Thursday, 03 December 2020 00:00

Running a Global Hospitality Business in a Pandemic

PANDEMIC-BUSINESS

The Inside the Mind of the CEO interview series explores a wide range of critical decisions faced by chief executives around the world. For more insight, see PwC’s CEO Survey.

Minor International is a hospitality industry powerhouse. Based in Bangkok, Minor operates more than 530 hotels in 56 countries, with a large presence in Asia (where it operates chains across the region, including the Anantara luxury hotel brand), Europe (where it runs the NH chain of hotels), and Africa. The company also owns brands in the well-being and lifestyle sectors and runs 2,300 restaurants.

Founded in 1967 by American William Heinecke, who was then 17 years old (hence the name Minor), the company began as an advertising and cleaning business. A decade later, Minor began its journey into hospitality, opening a resort on the coast southeast of Bangkok, in Pattaya, that today is part of Minor’s Avani chain.

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The trade-off between cost reduction and increased effectiveness of the finance function is a false choice. Leading finance departments are guardians of enterprise value creation, demonstrating stewardship of their own spend by lowering absolute costs and shifting work towards more value-added activities.

We have analyzed the finance functions of hundreds of companies to understand how cost and effectiveness have evolved over the past ten years. After controlling for differences in sector, scale, and geographic footprint, several findings emerged:

  • Finance organizations have, on average, decreased their cost by 29 percent.
  • The most efficient cohort of finance departments (“finance leaders”) achieved similar cost improvement to the level shown by average performers—an impressive feat given that the finance leaders started from a lower cost base.
  • Finance leaders spent 19 percent more time on value-added (versus transaction-processing) activities than a typical finance department did.

What can companies do differently to join the finance leaders? The research points toward four imperatives. The first is to cast a wider net for new efficiency opportunities, reaching beyond the transactional activities that have long been the primary focus of attention. Second, boost finance’s role in managing data, whether consolidating, simplifying, or controlling the flood of information flowing across the organization. Third, strengthen decision-making through widespread adoption of data-visualization, advanced-analytics, and debiasing techniques. Finally, reimagine the finance operating model so that it fosters new skills and capabilities.

These steps are already enabling companies to join the finance-function elite—while cutting audit costs by double-digit percentages, improving data quality (and reducing wasteful data-cleaning efforts), upskilling finance teams, and enabling the function to guide better decisions throughout the enterprise.

 

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