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UK hotels lag behind other industries on protecting against fraud

By Peter Ruddick , 16-Jan-2012

Related topics: Business, Trends & Reports, Hotels

The UK hotel sector needs to do more to protect itself against fraud which could cost the industry over £2bn a year, according to a new report published today by the accountancy firm PKF and the University of Portsmouth.

The UK hotel sector could find fraud costing the industry over £2bn a year unless they protect themselves better, say PKF and University of Portsmouth

The UK hotel sector could find fraud costing the industry over £2bn a year unless they protect themselves better, say PKF and University of Portsmouth

‘The Resilience to Fraud of the UK Hotel Sector’ survey questioned 26 hotel companies with a collective turnover of £800m to find out how well the industry protects itself from fraud and to highlight areas for improvement.

The survey responses generated an average score on a 50 point scale for the industry of 25.4 points when it comes to fraud resilience, which compared with 30.6 points for the private sector as a whole.

This score combined with a separate study by the same authors led PKF and University of Portsmouth to claim that unless steps are taken by the industry fraud could cost UK hotels over £2bn a year.

Reducing losses vital in economic downturn

The authors of the report argue that tackling fraud is vital with the current poor economic climate. Stuart Collins, national hotels partner at PKF said: "Reducing fraud losses is one of the least painful methods for hotels to minimise business expenditure in the current economic environment because fraud costs - unlike expenses relating to staffing, property and utilities - are unnecessary and unproductive."

"Moreover, as fraud costs have not historically been given a particularly high priority by management, there is significant scope for losses to be reduced in the sector as a whole. Given the challenging business environment, with the possibility of a double dip recession, hoteliers are advised to review and strengthen their protection against fraud."

Majority of hotels don't calculate cost of fraud

Whilst 88 per cent of respondents said they had a zero tolerance approach to fraud, just 27 per cent calculated the cost of fraud or used losses to make decisions on how much to invest in counter fraud activities.

The report says urgent progress is needed in this area and to raise the number of hotels who review their counter fraud work or re-train counter fraud staff if losses of 5.7 per cent of expenditure are not to continue.

However, Jim Gee, chair of the Centre of Counter Fraud Studies at the University of Portsmouth said the news from the report was not all bad: “The good news is that these losses can be reduced. Research shows that fraud can be cut by up to 40 per cent within 12 months. Hoteliers need to be proactive in their approach to tackling fraud - responding and reacting to individual incidents is not enough. To successfully minimise fraud, organisations need to take steps to change human behaviour and to remove opportunities for fraudsters."

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