Why Every Hospitality Board Needs a Finance-Led Digital Transformation Agenda

A hospitality CFO recently shared how their finance team spent the better part of a month trying to untangle service charge records from multiple sites. Turns out, pooling tips across properties (something they’d always done) no longer met the updated tipping rules. Payroll data was incomplete, audit trails were patchy, and suddenly, their sponsor licence was under review. 

That wasn’t a tech failure. It was a systems gap. And it’s becoming a familiar story. 

In 2025, finance teams aren’t just closing books — they’re fielding compliance risks, juggling ESG data requests, and trying to keep pace with reporting standards that keep rewriting the rulebook. From IFRS 18 to Tronc reform to the UK’s new ESG framework, there’s mounting pressure to get things right — and legacy systems just aren’t cutting it. 

This isn’t about “digital transformation” as a buzzword. It’s about whether finance has the tools it needs to keep the business out of trouble and ahead of the curve. More often than not, it’s finance that sees the cracks first — and ends up leading the fix. 

4 Reasons Why Every Hospitality Board Needs a Finance-Led Digital Transformation Agenda 

1. Compliance Is No Longer a Year-End Activity

There was a time when financial reporting in hospitality followed a familiar rhythm: crunch the numbers, close the year, prep for audit, repeat. 

That rhythm is breaking. 

What’s Changing? 

Enter IFRS 18, coming into effect for annual periods beginning January 2027. 

This isn’t a small standards tweak. It fundamentally redefines how financial performance is presented. Among the key changes: 

• New categories and subtotals in the income statement 
• Greater scrutiny on how income and expenses are grouped, labelled, and disclosed 
• A requirement to report and explain management-defined performance measures (MPMs) — numbers you’re already using internally, now open to external audit and interpretation 

And here’s the kicker: restated comparatives will be required from 2026. That’s next year. Meaning systems and structures need to change now — not in 2027. 

So what does this actually mean in hospitality? 

If you’re running a multi-site group with a mix of rooms, F&B, events, wellness, maybe even co-working or retail concessions, then chances are your income is bundled across cost centres. 

Excel can separate those lines — but it can’t tag, track, and report them consistently across entities, especially if you’re rolling up data from five PMS platforms and a cloud-based booking engine. 

And when you’re asked to define and disclose your own performance measures, like “adjusted GOP” or “EBITDAR excluding lease incentives,” you’ll need systems that do more than just total up the numbers. You’ll need audit-ready logic and data lineage behind every subtotal. 

2. Payroll Reform Is Turning Finance Into a Risk Hub

Payroll used to be seen as a back-office function. Quiet. Necessary. Mostly invisible to the boardroom. 

That’s changed. 

In 2025, it’s one of the most legally sensitive, publicly exposed, and regulator-watched parts of the finance function. And hospitality — with its layered staffing models and multi-site complexity — is right in the firing line. 

What’s Changing? 

• Tronc reform (October 2024) now requires that all service charges and tips — whether discretionary or contractual — be distributed fairly, including to agency workers 
• Tips must be tracked by site, not pooled across locations 
• New requirements are governed by Employment Tribunals and enforced by HMRC 

And that’s just one front. 

• Payrolling of benefits (postponed until 2027) means BIKs like accommodation, meals, travel, and loans must be reported in real-time — not just reconciled at year-end 
• This will impact how benefits are communicated, valued, and even factored into cost planning 

What Makes This Risky? 

Let’s say you operate ten hotels across the UK. Each site uses a slightly different rota system. Some use agency staff, others don’t. One property manually tracks Tronc. Another relies on the GM’s Excel sheet from 2022. 

Now imagine an HMRC review lands — triggered by a worker’s underpayment complaint. Or worse, an error flags up during your sponsor licence renewal. 

If records are incomplete, if Tronc allocations can’t be traced, or if benefits in kind haven’t been properly valued, you’re not just dealing with an adjustment.
You’re dealing with reputational risk.
With tribunal risk.
With licensing risk. 

And guess where that lands? Right on finance’s lap. 

Operational Complexity 

• Many hospitality businesses operate with layered teams: salaried managers, hourly workers, casuals, and agency staff — all paid differently 
• Tip distribution policies often lack system-level enforcement — and may not even be understood by payroll vendors 
• Multi-site operations make it harder to ensure consistency — and Tronc governance often breaks down without clear audit trails 
• New policies prohibit tip-sharing across sites — but systems haven’t caught up 

What the Board Needs to Know 

Payroll is no longer “just payroll.” It’s where finance, employment law, immigration compliance, and public perception converge. 

Some key questions the board should be asking: 

• Can we produce an audit trail for Tronc payments across all locations? 
• Are our benefit-in-kind values traceable and up to date? 
• Would our current records survive an HMRC challenge or tribunal dispute? 

This isn’t about software alone. It’s about whether finance has the visibility, control, and agility to manage risk at scale — across every shift, site, and worker type. 

3. ESG Reporting Is Coming — and Finance Has to Own It

Not long ago, ESG was something hospitality businesses highlighted in CSR reports and brand decks. Nice to have. Good optics. Mostly qualitative. 

