Audits Demystified
Simply put, an audit is a tool designed to improve results. So why do we often resist it? Audits tend to evoke associations with exams, inspections, or evaluations—perspectives that naturally trigger varying levels of anxiety and stress. These reactions are almost automatic, deeply embedded in our human “software.” Moreover, especially in smaller teams (somewhat less so in large corporations), audits are often perceived too personally, as if they target individuals—”I’ll prove it to you,” “I’ll check on you,” “I’ll hold you accountable.” While this can happen, it misses the core purpose of an audit.
The term audit comes from the Latin word audiare, meaning to hear, listen, examine, or investigate. An audit’s purpose should never be a witch hunt but rather a constructive and objective assessment of data derived from formal documents, observations, and interviews. And since we’re on the topic of “witches,” let’s demystify the term.
Auditing as an Act of Care for Business and People
Let’s approach an audit as a check-up on whether everything in our organization is functioning properly—with care and a desire to help, support the business, and understand potential problems and their roots, which often lie in interpersonal relations. Think of a doctor conducting a patient interview, ordering tests, analyzing results, making a diagnosis, and providing recommendations—all for the patient’s benefit, not for any ulterior motives.
Sometimes this process ends with simple advice like improving one’s diet and exercising regularly, while other times it involves a difficult diagnosis requiring significant lifestyle changes. Either way, it’s always for the patient’s benefit. Successfully implementing recommendations requires accepting the diagnosis, understanding the negative consequences of maintaining old habits, and recognizing the benefits of new approaches.
The way feedback is delivered is just as important as the content itself—intent, tone, and circumstances matter greatly. While the outcome of an audit is often associated with a written report, simply sending this report to a director or owner without discussing it in a group with the auditor can be counterproductive. Without allowing those involved to comment on the results and propose solutions, the effort invested by both parties may go to waste, leaving the report to gather dust.
Knowledge of irregularities is crucial, but insufficient. Real change—implemented even in small steps—is what translates into tangible results. As Albert Einstein famously said, “Insanity is doing the same thing over and over and expecting different results.”
The Best Time to Plan an Audit is Now
External audits are most often commissioned due to unsatisfactory financial results in a hotel. This situation is often the final alarm to bring in an external advisor. It’s essential to remember that a hotel is an interconnected system, and issues in one area—such as finances—quickly spread to others: tense atmospheres and conflicts within teams, high employee turnover, additional training costs, declines in service and product quality, negative guest reviews, reduced demand, lower pricing, and so on.
Often, it’s hard to pinpoint whether the chicken or the egg came first, but it’s clear that the snowball effect is already in motion. The sooner action is taken, the easier it will be to stop it. The best approach is to limit such risks through regular preventive audits. While this does entail additional costs, as with many things in life, prevention is cheaper than cure.
This is particularly critical in today’s world of widespread technology, where visible guest reviews are immediately available to everyone and can significantly influence the choice of one property over another.
Internal vs. External Audits
A good internal auditor—though rare in small and medium-sized hotel structures—ensures transactional correctness, process transparency, and documentation consistency. In most cases, the hotel director fulfills this role, observing operations not only to assess results but also to anticipate challenges, threats, or trends. However, the most effective evaluation is an objective one, best conducted by an external entity unaffiliated with the hotel.
An external professional offers impartiality and a fresh perspective on the business, identifying outdated or ineffective patterns and habits. These tendencies are natural but often inefficient for individuals and organizations alike.
Operational vs. Financial Audits
Operational audits focus on the hotel’s day-to-day activities, starting with an analysis of the profit and loss statement. Financial audits, meanwhile, address the hard facts—revenues, costs, profits—but do not typically question owners’ decisions regarding indirect hotel costs recorded in company books. They focus on facts and suggest corrections to improve the operational financial picture.
An operational audit digs deeper into sales and marketing strategies, organizational structure, and procedures, assessing their practicality and effectiveness. Hotel departments should operate independently while complementing each other to achieve overarching goals such as cost control, effective sales, and efficient order management.
Unexpected Revelations
Audits can often reveal surprising, unforeseen situations. People may open up, resist, or even resign. These processes facilitate not only formal discussions but also the release of personal topics that are difficult to address during everyday hotel operations. Sometimes the root causes of business problems are interpersonal, driven by cultural diversity, generational differences, or high stress levels. Diagnosing these issues can be liberating and pave the way for positive changes that ultimately benefit the hotel.
The Cost of an Audit
Ironically, the cost of not conducting an audit may outweigh the cost of performing one. Audit fees vary based on scope, detail, number of departments involved, property complexity, and the auditor’s experience. The value of an operational audit lies in the auditor’s firsthand knowledge of hotel operations and industry-specific tools and mechanisms.
Franchise QA Audits
Hotels belonging to networks are subject to franchise audits, ensuring brand standards are met. These audits maintain service quality for loyalty guests and brand alignment. However, they do not uncover internal hotel or team issues.
Conclusion
A well-conducted audit motivates, inspires, and clears the path for deferred actions. It provides perspective on the hotel and everyone involved, from investors and guests to staff and management. Ultimately, it fosters collaboration, systematic improvement, and a shared sense of purpose.
Katarzyna Romanowska & Magdalena Konaszewska
Hotel Professionals, Hotel Professionals Management Group, NextCare