Today's Hotelier - November 2017 - 53

 10-MINUTE READING TIME

S

TUPID SOUNDS LIKE A
harsh word. Webster's
dictionary defines stupid
as, "Given to unintelligent
decisions or acts," along
with a few other more colorful options.
When I refer to outsourcing, I am
talking about a third-party provider,
not a centralized function. Outsourcing
your hotel accounting is a stupid move.
Here's why.
I often work with clients on difficult
decisions, and we make pro and con lists.
We write good things that can come from
a decision and how we can amplify them
on one side, and then we write the bad
things that could and would happen and
how we can minimize them on the other.
One good thing that comes from outsourcing is being trendy. Many brands
are doing it, and it is the thing to do.
I spoke with a CFO recently, and he
explained that his board had recently
decided to outsource.
"Why would they do that?" I asked. He
smiled a little and said, "We need to keep
up with our competition; other brands are
outsourcing, so we are going to as well."
Behind his smile, I detected a slight
amount of political discouragement.
My take on this exchange: It is a political thing and the CFO was going to pick
his battles. This was not going to be
one of them. Why should he care? His
company does not own the hotels; they
simply manage them for someone else.
He knows ultimately that if there is a
service problem, it falls on the hotel's
lap, not the management company's.
In business, especially one that has
multiple stakeholders, the pressure and
competition to keep up with the Jones's is
stiff. Companies feel compelled to move
and to innovate, and sometimes these
changes are not in their best interest.
There is a quote from Earl Nightingale
that speaks nicely to this: "Watch what
everyone else is doing, and then do
the opposite. The majority is almost
always wrong."

A negative aspect of outsourcing is
the reduced level of service. Good service in a hotel is everything, not only
for external guests, but also for internal guests. In a full-service hotel, the
accounting department provides a long
list of services: receivables, payables,
payroll, revenue control, cash management, systems oversight, audit, food and
beverage controls, purchasing, receiving,
general accounting and budget/forecasting, to name but a few. When a hotel
outsources, they typically outsource
payables, some parts of purchasing, general accounting, sometimes accounts
receivable, and almost always the daily
audit and revenue functions.
Where do you lose the service? Hotels
are a high-volume transaction retail
business. Every day a hotel sells hundreds or thousands of rooms to many
different customer segments. In addition, it services thousands of food and
beverage customers. At the heart of all
of this is understanding the sales and
segments, pricing and the corresponding
settlements. The service a good accounting department provides is to keep it all
together, find the errors, correct them
and, most importantly, work with the
operating departments to get it right.
These functions in a hotel are like filters, collecting all the errors and working with operations to get them back on
track. A good accounts payable clerk is
worth their weight in gold. A revenue
auditor is equally as valuable. What
these functions ultimately provide is
a service well worth having. If it is outsourced, it is hidden with the volume
turned way down. The onsite, in-yourface service provided by an accounting
clerk is an extremely valuable business
process that ensures a smoother and
more profitable outcome.
I said I was going to alternate between
the pros and cons. The second pro, if
you can call it that, is cost savings.
Typically, when outsourcing, a few colleagues with lots of tenure are gathered
up and, depending on the jurisdiction

TODAYSHOTELIER.COM | NOVEMBER 2017 | 53


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Table of Contents for the Digital Edition of Today's Hotelier - November 2017