That’s no longer the case. 

What’s Changing? 

The UK Sustainability Disclosure Framework, expected in Q3 2025, will bring ESG reporting in line with ISSB global standards. This includes: 

• Scope 1–3 emissions (direct, indirect, and value chain carbon data) 
• Workforce metrics like gender pay, staff turnover, and wellbeing 
• Governance disclosures — board structures, ethics policies, DEI initiatives 

And this time, the data isn’t optional.
It needs to be consistent, auditable, and financial-statement-grade. 

Why It Falls to Finance 

Hospitality CFOs may not be responsible for how much energy each hotel uses.
But they will be asked to present, reconcile, and stand behind that data at board level. 

Why? 

• Because ESG data is showing up in investor term sheets and bank covenants 
• Because regulators are now treating ESG metrics like financial disclosures 
• And because no one else in the business has the same reporting muscle memory finance does 

Where It Gets Complicated 

Here’s where many hospitality groups are hitting a wall: 

• ESG data is scattered — some sits in ops, some in HR, some with property managers 
• There’s no common standard — one site logs energy by kWh, another by spend 
• Systems weren’t designed to connect financial and sustainability data — yet now, both must sit side-by-side in the same board pack 

Let’s say your brand reports a 20% reduction in energy use — but energy spend went up due to rate hikes. Finance needs to be able to explain that. Reconcile it. Tell the full story. 

That’s not just a narrative issue. It’s a systems issue. 

What the Board Needs to Consider 

• Can our current reporting platform handle non-financial disclosures at scale? 
• Is there a clear owner for ESG data — or does it fall between teams? 
• Do our ESG metrics link back to our financial outcomes — or live in silos? 
• Are we confident we could defend these numbers in an investor Q&A? 

Because make no mistake — someone’s going to ask. And more than ever, that someone might be a regulator, a lender, or an investor. 

Still relying on old-school cost-cutting to protect margins? It might be doing more harm than good. Discover why traditional tactics are falling short — and what hospitality finance leaders are rethinking instead. 

4. Tax Strategy Is Now a Systems Challenge

Once upon a time, tax sat at the edge of strategy — a year-end review, an occasional consultation, something for the specialists to handle. 

That’s not how it works anymore. 

Today, tax is showing up in investment decisions, lease negotiations, and ESG planning sessions. And more often than not, the challenge isn’t the rules — it’s the systems behind the numbers. 

What’s Changing? 

Several overlapping reforms are turning tax into a real-time operational concern: 

• Pillar 2 global minimum tax rules are now live — registration deadline: 30 June 2025
  → Large groups must report jurisdiction-level effective tax rates and reallocate profits 
• Transfer pricing consultations are exploring the removal of exemptions for UK-to-UK transactions
  → Even domestic intercompany flows could require justification 
• Super deduction clawbacks apply if businesses exit qualifying assets (e.g., leased sites) too early
  → These need to be tracked by asset, by contract, by timing 

And unlike in the past, this isn’t just about calculations — it’s about how well systems record, trace, and surface these risks proactively. 

Example Scenario 

Let’s say a hospitality group received tax relief on fit-out works for a city centre property back in 2021 — under the now-closed super deduction scheme. 

In 2025, they decide to exit the site early due to rent escalations. But no one flagged the clawback risk. Why?
Because the asset schedule was managed in a spreadsheet, disconnected from tax tracking systems.
Result: unexpected cost, accounting adjustments, and some tense conversations with auditors — and the board. 

It’s not a technical tax error. It’s a systems visibility failure. 

What the Board Needs to Know 

• Are asset-level tax benefits being tracked — and regularly reviewed? 
• Can finance identify and flag when those benefits are at risk of clawback? 
• Do we have intercompany transactions documented in a way that would withstand new transfer pricing scrutiny? 
• Are we modelling the impact of Pillar 2 compliance across our legal entities — including overseas ones? 

If the answer to any of those is “we think so,” that’s a problem. Especially when decisions like site closures, restructuring, or investment timing could trigger real exposure. 

Why It’s a Systems Problem 

• Tax risks don’t appear in isolation — they’re often buried in leases, contracts, and asset ledgers 
• Tracking them requires integration across finance, tax, and legal 
• And reacting to them requires systems that flag thresholds, dates, and dependencies in real time 

The finance tech stack of five years ago — built for transactional efficiency, not predictive visibility — simply wasn’t designed for this. 

What’s the Bottom Line?  

Let’s be honest — most finance systems in hospitality were built for yesterday’s problems. 

But the pressure coming at finance today? It’s faster, messier, and not waiting for year-end. Between new reporting rules, payroll risks, and ESG showing up in board packs, the cracks are already showing. 

The smart move? Stop treating finance systems like admin tools. Start thinking of them as the backbone of how the business responds to change. 

Because in this environment, “good enough for now” won’t be good enough for long. 

Originally published Jun 24, 2025 11:06:00, updated Jun 25 2025

Topics: Finance & Accounting, Hospitality Accounting