Staying at the Forefront of Hospitality Sector with Accounting in Hotel Business
Hospitality industry, alongside the tourism business, has been growing in the past years before the COVID-19 pandemic caused a major slowdown in 2020. Still, several parts of the world have been reopening again, slowly reviving the sector. Once a vaccine for the virus has been discovered and it is much safer to travel, the hospitality industry will return to its former glory.
Prior to the pandemic, investments for the hospitality sector have been booming. Several hotels, and even casinos, are constructed to cater to the growing demand. Business owners are developing more and more leisure properties in the hopes of making bigger profits.
With this, hospitality players are investing in accounting in hotel business. They are making sure their finances are being well-accounted for. With financial performance being a key indicator of growth, hoteliers are employing accounting professionals right away. These accountants are handling the recording, summarizing, reporting, and interpretation of all financial transactions.
Accounting in hotel business is given the utmost importance regardless of the size of operations. After all, hotel owners are making their business decisions based on the financial reports and other related data. These financial statements include balance sheets, income statements, cash flow statements, and more.
Tracking the All the Transactions of the Hotel
As mentioned, hiring accountants is helping the hotel keep track of all the financial transactions, whether they are completed or pending. Business owners are always looking into these reports to remain updated.
By doing so, hotel owners are making their business accountable for all the transactions. In addition, the accountants are managing the payables and receivables, reviewing hotel expenses, monitoring general ledger, and checking inventory.
The accounting team is also monitoring the following:
- recurring bills and dues
- sales and journals approvals
- occupancy rate
- average daily rate
- revenue per available room
- guest satisfaction
- competition analysis
- variance analysis
- labor management
- operating budgets
- financial benchmarking
At the same time, accounting in hotel business focuses on time and payroll management, daily activity tracking, and profit projections.
Benefits of Automating Accounting in Hotel Business
Hoteliers are hiring an accounting team because it is beneficial for the business in the long run.
Third-party accounting service providers are giving hotels access to accounting software. This kind of technology is allowing accounting personnel and management to track the daily finance and create revenue and expenses forecast efficiently.
With the use of accounting software, the whole accounting process is automated. This lessens human error and paper works. At the same time, financial reports can be presented in a timely fashion.
Besides efficiency, using accounting software is bringing in a lot more benefits for the hotels.
Allowing Hotels to Save Money
With the right accounting software, the hotel owners are saving a big portion of operational costs when managing accounts and finances. Hoteliers are recording a significant reduction in labor costs, infrastructure, and software maintenance when using effective accounting software.
Making Revenue Channels Healthy
With accounting software, hotel owners are finding it easier to analyze and even optimize the cash flow of the business. This is helping them maximize their revenues through a more thorough review of the budget based on real-time information. At the same time, they are able to adjust profit forecasts accordingly.
Overall, the software is allowing the business to improve financial performance.
Boosting the Hotel’s Productivity
Whether it is digital or traditional, accounting in hotel business is addressing the productivity of the company. With accounting software in place, the burden of executing all tasks related to accounting is significantly lower.
This also allows hotel owners to focus on something that is related to operations. They can address all customer-related concerns and increase the business portfolio of the hotel.
Developing Meaning Business Insights for the Hotel
Accounting software is aiding the hotels in crafting an in-depth analysis of the financial data. Such reports are used by the business owners to come up with insights regarding the industry trend, operating costs, and other related aspects.
The software is providing the business owners a real-time update on hotel occupancy rate, revenue statistics, revenue per available room, and other data.
Important Financial Reports for Accounting in Hotel Business
As discussed, accounting in hotel business highlights different financial reports, including balance sheets, income statements, and cash flow statements. Let us tackle each one of them.
Knowing the Financial Position Through the Balance Sheet
The balance sheet is providing a summary of the hotel’s financial position. It comprises three of the most important financial measures: asset, liabilities, and equity.
The hotel assets refer to the resources of the business. The hotel itself is an asset because it is a property. The furnishing, furniture, equipment, and fixtures inside the property is also an asset. Other assets include the amount of money the hotel is yet to receive after delivering its services.
Meanwhile, hotels are also dealing with liabilities, including utilities, vacation pays, salaries, bonuses, and other accrued compensation.
Evaluating the Profit and Loss of the Hotel
The income statement is outlining the different revenue channels of the hotel and the related expenses in a given period. If the hotel made more revenues compared to expenses, it means it is generating profits already. On the contrary, it is losing money.
Recording net loss in the early years of the business is only normal. It means hoteliers have yet to make a return on their investment.
They just need to make sure that they meet their timeline of profitability. Otherwise, they might need to adjust strategies. Worse, they might need to close the hotel for good.
Monitoring the Money Coming In and Going Out
The cash flow statement is monitoring the movement of the hotel’s cash. Such a tracking report is needed because a lot of money is going in because of the hotels’ everyday operations.
Business owners are keeping the cash flow in check because it is one of the key indicators of a stable business. Healthy liquidity—or the amount of assets readily convertible to cash—can go a long way.
Opening a Hotel in Indonesia
Indonesia’s tourism business is one of the greatest growth contributors to the economy. Tied with this is the hospitality sector. After all, tourists are looking for accommodation when going to different places.
Here are the different types of hotels you can open in the country:
- bed and breakfast with less than five rooms available for occupancy
- low-cost hotels for backpacking tourists
- starred hotels which require special licenses from regulators
- hotels with built-in resorts
Among the requirements of opening a hotel in Indonesia are operational license, principal license, restaurant and alcohol licenses, and environmental permits.
Looking for an Expert to Establish Your Hotel Business
If you are an aspiring hotelier, you might need some professional help to open your business smoothly. Lucky for you, 3E Accounting is the one-stop-shop that can turn your dreams into reality. We are an Indonesia accounting service provider ready to serve you and your company. Our team is more than glad to help you in every step of the way. Contact us today.