Xero vs. Sage for Hotel industry: Choosing the Ideal Cloud-Based Accounting Software

17 November

Jordan Reader

The key to managing a successful hotel and indeed any business is the hospitality industry, lies in tightly managing cost control.  By keeping a close eye on this aspect and other important elements of their financial practices, hotels are able to stand a chance of keeping up with the competition.  In today’s ever evolving business world, competition is fierce, but fortunately cloud-based accounting software has emerged as a pivotal asset that paves the way for hotels to transform the way they manage their finances.  Xero and Sage have established themselves as leading providers of cloud-based accounting software and hotels can look to them when they are seeking their ideal financial solution.  Their software offers hotels not only convenience and efficiency, but scalability too, which is crucial within the hospitality industry operating in today’s digital age.

Understanding Cloud-Based Accounting Software

Cloud-based accounting software has risen to prominence in recent years and for those companies that have acted swiftly and made the transition, it has proved itself an invaluable tool.  Businesses are receptive to moving away from expensive hardware and replacing it with software that can be accessed remotely via the cloud from anywhere with an internet connection.  They also love it for its flexibility, efficiency, convenience and the real-time collaboration it creates between team members.  Naturally, the ease of scalability is also attractive and business owners take comfort knowing they can adapt to the evolving needs of their growing business when the time comes.

In the context of the hotel sector, cloud solutions bring about a revolutionary approach to financial management.  Hotels deal with intricate financial operations, ranging from managing room bookings and reservations, hosting events, restaurant sales, to vendor relationships and this powerful software consolidates this financial data into meaningful information for them.  Furthermore, hotels are often part of a group and located at different sites with different departments inside.  Cloud-based software provides hoteliers with a holistic view of their finances, so they can assess their overall group performance.  Additionally, it automates numerous accounting tasks and streamlines processes, saving them time and money, and providing data for informed decision making.  For hoteliers, this may be decisions relating to seasonal room rates adjustments, staff scheduling or cost controls for example.  

Xero: Tailored for Hotels

Xero offers a comprehensive suite of features and functionalities perfectly tailored to address the unique challenges that hotels encounter in their financial management.  Their website has a section dedicated to the hospitality industry and outlines how Xero specifically supports business such as hotels. 

Hospitality & Restaurant Accounting Software | Xero UK

Xero has a robust platform that excels in streamlining financial operations by providing tools for efficient invoicing, expense tracking, payroll management and inventory control.  Xero is widely renowned for its user-friendly and intuitive interface, which will appeal to hoteliers who are likely to be non-accounting experts and possess a stronger desire to spend their time on the ground, with their customers driving their business forward. 

Monthly price plans start at £15 and vary according to the level of the hotel’s accounting requirements.  Xero also helps hotels tightly manage their all important cost controls.  Xero’s accounting dashboard and analytics monitor the hotel’s finances, giving them cash flow projections and business snapshots all in one place.  They help them stay on top of their bills; keeping an eye on when they are due and making sure they are paid on time.  Batch payments can also be set up and payments scheduled in advance.   Xero payroll software is also appreciated by hoteliers, as it facilitates paying employees with HMRC-recognised payroll software, meaning tax, pay, leave and pension calculations are automatically factored in.  With it, employees too can view payslips, request leave, submit timesheets and auto enrol in the pension scheme online.  This makes it a slick process for employees and employers alike, and saves time for everyone too! 

To compliment Xero’s offering further, they offer the ability for hoteliers to integrate with over 1000 third-party apps.  Many of these are tailored to the needs of the hospitality industry and Xero recommends Square, Planday and Hubdoc as the most popular apps amongst hoteliers.  Xero’s seamless integration with other hotel-specific software solutions further enhances its reputation as an ideal cloud-based accounting provider and sets it as an invaluable asset for hotels seeking to improve their efficiency and profitability levels within the challenging hospitality sector.

One example is a hotel chain that operates under a franchise operation. Within this business they post central costs across the whole business directly into Xero and then there is an integration into the franchisee businesses that supply operational data, which then feeds into Xero on a hotel by hotel basis – tracked by tracking categories.

This will then feed into a reporting application allowing the hotel chain to run complete and then detailed report on the franchised branches and the business as a whole.

This allows the hotel to see the Real Time Information across the whole group.

Sage: Optimising Hotel Accounting

Sage is an equal contender when it comes to being rated as an ideal cloud-based accounting software provider.  Sage recognises the fast-moving pace of the hospitality industry and the need to have a financial solution that can rise to the tough challenge of tracking all of the costs coming in and out at speed.  Sage’s primary intention is to make finances easy for hoteliers, so that they can focus on delighting their customers.  Sage offers a comprehensive range of features and functionalities that are tailored to address the specific challenges faced by hotels. Its strength lies in its ability to efficiently handle multiple revenue streams, diverse billing structures, and intricate financial workflows commonly found in the hotel sector.  They boast that with Sage intacct customers can impressively save 40 hours per month on invoicing processes, recover £10,000 per billable employee and even improve productivity by up to 65%!  To find out the monthly cost to your business, you have to request pricing online.  

Sage automates back office processes and provides information in real-time ready for informed decision making too.   It has a sophisticated multidimensional database that lets you operate in multiple entities and currencies across different locations.  Sage know that the hospitality industry can be turbulent and describe their solutions as being able to cope with challenging environments and help customers prepare for recovery and growth.  Their financial reporting capabilities include customisable reports, dashboards and visuals that give hoteliers the agility and flexibility to fluently provide key stakeholders with financial information and support them in their decision making. 