Letter From the Chairman
Letter From the President & CEO
The Perfect Storm for Hotel Owners
Design That Brings People Together
New Brands Design for a New Kind of Hotel Experience
Time for a Group Sales Tune Up
AAHOA Interview
Marketing
Technology
Small Business
Finances
HR
AAHOA @ Industry Events
AAHOA Founding Members
AAHOA Vendor Partners
Classifieds
Advertiser Index
Today's Hotelier - November 2017 - intro
Today's Hotelier - November 2017 - cover1
Today's Hotelier - November 2017 - cover2
Today's Hotelier - November 2017 - 3
Today's Hotelier - November 2017 - 4
Today's Hotelier - November 2017 - 5
Today's Hotelier - November 2017 - 6
Today's Hotelier - November 2017 - 7
Today's Hotelier - November 2017 - 8
Today's Hotelier - November 2017 - 9
Today's Hotelier - November 2017 - Letter From the Chairman
Today's Hotelier - November 2017 - 11
Today's Hotelier - November 2017 - Letter From the President & CEO
Today's Hotelier - November 2017 - 13
Today's Hotelier - November 2017 - 14
Today's Hotelier - November 2017 - 15
Today's Hotelier - November 2017 - 16
Today's Hotelier - November 2017 - 17
Today's Hotelier - November 2017 - 18
Today's Hotelier - November 2017 - 19
Today's Hotelier - November 2017 - The Perfect Storm for Hotel Owners
Today's Hotelier - November 2017 - 21
Today's Hotelier - November 2017 - 22
Today's Hotelier - November 2017 - 23
Today's Hotelier - November 2017 - Design That Brings People Together
Today's Hotelier - November 2017 - 25
Today's Hotelier - November 2017 - 26
Today's Hotelier - November 2017 - 27
Today's Hotelier - November 2017 - New Brands Design for a New Kind of Hotel Experience
Today's Hotelier - November 2017 - 29
Today's Hotelier - November 2017 - 30
Today's Hotelier - November 2017 - 31
Today's Hotelier - November 2017 - Time for a Group Sales Tune Up
Today's Hotelier - November 2017 - 33
Today's Hotelier - November 2017 - 34
Today's Hotelier - November 2017 - 35
Today's Hotelier - November 2017 - 36
Today's Hotelier - November 2017 - 37
Today's Hotelier - November 2017 - AAHOA Interview
Today's Hotelier - November 2017 - 39
Today's Hotelier - November 2017 - Marketing
Today's Hotelier - November 2017 - 41
Today's Hotelier - November 2017 - 42
Today's Hotelier - November 2017 - 43
Today's Hotelier - November 2017 - Technology
Today's Hotelier - November 2017 - 45
Today's Hotelier - November 2017 - Small Business
Today's Hotelier - November 2017 - 47
Today's Hotelier - November 2017 - 48
Today's Hotelier - November 2017 - 49
Today's Hotelier - November 2017 - 50
Today's Hotelier - November 2017 - 51
Today's Hotelier - November 2017 - Finances
Today's Hotelier - November 2017 - 53
Today's Hotelier - November 2017 - 54
Today's Hotelier - November 2017 - 55
Today's Hotelier - November 2017 - HR
Today's Hotelier - November 2017 - 57
Today's Hotelier - November 2017 - AAHOA @ Industry Events
Today's Hotelier - November 2017 - 59
Today's Hotelier - November 2017 - AAHOA Founding Members
Today's Hotelier - November 2017 - 61
Today's Hotelier - November 2017 - AAHOA Vendor Partners
Today's Hotelier - November 2017 - 63
Today's Hotelier - November 2017 - 64
Today's Hotelier - November 2017 - 65
Today's Hotelier - November 2017 - 66
Today's Hotelier - November 2017 - 67
Today's Hotelier - November 2017 - 68
Today's Hotelier - November 2017 - 69
Today's Hotelier - November 2017 - 70
Today's Hotelier - November 2017 - Classifieds
Today's Hotelier - November 2017 - 72
Today's Hotelier - November 2017 - 73
Today's Hotelier - November 2017 - 74
Today's Hotelier - November 2017 - 75
Today's Hotelier - November 2017 - 76
Today's Hotelier - November 2017 - 77
Today's Hotelier - November 2017 - 78
Today's Hotelier - November 2017 - 79
Today's Hotelier - November 2017 - 80
Today's Hotelier - November 2017 - Advertiser Index
Today's Hotelier - November 2017 - 82
Today's Hotelier - November 2017 - cover3
Today's Hotelier - November 2017 - cover4
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