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Hospitality industry

Optimizing cash flow management for a hotel

Hotels are relatively straightforward businesses to understand, but cash management can be complex. In this article, we will look at the best cash management solutions, including Fygr, a cash management software program that is ideal for the hotel industry.
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Hospitality industry: key points to remember about cash management

Cash management is a key issue for companies in the hotel sector, whose business model is based on high seasonality, high fixed costs, and multiple distribution channels. Tensions arise from a structural imbalance between revenue volatility, unavoidable expenses, and the complexity of financial flows:
Highly seasonal revenues with significant variations between off-peak and peak periods
High and inflexible fixed costs (labor costs, maintenance, real estate)
Complexity of flows and commissions (OTA platforms, reservations, deposits, cancellations)
Difficulty in financial forecasting between low season and future investments
Fygr enables hospitality industry players to secure their cash flow and profitability by providing a clear, forward-looking, and operational view of financial flows.

The specific cash flow challenges for hospitality businesses

Why is cash management particularly difficult for companies in the hospitality industry? We have identified three major issues.
Extreme Seasonality and Revenue Volatility
Massive and Incompressible Fixed Costs
Complex Financial Ecosystem and Commissions

Extreme Seasonality and Revenue Volatility

The hospitality industry faces particularly pronounced seasonality, with revenue variations of up to 70% between peak and off-peak periods.

This extreme volatility creates constant pressure on cash flow, forcing establishments to generate sufficient liquidity during good times to survive during less favorable seasons.

Tourist destinations experience drastic fluctuations, making financial forecasting and management particularly complex.

Massive and Incompressible Fixed Costs

Hotels incur considerable fixed costs that are virtually impossible to reduce, including personnel expenses, maintenance costs, rent or property depreciation, and essential service contracts.

These expenses remain stable regardless of occupancy, which means that during periods of low activity, the establishment must continue to bear the full cost of its structural expenses while experiencing a significant reduction in revenue.

This economic reality creates constant pressure on cash flow and exposes the establishment to significant financial risks.

Complex Financial Ecosystem and Commissions

The hotel business model involves multiple distribution channels and financial flows, particularly with online booking platforms that charge significant commissions.

These intermediaries can take up to 15-25% of the sale price, automatically reducing margins and complicating cash flow management.

Added to this are the issues of managing deposits, cancellations, and deferred payments, which create additional complexity in tracking and forecasting cash flows.
BEST PRACTICES

How to effectively manage cash flow for a business in the hospitality industry

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Mastering seasonality and variable cash flows

Cash management in the hotel industry requires a deep understanding of seasonal variations in revenue. Establishments must develop a flexible financial strategy that allows them to build up reserves during busy periods to absorb slower times. This approach involves detailed analysis of tourism cycles, accurate expenditure planning, and constant adaptability. Building a cash reserve is crucial to maintaining financial stability, covering fixed costs during periods of low occupancy, and investing in development opportunities.

Optimizing multichannel revenue management

The financial performance of a hotel establishment now relies on a sophisticated revenue strategy that goes beyond simply renting rooms. It is essential to develop an integrated approach that maximizes revenue across all departments: accommodation, catering, seminars, and additional services. This involves dynamic pricing that adapts in real time to demand, accurate analysis of the profitability of each service, and a pricing strategy that takes into account the specific characteristics of each customer segment. The ability to understand and anticipate the financial flows of each revenue source is becoming a major competitive advantage.

Effectively manage costs and investments

Cost control is a strategic issue in the hotel sector, which is characterized by heavy investment and significant fixed costs. Effective financial management requires a proactive approach to resource allocation, with constant analysis of the cost-benefit ratio of each investment. This involves developing a long-term vision that incorporates maintenance needs, renovation opportunities, and technological investments. The ability to balance current expenses and strategic investments, while maintaining optimal cash flow, becomes a key factor in the establishment's resilience and growth.
CHOOSE FYGR

Why use Fygr for a hotel?

The best solution for managing your hotel's cash flow? Use cash flow management software such as Fygr. Fygr already supports many hotel groups. Read on to find out how cash flow software could help you improve your cash flow management.
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GOOD REASON #1

Hotel Banking Synchronization

Automatically centralize and categorize your multi-service financial flows
Real-time revenue tracking by department (rooms, catering, seminars)
Automatic categorization of flows according to distribution channels (direct, OTA, agencies)
Accurate identification of commissions and margins by service and season
GOOD REASON #2

Dynamic Cash Flow Forecasts

Anticipate your financial performance with pinpoint accuracy
Modeling seasonal scenarios with occupancy rate projections
Simulation of the impact of local events on your cash flow
Projection of financing needs according to tourist seasons
GOOD REASON #3

Financial Dashboard

Assess the gap between forecast and actual in real time
Detailed comparative analysis of revenues
Identification of areas for financial optimization
Real-time monitoring of key performance indicators

They chose Fygr

Here's what some of our customers have to say after choosing Fygr to visualize their financial data:
Friendly team and easy-to-use tool.
Pierre Boileau
CEO @ Hôtel de Sévigné
Very practical and intuitive software. The team is always attentive, helpful, and friendly. I highly recommend it!
Kods Mahdhaoui
CEO @ Paris Monceau Dental Practice
I've been using Fygr every day since we installed it: I feel much more relaxed about my cash flow, without having to put in all the effort I used to with Excel.
Thomas Reynaud
Founder & CEO & Guarantor
FAQ

Everything you need to know about cash management for hotels

Answers to the questions you ask us most often.
How to choose cash management software for a hotel establishment?
To choose the right cash management software, start by identifying the specific characteristics of your establishment: number of rooms, additional services, seasonality. Choose a tool that can handle the complexity of hotel cash flows, with dedicated features such as revenue tracking by department and integration with hotel management systems. Check that it can handle seasonal variations and multiple currencies. Fygr may be a suitable solution for establishments looking for a strategic approach to their financial management.
What are the advantages of cash management software over Excel for a hotel?
Cash management software offers complete automation of financial processes specific to the hotel industry. Unlike Excel, it allows real-time synchronization of data from different departments (accommodation, catering, seminars) with automated dashboards. Managing booking platform commissions, tracking margins by service, and anticipating slow periods becomes simpler and more accurate.
How can reliable cash flow forecasts be made for a hotel establishment?
For reliable forecasts, collect historical data from several tourist seasons. Analyze your revenue cycles, taking into account the extreme seasonality of the sector, which can impact cash flow by +/- 70%. Include all fixed costs (staff, maintenance) and variable costs (consumables, temporary staff). Take into account local events, tourist periods, and potential special events that may influence your business.
How long does it take to implement cash management software for a hotel?
Setup time varies depending on the complexity of your establishment, the number of services offered, and existing systems. A small hotel can be up and running in a few hours, while an establishment with several departments and services may require a few weeks. Fygr offers personalized support to facilitate integration, taking into account the specific characteristics of your establishment.
How much does cash management software cost for a hotel?
Fygr's rates start at €59 per entity and per connected bank account. Pricing takes into account the specific nature of the hotel sector, with options tailored to both small establishments and larger hotel chains.
Who are Fygr's competitors in the hotel industry?
Fygr's main competitor is Agicap, which offers generic solutions. However, Fygr stands out thanks to its sector-specific approach, with features designed specifically for the hotel industry. User feedback highlights Fygr's simplicity and adaptability for establishments with 5 to 200 rooms.
How do I know if my hotel needs cash management software?
Your establishment needs such a tool if you encounter difficulties in forecasting your cash flow during slow seasons, if managing different departments becomes complex, or if you lack visibility on your margins. This is particularly relevant for establishments with annual revenues exceeding €500K.
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