Similarly to Xero, Sage’s software also includes functionality to help manage inventory levels, invoices, cash-flow, HMRC requirements, payroll and bank reconciliations.   Rather than working with an extensive app store, Sage prefers to create rounded packages and then give customers the options of add-ons for additional fees.  

Software for Hospitality Accounting – Sage Intacct | Sage UK

Incorporate testimonials from hotels that have benefited from Sage.

Conduct a side-by-side comparison of Xero and Sage.

It is clear that Xero and Sage are both formidable players in the realm of accounting software, each offering a range of features and benefits, but they differ in several key aspects.

In terms of pricing, Xero often comes across as more budget-friendly, particularly for small to medium-sized businesses, with transparent and competitive pricing plans. Sage, on the other hand, tends to have a more variable pricing structure, which can make it a bit more complex to budget for.  The visibility of Sage’s pricing plans is not as clear as Xero’s, as you are required to complete an online pricing request form to ascertain the information.

Scalability is a crucial factor for businesses, and both Xero and Sage are scalable solutions. However, Xero is often considered very agile and easy to scale, making it suitable for both small startups and larger enterprises. Sage, while also scalable, again does not have the same level of visibility in this regard.  With Xero there are clear pricing plans to view and a wealth of apps within the Xero App Store, but Sage you would need to look closely at the details behind the add-ons.

Ease of use is subjective, but Xero is certainly famous for its user-friendly and intuitive interface, especially for those who are new to accounting software.

Ultimately, the choice between Xero and Sage depends on the specific needs and preferences of the hotel. Xero may be the preferred option for smaller hotels looking for an easy-to-use, cost-effective solution with robust integration capabilities and excellent customer support. On the other hand, Sage may appeal to larger hotel chains willing to invest in a more complex system that can be customised to meet their specific financial management requirements; particularly is they operate on a global scale.

Hotel-Specific Considerations

The hotel industry needs to consider a distinct set of hotel-specific considerations when selecting the ideal cloud-based accounting software. As already stated, one of the primary concerns is revenue management, as hotels deal with fluctuating occupancy rates, seasonal demand variations, and multiple revenue streams such as room bookings, dining, and event hosting.   They require effective accounting software that can accommodate pricing strategies, real-time revenue tracking, and forecast revenue trends accurately.  As the hotel manages various expenses, they need software that helps them maintain tight control over cost tracking for areas such as labour, supplies, maintenance, and marketing.  This in turn will aid them in identifying cost-saving opportunities.  Then, all captured information needs to be amalgamated into meaningful and easy-to-interpret information, so robust reporting tools are vital.  Lastly, the hospitality industry has industry specific regulations and tax requirements that must be met, so it is imperative hotels choose accounting software compliant with these.

Integration and Ecosystem

Both Xero an Sage offer a wide array of third-party integrations and add-ons that can significantly enhance a hotel’s operations.  Xero has a separate website dedicated to displaying its extensive ecosystem of integration with over 1000 applications available.  Whereas, Sage has a variety of add-ons available.  Both offer integrations with property management systems (PMS), online booking platforms, and point-of-sale (POS) systems and customer relationship management (CRM) systems.  This interconnectedness ensures that financial data from different aspects of the hotel’s operations can be seamlessly integrated into the accounting system and a clear, rounded picture of the hotel’s financial health can be easily ascertained.  

This links very well into some of our hotel clients, specifically non franchised hotel companies. It works in a very similar way to the franchised branches, however the PMS system and booking system, feed directly into the accounting system and are the same across the board, so all the data can be easily consolidated.

All of the data is held and controlled centrally rather than a hotel by hotel basis, so all of the applications are the same tech stack throughout.

Support and Training

Xero offers particularly supportive and in-depth training for new users. They provide ‘getting started’ tutorials foe new users to access alongside the intuitive system.  This is supplemented with a fully equipped library of tutorials and guides that cover a range of topics and enable you to pick and choose the areas you would like training on.   To add to this, Xero experts regularly host webinars, which provide more in-depth insights into aspects of the accounting platform.  As further support, users can access an extensive array of articles, learning courses and materials, and online support.   Plus they have Xero Central which is Xero’s help centre and accessible online.  It is a self-help for you to search for the information that you need.  Finally, there is also access to the Xero community of peers and Xero experts, where you can draw on their knowledge for answers to questions and Xero support which is available 24/7 for you to raise a case for support. 

With Sage you can discover your support options by filtering on their website according to the software package that you subscribe to.  Typically, you can access the Sage community, access their Knowledgebase to view support articles, software updates and the help centre, explore Sage University for training guides, connect with Dage on social media, identify training events or phone their help centre.   

Conclusion In the choice between Xero and Sage for the hotel industry, there isn’t a one-size-fits-all answer. Both platforms offer valuable features and capabilities, but the decision should hinge on the unique financial requirements and growth aspirations of your hotel. If simplicity, cost-effectiveness, and ease of integration are paramount, Xero may be the optimal choice. Conversely, if high level customization, scalability, and the ability to handle complex financial processes are your top priorities, Sage might better align with your needs. Ultimately, it’s crucial to carefully evaluate your hotel’s specific financial demands and operational goals to determine which accounting software will best empower you to efficiently manage your finances and thrive in the competitive hospitality sector.

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