Article written by QHA Partner McGrathNicol
Hospitality operators’ focus on profitability is more important than ever due to economic headwinds caused by the rising cost of living. Consumer confidence and discretionary spending is expected to fall, adding pressure to existing challenges in the hospitality sector, such as staffing and the impact of the COVID.
Hospitality businesses can drive operational improvements and business performance through system transformation projects, which empower staff to provide excellent customer experiences, without the hassles of “clunky” systems. In this article, we share our top four tips for the transformation of hospitality operator systems.
It is well known that the core function of hospitality is a great customer experience. Whether that’s the perfect cold beer from the bar right through to the honeymoon suite being set just right for that special moment. All these excellent customer experiences are created by excellent hospitality staff. “If an operator can create a pain-free and efficient workplace, their staff will be armed to deliver great customer outcomes. This generates positive reviews, creates demand for services and may enable the operator to charge a premium.” explained Sean Wiles, McGrathNicol Advisory Partner.
For staff to have a positive experience using an organisation’s systems, it is first important to understand the “pain-points” of existing systems. This could highlight the importance of an easy-to-use rostering and payroll system that reduces staff dissatisfaction with incorrect or late wage payments. It may also identify the significant impact of an efficient Point of Sales system, which supports end-of-night reconciliations and stock-takes.
Selina Gerner, McGrathNicol Advisory Partner commented “Once the existing pain-points are identified, management should prioritise investment to create a fit-for-purpose and high-quality system.” As part of this process, we have identified the top four management considerations for hospitality operators when replacing systems:
- Staff communications. Make sure staff are aware of the system transformation project and how they can contribute their pain-points and suggested solutions. It is important to maintain an open dialogue with staff throughout the transformation project so they know what decisions are made (and why), all planned changes and how those changes will improve their experience.
- Cloud based systems. Many operators run their systems with “on-premises” servers. The alternative is cloud-based systems that are safer, more flexible and reliable where a cloud vendor takes over the responsibility of maintaining and updating systems. They can also provide “real time” data. However, cloud systems may not always be cheaper, so it is worth undertaking a cost vs. benefit analysis before any transformation project.
- Integration of systems. Hospitality has many specific needs for its operating and finance functions. For example, an on-demand invoicing system for accommodation; or a stock management database to manage high stock turnover across multiple locations. These specific needs often drive hospitality providers to use bespoke systems that suit their operating requirements. As a result, automating data flows from multiple hospitality specific systems to a central finance system (called integration) can be a big-time saver for staff compared with manually moving data between systems.
- Embed procurement workflows. There may be many supplier invoices in a hospitality business. Most are “business as usual”, but some are for ad-hoc capital improvements or maintenance items, which can get lost between layers of management and cause unnecessary “noise”. This is where an efficient and easy-to-use “procure to pay” system can help track the approval of expenditure along pre-defined workflows.
“Ultimately, implementing a fit-for-purpose system that supports staff to do their job as efficiently as possible is an important enabler of value and performance for hospitality operators. It can also be a key point of differentiation for management, staff, and investors alike.”, Gerner summarised.
From a strategic perspective, a lot of time and effort is often put into three- or five-year plans without the right level of thought given to the systems and processes that support or underpin the strategic objectives. In a lot of instances, this can hamper management’s ability to scale up or produce information needed to make key decisions. When you add it all up, it is worth considering whether an upgrade to back-end systems could help you achieve improved operating performance.
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