Growth of Hospitality Sector in UAE

The UAE hospitality market is expected to reach $7.6 billion by 2022 at a five-year CAGR of 8.5 per cent (2017-2022) and international tourist visits are expected to grow at a five-year CAGR of 4.3 per cent to 25.5 million whereas the hotel supply is expected to grow at a five-year CAGR of 6 per cent to 183,718 hotel rooms, shows Alpen Capital’s latest report on GCC Hospitality Industry 2018.

“We are in an era of a shared economy. The change will require a new strategic approach, one which can enable hotels to understand market trends and build the internal capabilities required to succeed in a new landscape. The more the products and services are tailored to offer local experiences and value for money, the better conversion can be expected. There is a strong need to build on experiential travel and hospitality today.”

The average daily rate is expected to grow at a five-year compound annual growth rate (CAGR) of 1.3 per cent to $149 until 2022, whereas revenue per available room is expected to grow at a five-year CAGR of 2.1 per cent to $116 by 2022.

Dubai is expected to witness 20 million international tourist arrivals by 2020 and its hotel supply is expected to reach 132,000 by 2019, which also includes the mid-market hotel segment which targets budget travellers.

GCC hospitality is expected to witness increased market penetration by the mid-market hotel segment through 2022. In addition, the industry is expected to also see increased adoption of Airbnb-type renting models. Regional players such as Emaar Hospitality, Rotana, CityMax Hotels and Habtoor Hotels are building room inventories and increasing their construction pipelines at a substantial rate.

“The GCC hospitality industry, which has been under pressure in recent years is expected to gain positive momentum on account of the recovery in oil prices, upcoming mega events, increased tourist inflow, positive regulatory initiatives and increased government spending/investments towards the hospitality and tourism sector. GCC countries have well-defined strategies to develop themselves as preferred travel destinations. They are making significant investments into the development of tourism and hospitality infrastructure, including airport expansions to increase the handling capacity of anticipated visitor inflow,” said Sameena Ahmad, managing director at Alpen Capital.

The GCC hospitality market is expected to grow at a 7.2 per cent CAGR from an estimated $22.9 billion in 2017 to $32.5 billion in 2022. Upcoming mega events and government initiatives to boost tourism are the primary drivers behind this growth. Growth in hospitality sector revenue of individual GCC countries is expected to range from 6 per cent to 12 per cent. The UAE is expected to witness high revenue growth on account of significant investment activities in the tourism and hospitality sector for the upcoming Expo 2020 Dubai.

Growth of Health Care Sector in UAE

The UAE’s healthcare industry has continued to evolve over the past few years, and today offers a range of new specialised services and treatments for residents, experts at Arab Health 2018 noted.

Healthcare is one of the fastest-growing sectors in the world and is a key contributor to the UAE economy. Alpen Capital Consulting Services said that the UAE’s healthcare market is expected to reach Dh71.5 billion in 2020 at an average annual growth rate of 12.7 per cent from 2015. The UAE is also world’s fastest growing medical tourism hub, with total health expenditure allocation jumping from the current $23 billion to $28 billion by 2021.

Importance of Audit & Accounting in Hospitality & Hospital Sector

Where money and resources were being thrown out it all directions without knowing how much was spent, how much was left, or even where it went to. This wouldn’t be very sustainable, not to mention comfortable.

Now imagine if this was in a hotel environment; how could you even accommodate guests? Hotel staff wouldn’t get their salaries, guests wouldn’t get what they paid for, no improvements would take place, and money would just disappear. That doesn’t sound too good, does it?

This is where proper hotel management accounting comes in. But before we delve into what accounting can do for hotel management, let us first understand what hotel accountants do.

Key responsibilities include:

  • Producing an accurate set of month-end accounts
  • Comparing profit to previous periods and forecasts
  • Preparing budgets and business planning
  • Financial statement and balance sheet production
  • Cash flow statements
  • Payroll control

Now that was very technical and you probably aren’t sure how this applies to your business. Allow me to lighten it up for you; with proper accounting, in and out cash flows are easy to keep track of. Recording transactions make sure that you know exactly how much was spent or received and where it went to. Resources would be properly allocated to each division without budget shortage and it would be easier to know how to improve your business.

As far as hotel industry is concerned, management accounting plays the primary role in the context of F&B segment. It also plays its role where each department is supposed to sustain on its own. Some of its importance are listed as under:

Now that was very technical and you probably aren’t sure how this applies to your business. Allow me to lighten it up for you; with proper accounting, in and out cash flows are easy to keep track of. Recording transactions make sure that you know exactly how much was spent or received and where it went to. Resources would be properly allocated to each division without budget shortage and it would be easier to know how to improve your business.

  1. To determine whether its profitable to operate any particular segment of the industry or not. (relevant costing)
  2. To confirm and measure the actual outcome against the budgeted ones. This will help to analyse where and where we need to bring a change. (Budetary management technique combined with standard costing)
  3. Pricing of goods and services. (Pricing)
  4. Paretos can also be used to find the areas of improvement in hotels. (Pareto Analysis)
  5. To determine the right order dates for inventory. (EOQ, inventory management including perpetual and periodic measurement system)
  6. Expansion planning in terms of increasing any food outlet or to add any service like spa or private pools. (Relevant costing again)

You can even use ABC costing if you have occupancy details coupled with supplier management and a proper inventory system.

Healthcare Auditing: Money Management

The only way to manage money properly within an organization is auditing. Adhering to policies of the organization and regulations of the government will be enhances through the auditing process, in healthcare industry they review the cases and the process of which the patients follow to get opportunities for turning the weakness areas in the process to a strength. Also, there are many types of healthcare auditing services, so make sure to ask your CPA about the same.

However, healthcare auditors are not taking responsibility for managing or executing the organization activities, but they advise how to execute these activities in a more efficient way. There are different types for reviewing the entity.

Managing Money:

Monitoring cash activities ensures the type of systems that hospitals use for medications to control them better, and discover ways to use the unused medications or return them for credit. In addition to monitoring the cash flow through cafeteria or vending machines.

Medicine Audit:

The reason for watching the medicine activities through selling or purchasing is to evaluate the distribution of drugs, control of inventory, and pharmacy operations.

The Benefits of Healthcare Cases Reviewing:

Payments Control:

Through the auditing operation there are many things will be discovered to be upgraded. There will be payments and remittances are paid with no reason, and auditing will recover these activities, prevent them, and decrease improper payments.

Submissions of Claims:

Ensuring the proper actions to apply a claim is very significant to take the required data that caused it and by doing so, the health provider will get the results to update the uncovered areas that may save some costs for the organization. This can be achieved by doing healthcare audits on regular basis.

Patient Care:

This may be the most salient point of why healthcare audit is very important. Enhancing the patient treatment and upgrade the care for patients are results of auditing. Costs will be fewer on the patient and the quality of treatment will increase, while increasing the profits for the healthcare providers will be noticeable.

Staff Involvement:

Auditing will let the health entities learn to gather errors from their activities and operations. However, the greatest source of reporting errors will be from employees and the staff of the hospital. So, auditing will tend to send a message to the staff that they must report errors while they are working on any claim.

To sum up, healthcare auditing claims and hospital operation will help they managers to know which areas are prone to errors and in a result, they will recover them and achieve the wanted goals and results. Also, saving costs will be higher than before because of finding out the errors which cause an increase of the costs.

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