every path will be ideal and with it, the results will never be as expected.
- Prices must be aligned with the target customer. It varies depending on the category of the hotel, the area in which it is located, the client we want to attract, etc.
- Make correct budgets, aligned with the final objective of the hotel
- Hotel operation will be more efficient with a clearly defined market. Proof of this is the correct acquisition of equipment, furniture, and other elements.
- Inventories must be reviewed periodically (monthly, quarterly, semi-annually). This process must be thorough in order to find possible faults.
- Check that your suppliers continue to be competitive in product and price. It is not bad to change providers every time the conditions offered no longer meet what you want or what the market shows.
- Once again, control is primordial. Every strategy must have control processes that will certify whether or not there are points to improve.
- The strategy should always include an item that talks about the software to be used in the hotel. This will be key to being able to effectively control all areas of the hotel.
Confusing or non-existent leadership
- A good leader understands that efficient communication is the most important thing. For this reason, communicating the path and objective to which you want to reach will make the collaborators work with more dedication and honesty.
- Always have the best possible staff
- A good leader doesn’t do everything, instead, he delegates and holds responsibility. To achieve this, there must be clearly defined processes. Without it, accountability becomes inefficient.
- The priorities and responsibilities cannot be confusing. Clarity is a key element in communication and delegation.
- A good leader makes all his collaborators take ownership of the company and work hard for its success.
Inefficient or non-existent policies
Policies are an essential part of any company. With this, the behavior of the company and that of all collaborators who belong to the hotel are governed. These should be clear and applied when necessary. Policies can be processes, responsibilities, control, sales, budgets, cash management, inventories, assets, among others. These policies may exist for clients, suppliers, and collaborators.
How does a PMS system help prevent money from leaking from your hotel?
A PMS (Property Management System) or hotel software is today the great ally for hotels. Through them, the information is centralized to achieve the sales and operational objectives established by the hotel owners. Together with well-established processes, your PMS will be able to provide you with key information to prevent money leaks from your hotel.
With the PMS you can:
- Have different points of sale within your hotel. For example restaurants, reception, spa, etc.
- Control the permissions and actions that each user/collaborator of the hotel can perform.
- Control the inventory that enters and leaves the hotel.
- Cross-over the information generated by each of the areas
- Centralize in a single point the reservations that are generated in all the hotel’s sales channels.
- Control the income and expenses of money. In addition, you will be able to know from which point the transactions were made.
- Have a customer database. This will help you to provide a better service, to carry out marketing campaigns, among others.
- Generate automatic invoices with each service provided.
- Control the shifts of your collaborators.
- Control the daily tasks of the different areas that the hotel has.
- Generate reports with statistics to perform information validation and control.
- Generate balances that will help you identify where the failures and money leaks are.
What are the tools that Lobby has that help control money leakage?
LobbyPMS is a great example of a hotel PMS or software that helps control money leaks from your hotel. Here we will mention the functionalities that Lobby has to control them efficiently:
- Calendar and hotel operation: Manage your reservations in a simple and fast way with the LobbyPMS reservation calendar
- Channel Manager: Save hours of work by automatically updating availability in the main online agencies
- Point of sale interface: Control all your sales of products and services. For example Bar, restaurant, tours, laundry, or any other item.
- Control of boxes and shifts: Record and control the closings of each shift. Set up multiple boxes, check balances, and transfer funds.
- Inventory control: Inventory control of all sales products. Set up warehouses and monitor the stock at all times.
- Accounting reports and statistics: Reports of invoices, taxes, sales, consolidated, income, and expenses. Also, learn about data such as the statistics of occupancy, ADR, and RevPAR.
- Users and permissions: Create unlimited users for all your administrators and collaborators. Of course, configure access permissions and controls.
- Housekeeping: Identify in real-time the rooms that require cleaning and the assignment of the personnel in charge.
- Expense control: Register and control expenses such as utilities, rent, collaborators, among others.
- Customer and Vendor List: Search for vendors and customers easily. Export and import all data in Excel or PDF format
Finally, don’t forget that if you are an owner or administrator of a hosting business, you can go to www.lobbypms.com to request a demo and a free 15-day trial of the platform. An advisor will contact you to show you all the functionalities and in a matter of an hour, you will have your hotel management software.