Artificial Intelligence (AI) has the potential to transform the hospitality industry, revolutionizing both the guest experience and operational efficiency. From personalized guest recommendations and enhanced guest services to predictive maintenance and revenue management, the applications for AI in hospitality are immense and exciting. However, despite the proliferation of AI tools, many hospitality companies have yet to leverage its capabilities in the back-office, particularly in hotel accounting.
With limited AI integration capabilities, legacy hotel accounting software systems have had trouble embracing AI’s transformative power in this critical area. However, the landscape is evolving, and forward-thinking hotel management and ownership firms are beginning to realize the tremendous benefits of incorporating AI into their accounting practices.
What is AI?
AI is a broad range of technology encompassing many forms of intelligent systems, from generative AI, such as the popular ChatGPT, to Machine Learning (ML) and Rule-Based systems, which are more applicable to hotel accounting applications. Broadly speaking, AI is a technology that learns from data, much like a human learns from experience, and then applies deductive reasoning and decision-making.
ML is an area of AI in which AI systems can learn from data inputs and refine their algorithms over time, continuously improving their performance and delivering valuable insights. Rule-based AI is a sub-category that uses algorithmic intelligence to inform analysis and draw conclusions.
By leveraging AI in hotel accounting, companies can streamline their processes and gain a competitive edge through enhanced accuracy efficiency, and strategic decision-making capabilities.
How can AI be used in hotel accounting?
AI is introducing innovative solutions that can help hotel accountants, managers and team members perform tasks more accurately and efficiently. A few areas that AI is transforming hotel accounting include:
GL anomaly detection: With AI Machine Learning, large volumes of financial data in the general ledger (GL) can be analyzed to detect incorrect ledger postings. By flagging potential errors, fraud or unusual activities in general ledger postings before closing financial periods, AI technology helps the accounting team work effectively, maintaining financial integrity and reducing risk.
Smart bank reconciliation: Another form of AI uses smart matching to automatically match bank transactions with general ledger postings based on matching criteria and algorithms. By auto-matching most of the transactions and flagging any unmatched transactions, AI reduces errors and facilitates timely bank reconciliation for more accurate and streamlined cash management.
Automated accounts payable (AP): Hotel companies can struggle with managing the sheer volume of invoices, payments and vendor relationships. Automated accounts payable uses AI-driven optical character recognition (OCR) tools to continuously learn as it scans invoices, extracts the data, and codes those invoices to the GL. Machine learning tools capture any manual corrections to inform future scans. Automated AP streamlines invoice processing, payment approvals, and reconciliation tasks, reducing errors and accelerating the accounts payable workflow.
AI expense management: AI-powered expense management systems expedite the reimbursement of employee expenses. Employees can use mobile apps to scan expense receipts, and then OCR captures relevant data. The expense report can be automatically generated while initiating approval workflows and reimbursement processes, saving time and effort for both employees and finance teams and ensuring compliance with expense policies and regulations.
Daily PMS reconciliation: Streamline daily PMS reconciliation for hotels with intelligent software. Instead of painstakingly reviewing each hotel’s daily report, discrepancies can automatically be flagged as out-of-balance, immediately alerting the reviewer of new revenue codes so that the issue may be corrected quickly, ensuring that financial records are accurate and up to date.
Auto-predict text: AI’s ability to auto-predict text while typing enables quicker data entry. As users enter information, the AI-powered algorithm predicts text strings. It allows for auto-populating fields with a click, improving over time as the system anticipates the user and drastically reducing the time spent creating new documents and forms.
Workflow automation: Workflow automation offers efficiency gains that reduce errors, increase transparency and reduce bottlenecks—typically by relying on predefined rules and logic to automate processes. Approvals are one area of accounting that can significantly benefit from workflow automation. For example, purchase orders can be streamlined with smart, multi-step approval processes that may require two or more approvals if they are over a certain dollar threshold. These approvals can be automatically escalated if a set time has lapsed.
Overall, utilizing AI in hotel accounting processes offers significant benefits, ranging from improved data accuracy and operational efficiency to enhanced decision-making capabilities and cost savings.
Why isn’t AI in hotel accounting commonplace?
As great as the potential for AI in hospitality accounting, many legacy hotel accounting software systems have limited AI integration capabilities and thus cannot offer many AI options.
Legacy hotel accounting software systems were often designed to handle the core accounting functions of hotels. Compared to more modern solutions, these older systems may be outdated, inflexible and lacking in integration and functionality. Legacy systems can restrict data access and sharing without API (Application Programming Interface) access or other integration capabilities, making it difficult to connect with AI platforms or external applications.
However, modern software, especially hospitality-specific ERP (Enterprise Resource Planning), has the distinct advantage of being tech-forward and accommodating AI, machine learning and rule-based systems. This type of single-system software with many interconnected modules covering the full range of back-office functions works seamlessly with third-party services. ERP platforms are constantly innovating and incorporating leading-edge technologies, offering native AI features on the platform.
Now is the time to embrace modern hotel accounting technology
As technology offers more opportunities to do more with less, hotel companies must decide if they are okay with the status quo or if they want to take the fast route. Leveraging technology to drive efficiency and maintain profit margins is key. Modern ERP platforms and AI tools can help automate tasks, streamline financial processes and offer greater accuracy and deeper insights. By embracing innovation and investing in the right technology, hotel companies can position themselves for greater success.
Charles (Chip) Fritsch is COO/cofounder of Hotel Investor Apps.
This is a contributed piece to Hotel Business, authored by an industry professional. The thoughts expressed are the perspective of the bylined individual.