Terrorist Attack on Taj & Trident

Before I give account of the topic I have selected today, I would like to brief you on 'where I am coming from'. I am among the fortunate ones who have done Internal Audit of five star hotels like Taj & JW Marriott in Mumbai and have spent a considerable time of my career doing these Internal Audits. My first Internal Auditing lesson had come from doing Internal Auditing at Taj. My Internal Auditing style resembles my work at these five star hotels i.e. systems audit. When I say Systems Audit, I do not mean IT systems audit but Business Systems Audit. All who have done Taj Internal Audit before TPAM audit started there will understand what I am saying.

Now, I would like to share a specific Internal Control which I think has never been paid attention to, which I think is not only important from Revenue Assurance point of view but also from security point of view.

Like every business, inventory of these hospitality giants are also required to be reconciled and physically verified. There are two kinds of perishable inventory which a hospitality unit like Taj might carry. One is connected to their F&B business and other is connected to their Room Revenue business. We will talk about their Room Revenue Business Inventory called Room Nights. Inventory made of Time & Space which is sold to its Guests.

How do you physically verify such an inventory which is made up of Time & Space? Historical records will not serve the purpose as one cannot go back in time to do a physical verification once you have moved ahead in time. I am sorry; but we have still not invented something called Time Machine.

Thus, concurrent physical stock taking is the only solution available. Now-a-days most of the hotels have software to manage its room inventory. One can tell if a room is occupied or not. Front Office keeps track of room folios opened with a formal check-in and check-out procedures. Most often than not housekeeping department in the hotel perform a check to physically verify status of the room once or twice a day. They update system with room status independently verified by them.

When we have two sets of inventory data, we reconcile them and if there are discrepancies or variances, we would go and find out cause for the discrepancies. If room is occupied as per Front Desk record but vacant as per housekeeping than we have a situation called 'Skipper' and when room is vacant as per front office desk but occupied as per housekeeping it's called 'Sleeper'.

Both the cases involve a possible leakage of revenue for the hospitality unit. Along with this room status control, a few hotels also resort to something called baggage control. No. of patrons staying in a room etc to make this control complete. Most often than not, I have found serious lacuna in the said control. Inspite of reporting it several times to various hotel unit managements, this control has never been taken seriously by any one and always has ranked as a low risk area.

It's important that the managements of these hotels understand risk of having inventory that is made up of Space & Time and its possible abuse by any unscrupulous person.

Housekeeping department although independent from the front desk personnel to verify the room stock is not properly trained to verify the physical status of the room when they visit a room for cleaning or otherwise. Second issue is that, the housekeeping department in most of the hotels submits this room status discrepancy report only to Front Office Manager instead of Security Manager or Loss Prevention Manager along with Front Office Manager. Moreover, the luggage brought by the guests are also not tracked and controlled to ensure an effective status control activity. Currently, the control is too mechanical and that too is adhered to half heartedly and does not ensure a subsequent procedure to ensure no leakage of revenue or a security threat. In simple words, hotel management should know intelligently what is happening at every room without disturbing privacy of the guest.

I am sure the recent attacks on Taj & Trident will ensure strengthening of this control further in light of this new risk lurking on the hospitality industry. I also see improvement possibility in gate security and guest room key control procedures.

I also feel strongly that there is something wrong with the procedures where the hoteliers have to submit details of the foriegn nationals staying in their hotels to the local police station on an every day basis. Its possible that police station takes these reports, stamps it and sit back without doing much scruitiny of these records.

My heartfelt condolence to the families of those who have affected by the recent inhuman act of terror at Taj, Trident and Nariman House.