Hospitality sector lags in digital finance transformation
In an era marked by rapid technological change, the hospitality industry remains hesitant to fully embrace digital transformation within their finance systems, according to a new insights report by Xledger. Despite significant strides made by the sector, only 3% of venues and hospitality organisations have completely overhauled their finance functions digitally, while 69% have either begun or are in the midst of this journey. The report is based on a survey of 101 UK venues and hospitality businesses.
The study reveals that the hospitality sector, which has historically shown resilience amid external disruptions such as the COVID-19 pandemic and Brexit, is still grappling with the adoption of new technology. Notably, just 34% of finance leaders express full confidence in their existing software solutions. This hesitancy contrasts sharply with the industry's broader technological advancements aimed at enhancing customer experience, which include updates to back-of-house systems, point-of-sale (POS) systems, rotas, and customer review platforms.
Xledger's report delves into the prevalent concerns within the industry, uncovering a significant aversion to change among finance leaders. Over one-third (35%) of respondents cited fears of delays, backlogs, and productivity issues as primary reasons for their reluctance. Additionally, 21% admitted that the familiarity of current systems makes them wary of transitioning to new technologies. This unease is compounded by a severe lack of financial forecasting tools, with only 22% of the respondents asserting that they have the resources needed to project ahead of a potential recession.
Peter Hucker, CEO of Xledger UK, suggests that the sector stands to benefit significantly from championing change at a faster rate. "The hospitality sector could see real benefits if it begins championing change at a much faster rate to secure greater fiscal oversight and build robust operational structures. The report points to some in the sector having concerns around change, which is understandable, but crucially this can be addressed through appropriate planning, training, and communication. The risks of stagnation outweigh those of careful transformation," Hucker explains.
Additional challenges outlined in the report include rising costs (50%), staffing turnover (34%), and outdated technology (30%), each of which puts considerable strain on hospitality finance teams' time and attention. Despite these barriers, the sector is making visible progress in its digital transformation journey, driven by a clear appetite for change. However, the report emphasises the need for an awareness campaign to help parts of the sector reframe their apprehensions about implementing new technologies.
For Hucker, building trust is critical to accelerating digital transformation within the finance functions of hospitality organisations. "To accelerate any digital transformation, trust is a crucial element. It’s clear that for many in the hospitality finance function, there is still work to be done to assist with the mindset around change, which will inevitably help to fuel confidence in the digital transformation process," he states.
He further adds that empowering finance teams with new capabilities is essential: "As industry bodies, sector specialists and our latest research all point to, building that trust starts with empowering new capabilities within finance teams. It is here that the hospitality sector can start to accelerate its digital transformation journey and elevate finance to become a true strategic enabler for future business growth."
The report from Xledger serves as a vital wake-up call for the hospitality sector. It highlights the importance of adopting digital finance technologies not only to improve efficiency and productivity but also to position the industry for future growth and resilience against economic uncertainties.
