How P2P Software Will Help Hoteliers Master Their 2024 Budget
Budgeting effectively is a challenge at the best of times, but hoteliers looking to set their 2024 budgets have to do so amid lingering uncertainty across the travel industry. While travelers may be more excited than ever to set out on their next adventure, economic factors are changing the way people travel and how much it costs to provide exceptional guest experiences.
Accenture reports that 71 percent of consumers plan to sustain or increase their spending on leisure travel next year. This trend gives hoteliers ample opportunity to recover revenue lost during the pandemic and achieve new top-line growth. CWT projections show that average daily rates (ADRs) across the globe are likely to grow by 3% between 2023 and 2024. Even though occupancy and ADRs are rising, costs are climbing, too. As employees demand higher wages and inflation hits food, beverage, and energy costs, expansion in travel spending isn’t making it down to hoteliers’ bottom lines.
To get the most out of the steady resurgence in travel, hoteliers need to allocate more of their budget to back-of-house innovation that will help them streamline their operations and ultimately enhance guest engagement. Inevitably, this means finding new ways to cut costs even as the price of goods and services continues to rise. A key area for budget optimization hoteliers should focus on in 2024 is their procurement-to-pay (P2P) process.
Gaining more control and visibility impacts cost reduction across several dimensions of the business. Investing in solutions that enable eProcurement and automation across the P2P process increases efficiency and makes transactions and inventory management much more profitable, ensuring that hoteliers can take full advantage of the increase in travel demand.
Addressing the Need for Procurement Transformation
Inflation will likely continue to be a challenge for procurement teams in every industry into the new year. Interest rates in the US and Europe aren’t falling, which will affect hotelier’s ability to leverage debt to purchase new assets or maintain the ones they already have. On top of it all, procurement teams have to juggle fallout from supply chain issues.
All of these factors roll up into higher costs that are largely out of the hotelier's hands. The only option is to improve operations at a granular level to pull out savings wherever possible. Businesses waste up to 4% of their external spend on high transaction costs, inefficiency, and noncompliance in the procurement process. P2P software solutions enable hoteliers to find cost savings at every point between sourcing and receiving payment—and early adopters will be the ones who pull ahead of the pack.
Many hoteliers still rely on paper-based procurement and invoicing. Procurement involves many departments—from the kitchen to accounts payable—and manual workflows create information silos. This leads to departments spending over budget and accounting misunderstanding the strategy behind purchase decisions. It also creates a convoluted approval process that individuals are more likely to try to bypass, resulting in decreased compliance.
Using highly manual processes also increases the likelihood of human error and costly mistakes. While teams are busy managing stacks of paper, they aren’t gaining enough visibility into inventory levels, and they don’t have the data they need to improve their inventory management decisions. Manual processes and lack of transparency also make it hard to accurately verify invoices and manage cash flow, disrupting vendor relationships and slowing the business down.
End-to-end P2P solutions unify the procurement process across departments, streamline approvals, and make it easy to verify invoices and provide payments. Another critical advantage of moving to P2P software is automation, which speeds up procurement overall and frees teams to focus on data analysis and optimization strategies.
Meeting the challenges of tomorrow’s travel landscape requires hoteliers to take a hard look at legacy workflows that cost them the cash they need to reinvest in growth. P2P software is more than a nice-to-have; it’s an essential tool that puts money back in the hotelier’s pocket and supports better buying decisions that lead to exponential expansion.
Digitisation to Optimize and Reduce Costs
Technologies available today could automate more than half of the source-to-pay process. P2P software that brings together identification, requests for purchase (RFPs), vendor validation, purchase orders (POs) and approvals, receipt of goods, matching and verification, and payment. The automation, transparency, and data collection features provided by P2P platforms help hoteliers realize cost savings at every stage and provide seamless connectivity between hotel operations, corporate, and suppliers
Efficiency is the core benefit of procure-to-pay digitization. When it comes to the bottom line, efficiency means a reduction in hours spent on manual tasks and making up for human error in procurement workflows. Automation enables greater efficiency by eliminating busy work and reducing human touchpoints. In a review of current technology, McKinsey found that 88 percent of the tasks surrounding placing and receiving orders can be fully automated, while 93 percent of payment processing can be automated.
For hoteliers, when every department is using one P2P platform as a single source of truth, there’s greater visibility into how everyone is using their budget. This makes it much easier to assess whether a PO should be approved, empowering teams to optimize spend in the moment and speed up payment processing for accounts payable.
Streamlining POs, invoicing, and payments also has major benefits for the vendor, improving the relationship between hotelier and supplier. Solutions that connect to vendors’ inventory and invoicing systems make purchasing easier and ensure vendors get paid early or on time, leading to greater discounts. On the hotelier’s side, P2P solutions provide analytics that surface insights about vendor performance so they can spot opportunities to capture further cost reductions.
P2P solutions integrate procurement and inventory management systems for deeper visibility into the supplies hoteliers need and what’s just taking up space. Visibility empowers non-experts, such as chefs and frontline staff, to take greater ownership of procurement while remaining compliant. With end-to-end P2P solutions, this visibility can also be shared amongst departments. A higher degree of transparency leads to better decision-making, which happens within the context of the whole business, not just on a departmental level.
P2P software addresses the complexity and nuance of procurement workflows, simplifying the process while significantly reducing risks. With better data and analytics tools baked into P2P platforms, hoteliers can continue to find ways to minimize costs and seize opportunities to boost revenue.
Regaining Control Over Your 2024 Budget with P2P Solutions
A budget is telling your money where to go instead of wondering where it went. John Maxwell said it first and said it best. Hoteliers must rely on more than just their top line to drive profit and shape budget planning. Establishing a feasible budget for 2024 requires hoteliers to take care of their side of the street: cleaning up their operations and reducing costs to expand their margins.
By maximizing procurement profitability, hoteliers can create a strong foundation for weathering change as the travel industry evolves in the coming year. P2P software should undoubtedly be a line item in hoteliers’ 2024 budget. Investing in P2P solutions delivers the immediate benefits of efficiency and sets hoteliers up for years’ worth of cost-reduction potential by transforming the entire procurement pipeline. Ultimately, P2P software provides the high level of control today’s hoteliers must have over the cost of procurement as economic variables and the appetite for travel continue to shift.
OUR APP: Procure-to-pay while on the go!
From placing orders and managing recipes to approving invoices and viewing reports, with FutureLog’s native mobile app you’ll have all the power and automation of our P2P web solutions conveniently at your fingertips. Whether you’re online or offline, you can stay in control.