Starting a new hotel can be an exciting but daunting project. There are so many equations to balance, from the initial planning stages all the way to setting up systems for managing operations.
But one of the most important pieces of the puzzle is financial management.
The hotel industry is very competitive, and even a slight misstep in managing finances can result in big problems down the road. That’s why it’s so important for new hotels to get off on the right foot with their financial management.
Getting your financials in order from the start is crucial to the success of your business.
Here’s how to do it:
1. Pick the right finance system
What “the right finance system” means will vary from business to business. But for a new hotel like yours, you want a financial management system that boasts the following functionalities and capabilities:
- Integration with other hotel systems: Look for a system that can seamlessly connect with your core operational systems such as your property management system, point of sale system, payment system, procurement system, and so on. This will save you a ton of time and hassle by reducing duplicate data entry.
- Dynamic reporting with in-context analysis: A good finance system will allow you to quickly generate reports and slice-and-dice data in various ways. This is important for understanding how your business is performing and for making informed decisions about where to allocate resources.
- Multi-operational capabilities: If you plan on expanding your hotel empire to multiple locations, you want a finance system that can accommodate growth. Look for a system that can handle multiple entities, currencies, and languages.
There are other things to look for but these are some of the most important features of a new hotel.
2. Set up a competent finance team
No matter how small or new your hotel is, you need to have a competent finance team in place from the onset.
It doesn’t matter the size of the team, as long as you have the right people with the right skillsets and they are able to handle your specific needs.
A finance team will help oversee all aspects of financial planning and execution, including short-term cash flow management and long-term strategic planning.
They’ll prepare regular financial reports and ensure compliance with all local, state, and federal laws.
They’ll work with upper management to develop and implement budgeting and forecasting processes, among other things.
3. Develop internal financial policies, procedures, and controls
Internal financial policies, procedures, and controls are designed to prevent and detect errors, fraud, and abuse.
They are also put in place to ensure that your financial information is accurate and reliable and to safeguard your assets.
Some examples of internal financial policies, procedures, and controls include:
- requiring pre-approval for all expenditures over a certain amount
- implementing a petty cash system
- segmenting duties among different individuals so that no one person has control over the entire finance function
This is especially important for hotels because there is a lot of cash and inventory floating around.
Conclusion: Financial Management for New Hotels
There’s a lot to think about when it comes to financial management for new hotels. But if you take the time to get your finances in order from the start, it will pay off in the long run. A well-run hotel is a profitable hotel, after all.
So don’t delay—put these tips into action and get your hotel off on the right foot financially.
Interested in unpacking how we can help with your specific financial management needs as a new hotel? Reach out, we’d love to chat!