When hotel and hospitality operators think about loss prevention, they may initially focus on only preventing physical theft: finding ways to minimize and stop employees from stealing actual objects, (guest belongings, hotel materials, food and beverage, etc.).
In reality, however, the most damaging hotel theft may actually be occurring right where customer service and operations first meet – the front desk.
That’s why it’s critical for operators throughout the hospitality industry to not only keep a close eye on fraud on a regular basis, but to also to identify and act against fraud before it occurs. That may require advanced surveillance, analytics, and reporting to effectively alert operators to fraud in real-time.
5 Ways Fraud Is Eating Away At Your Bottom Line
According to industry statistics, hotels lose an estimated 5% to 6% of annual revenue from employee and guest fraud, and transactional fraud on the part of employees plays a large role in driving that continued loss.
While no two instances of employee-driven fraud are exactly the same, many rely on the same or similar methods to achieve their goals without immediately raising suspicions:
1. Unverified Upgrades
For many hotels, the ability for a front desk operator to offer on-the-spot upgrades or room changes for guests during or after initial check-ins can be a major tool to provide excellent customer service. But aside from allowing hotels to respond seamlessly to customer complaints or requests, it can also be a potent vector for employee fraud.
By offering a guest an unauthorized upgrade – perhaps a friend or family member of the front desk worker, or a quid-pro-quo for unreported tips – front desk employees may be able to slip in an upgrade that may not be accounted for. Without a robust surveillance and analytics system, it may be impossible for operators to detect – or, more importantly, prove – that this type of fraud is occurring.
2. Manual Rate Changes
Much like unverified upgrades, manual rate changes can occur almost unnoticed by the operator while offering steep discounts to guests at an employee’s discretion. Often perpetrated during peak occupancy when changes are least likely to be manually identified, this method of fraud can be an easy way to cut from the bottom line without immediately appearing out of place.
Again, because this ability can often be used as a method of providing good customer service in times when a legitimate rate change is needed, most operators cannot simply remove this ability from the front desk. As such, a thorough and real-time surveillance system may be needed to identify which instances are legitimate and which are unauthorized.
3. Abuse of Comps or Due Backs
Like any other service industry or hospitality operation, a hotel often sees much of its customer-facing cash flow come in and out through the POS. That means it’s imperative to keep a close watch on when money is coming in and out – and how often that cash flow matches up with products and services delivered.
Due backs and comps are a critical part of normal hotel operations – the former, often used to reconcile the cashier bank at the end of the day (often when many large bills are received), and the latter used quite often to provide a high-level of experiential customer service. However, without a reliable POS surveillance system built specifically for hotels, it can be difficult for operators to identify fraud events and long-term trends before damage is done to overall revenue.
4. Substandard Employee Productivity
Monitoring employee actions throughout a hotel or hospitality property is often standard operating procedure, especially when it comes to protecting against physical theft of guest property or hotel materials. However, a more insidious form of employee theft – time waste – can also do damage to your bottom line.
That’s why many operators have begun to implement more robust tracking and analytics to supplement standard employee monitoring, helping to identify trends of low-productivity on a long-term basis. These systems can provide an in-depth analysis – as well as a source of truth for further disciplinary action – to help stop low-productivity while minimizing those less-tangible sources of loss.
5. Point Abuse for Hotel Affiliates
One of the most useful tools for driving repeat business available to a hotel or hospitality operation is rewards points. Typically, a customer can earn points with each expenditure, and then use those points at a later date as a form of payment for services, perks, and other expenses.
However, this points system is also an easy vector for employee fraud. Employees may have discretion to award points as a way to address customer complaints, or may be able to offer perfectly legitimate bonuses during special sales or peak periods. At the same time, employees may also be able to offer unauthorized point bonuses to select customers as a method of fraud, often without immediately raising suspicions form operators. Without an smart, real-time method of analyzing these instances, point systems can be quickly transformed into an avenue for abuse.
Stop Hotel Employee Fraud with Surveillance & Analytics
When it comes to keeping your bottom line secure from the damage done by employee fraud, few tools can make as much of an immediate difference as robust and real-time reporting.
That’s why our HotelConnect solution is designed specifically to give hotel operators real-time transactional data at front desks and hotel kiosks, allowing operators to identify and act on fraudulent instances or patterns with accuracy and efficiency.
By closely monitoring employee actions to identify suspicious activity as it happens, HotelConnect gives operators access to a fully-customizable reporting dashboard, which lays out everything from revenue reports to employee productivity and actions. This offers a single source of evidence for later actions to discourage and stop employee fraud throughout your hotel, saving you time and money while minimizing employee fraud.
Don’t let your hotel suffer from the negative effects of employee fraud. Arm your loss prevention with real-time reporting and get ahead of fraud – before it does damage to your revenue.