If the White Lotus, a fictional hospitality company featured in the television series of the same name, can profoundly influence tourists' travel choices (see: the "White Lotus effect"), just think of the brand loyalty a real-life boutique hotel group could inspire.
Of course, one advantage the White Lotus has over in-the-flesh hospitality groups is that it's exempt from the myriad complexities of multi-entity accounting, such as intercompany transactions and other complicated accounting processes.
These challenges become more intense as a company expands to multiple business locations, especially when using entry-level accounting software like QuickBooks, which is not designed for businesses with multiple companies.
A multi-entity accounting software like Gravity Software is the best way to meet the business needs of a hospitality organization with multiple locations, streamlining financial management and managing complex workflows with ease. Here’s why.
Boutique hotel or hospitality groups face unique financial challenges that are exacerbated by basic accounting software that wasn't designed for multi-entity organizations.
If each hotel property within a hospitality group uses a separate entry-level accounting system as opposed to cloud based accounting software, data silos will hinder real-time organization-wide insights into key business performance metrics such as cash flow, revenue and profitability.
Strategic decision-making will be dependent on team members manually copying financial data from the databases for each property — of which there could be dozens — into a separate spreadsheet to create comprehensive financial reports.
Gen Z is replacing an aging Baby Boomer population in the travel sphere. This generation has less spending power than previous travelers, according to Deloitte. An insufficient tech stack on a hospitality group's part translates to missed cost savings that could be passed on to this budget-conscious generation of guests.
Centralized procurement and purchase order requisition is key to streamlining vendor management and negotiating favorable contracts. With data silos resulting from accounting software not designed for multiple businesses, procurement will be significantly less efficient and hospitality groups won't have all the information they need for effective negotiations.
Without multi-company accounting software, each property's vendors will need to be managed separately, even though they're likely the same vendors used by other properties within the group.
Entering the same vendor information into multiple databases is inefficient at best. At worst, an employee manually adding or updating vendor information in dozens of databases has dozens of opportunities for error or oversight. This could lead to payment remittance mistakes or delays and result in strained vendor relationships.
A vendor invoice can't be paid without an approval process that could involve multiple leaders at both the entity and corporation level.
Without an integrated accounting system, the only way to obtain approval is for a team member to send the invoice to the designated parties and wait for a response, which may not come until after a few reminders. This can result in late payments, which can incur fees and damage the entire organization's relationship with a particular vendor.
Intercompany financial transactions can also be time-consuming without a streamlined system. These transactions ensure each property pays for the share of the goods or services purchased on their behalf by a parent company or designated entity. This process also applies when a parent company handles ongoing services such as marketing or payroll on behalf of multiple subsidiaries.
With entry-level accounting software, accounting teams will need to create "due from" journal entries in the purchasing entity's database, along with intercompany invoices for each location receiving the procured items or services. They'll then need to create "due to" entries by logging into each location's database. Finally, they'll need to ensure the "due to" and "due from" entries balance. All this can take hours and is prone to errors because of all the manual data entry.
Entry-level accounting solutions turn generating consolidated financial statements for ownership groups and other stakeholders into a tedious process that involves logging into each property's database, copying the relevant data points and pasting them into Excel or another spreadsheet. Human error is almost inevitable.
Even if all of the data in a report is correct, the end of the month or quarter -- or whenever a team member is available to compile the information -- might be too late to take meaningful action against an alarming trend revealed in the financial data.
Fortunately, an accounting solution like Gravity Software, built especially for organizations with multiple businesses under their umbrella, can easily overcome these obstacles.
Instead of requiring a separate subscription or software instance for each property within a hospitality group, multi-entity accounting software deploys a centralized database that stores financial records for all properties in a single location.
This has a twofold effect: First, users avoid logging into and out of multiple databases just to complete a simple data entry task across properties. Second, consolidated reports are baked into the concept, which affords stakeholders real-time financial insights at both the organizational level and individual property level.
For guests, part of the cachet of staying with the same boutique hotel chain wherever they travel is likely the familiarity: same soap, same fluffy towels, same comfortable mattress. It only makes sense to work with the same vendors across the brand. But paying those vendors can be a slog without the right accounting software.
With multi-entity accounting software, hotels can batch vendor payments across multiple locations, and there are no data silos to prevent the flow of automated approval workflows -- which Gravity offers via Microsoft Power Automate. This speeds up accounts payable and reduces errors in the process.
Intercompany transactions are a common pain point among multi-entity businesses. But with a multi-entity accounting solution, users can allocate shared expenses like payroll or inventory to the partaking locations with just a few clicks -- no more logging into multiple systems -- and "due to/due from" journal entries balance automatically.
Users can generate consolidated financial reports within minutes, not hours or days, with a multi-entity accounting software like Gravity. Thanks to its centralized database, not only are comprehensive, accurate reports available virtually on demand, but Gravity also offers customizable reporting features including real-time individualized dashboards powered by renowned business intelligence application Microsoft Power BI.
Expense tracking and other key aspects of financial management, along with proactive, up-to-the-minute decision-making, become second nature when information is so readily available.
Gravity's multiple business accounting software has profoundly impacted the operations of many hospitality groups with multiple companies. Notable among these is The Sunray Companies, a 47-entity enterprise that operates well-known hotel and spa locations.
Working with QuickBooks, which requires a separate online accounting software subscription for each business within an organization, Sunray's accounting team sacrificed their work-life balance on a regular basis to manually compile consolidated financial reports and settle recurring intercompany transactions that numbered in the hundreds.
Staff morale aside, weekslong reporting times hobbled organization-wide financial visibility and made hostages of team members who could have been spending that time on value-add activities.
By demolishing the data silos that were keeping Sunray's finance team members in the dark, Gravity’s multi-entity accounting system enabled real-time tracking of all properties and paved the way for automated intercompany transactions and approvals as well as one-step vendor information updates. This saved the team hours each week, in addition to strengthening vendor relationships by facilitating faster payments.
Gravity's automated consolidated reporting also cut month-end close times in half while promoting the visibility needed to make data-driven decisions. The finance team no longer feels "like their talents are being wasted," as accounts payable administrator Stephanie Welborn phrased it. Instead, they now have the bandwidth to focus on tasks like data analysis and strategic growth.
Hospitality and boutique hotel groups can’t afford to waste time on manual accounting tasks when they could instead be growing their brand.
Fortunately, Gravity Software has robust multi-entity capabilities to shatter inefficiencies in multi-location financial management. With key features such as automated intercompany transactions, purchasing and financial reporting, Gravity saves your team time and increases visibility across business entities for more informed decision-making. Knowing you have the right accounting software to fulfill your business needs means your team can focus on creating an unforgettable guest experience that will have them seeking out your properties every time they travel.
Schedule a demo today to see how Gravity can transform your hospitality accounting operations.
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