Today, Park’s portfolio consists of 54 hotels and resorts, boasting over 32,000 rooms, and including such ‘trophy’ properties as the New York Hilton, which spans an entire city block in Midtown Manhattan and the oceanfront Hilton Hawaiian Village in Honolulu. It also owns the Hilton Union Square in San Francisco, the hotel in which the Diginomica team is based this week during Oracle OpenWorld.
Another instant effect of the spin-off was a tough IT challenge for Darren Robb, Park’s senior vice president and chief accounting officer, who also oversees the $2.5 billion company’s IT function. The new company needed new systems - but those systems needed to be up and running within 12 to 24 months, according to a transition agreement signed with Hilton. Management upped the pressure further, by requiring a full finance system to be in place for 1 January 2018. It was, as Robb told Oracle OpenWorld attendees:
“... a ticking timebomb.”
Further complexity was presented by the nature of the REIT business itself. In effect, Park owns the hotel and resorts properties in its portfolio, but relies on the companies that manage those properties (predominantly Hilton) to capture transactional financial data on their own ledgers and feed that data on a monthly basis to Park, where it is then rolled up and consolidated.
A single platform
What Park required, Robb explained, was a single platform for all of its financial data, covering general ledger, accounts payable, fixed assets, procurement and project financials, which also offered enterprise performance management tools for financial close and consolidation and planning and budgeting. It also wanted to use cloud computing to keep its IT footprint to a minimum.
Park worked with consultants from Grant Thornton and settled on a plan of attack that involved implementing Oracle ERP Cloud, Oracle Planning and Budgeting Cloud and Oracle Financial Consolidation, and using Oracle Integration Cloud Service as the ‘secret sauce’ that enables Park to pass data between these apps.
The new solution, Robb explained, eliminates the need for manual journal entries and manual file loading relating to hundreds of thousands of monthly records captured in hotels, in order to accelerate period closes and give Park Hotels the ability to accurately project budgets and forecasts.
When you think about our peers in the REIT business, the evolution of systems for hotel owners has often involved the use of many bolt-on solutions. And you could have anywhere up to a dozen or two dozen different management companies that are managing operations for you, so you would have to collect all that data for each hotel, get it into your accounting system in order to roll it up and consolidate it. And in the old days, they would send you a print-out in the mail, and someone would sit there and key it into the system to create journal entries. We were really looking for something to get that to work better and avoid that whole methodology.”
Part of our strategy as a company is we want to diversify brands and diversify the managers we work with to grow over time, through single property acquisitions and portfolio acquisitions and we’ve been very public about that and the potential for consolidation in our industry. So using this system really allows us to create a repeatable process of rolling up data and consolidating it.
All in the details
By having a high level of transactional detail, Park’s finance staff are able to drill down into records relating to individual hotels, without constantly having to pick up the phone to hotel managers to query the data they’ve submitted. Hundreds of thousands of records are now processed on a monthly basis, within a 2-hour period, said Robb.
With the finance system up and running well in advance of the 1 January deadline, Park now has in place highly automated and standardized processes, according to Robb, which maximize efficiency, reduce risk and errors and free up employees to focus on growth at the newly independent entity. Says Robb:
Having a platform like this has really helped shape our team and figure out how we can be more efficient, both from a human capital perspective and also how we can be more efficient with our dollars.