Emaar Hospitality Group LLC - Case Study
Emaar Hospitality Group implements BOARD for worldwide Corporate Performance Management
The company - EMAAR: premier lifestyles from the Emirates to the rest of the world
Emaar Properties PJSC is rapidly evolving to become a global provider of premier lifestyles. A Dubai-based Public Joint Stock Company, Emaar is listed on the Dubai Financial Market and is part of the Dow Jones Arabia Titans Index.
In tandem with Dubai's rapid growth, Emaar has been shaping landscapes and lives in the Emirates since the company's inception in 1997. Emaar develops value-added, master-planned communities that meet the homebuyers' full spectrum of lifestyle needs. As a pioneer of innovative community-living concepts, Emaar is the prime mover of the Emirates' real estate and construction sector.
Emaar is charting a new course of growth through a two-pronged strategy of geographical expansion and business segmentation. Replicating its successful business model in Dubai, Emaar is extending its expertise in creating master-planned communities to international markets. Simultaneously, Emaar is developing new competencies in hospitality & leisure, malls, education, healthcare and financial services, which have evolved from an integrated approach to customer service and property development.
With six business segments and more than sixty active companies, Emaar has a collective presence in several markets spanning the Middle East, North Africa, Pan-Asia, Europe and North America. The company has established operations in the United Arab Emirates, Saudi Arabia, Syria, Jordan, Lebanon, Egypt, Morocco, India, Pakistan, Turkey, China, USA, Canada and United Kingdom.
The challenge - Plan and monitor hotel and hospitality assets’ profitability and financial performances at world-wide level
“Our plan and strategy was to create a strong and structured budgeting process moving more than 30 independent business units onto a single platform for budgeting, forecasting, profitability analysis and reporting thus freeing our people from their Excel nightmare and allowing our management to achieve a better control of the organization's performance.
We identified the requirements for a fully integrated planning cycle, capable of providing a detailed perspective of profitability through the whole organization, from the S&OP of any single business unit, to the Group P&L,” affirms Mr Lijo Mathew Kankapadan, IT Director of Emaar Hospitality Group LLC. “We wanted our budget and actuals to be as detailed as possible, collecting the data from various systems, and consolidating them in a central shared repository, to make it easier to access and use the information.
All of this keeping in mind a simple but essential objective: make our business better.”
The main points to be taken into consideration were:
- Fragmented data from different systems to be consolidated, normalized and made consistent throughout the organization
- Different business units to be consolidated in a single chart of accounts
- Capability to link S&OP with financial planning
- Need to ensure consistency, completeness, validity, timeliness and accuracy of data
- Possibility to manage multicurrency
- Ability to offer cross-company visibility and data consolidation
The project - Sales & Operational Planning and Consolidated Finance Planning “All in One”
From a functional standpoint, the BOARD application allows each Business Unit, such as the Armani Hotel or Dubai Marina Yacht club, to run its specific S&OP budgeting process and to create a P&L account that is consolidated in the group P&L projection through a world-wide multi-currency and multi-company process.
This means that each business unit is involved in the same holistic planning process even if they can run the diverse budgeting phases in different moments and with their own timeline.
The bottom-up budgeting cycle is complemented by a top-down rolling forecast process aimed at monitoring and anticipating key performance drivers.
The whole planning process is articulated in 5 main phases:
In this phase any Business unit plans its core business revenue.
Once primary revenues are confirmed, through several approval levels, all the correlated revenues and the associated costs are automatically recalculated.
For example, the revenues generated by the restaurants are automatically updated if you change the number of guests per day or the electricity costs are recomputed in case you modify the number of “room nights”.
In this phase, the capabilities offered by BOARD in terms of:
- data multidimensionality
- advanced data entry capabilities (cells lock and spread)
- automatic allocation procedures (i.e. allocation of a value from month to day (and vice versa) or subscription management)
- possibility to always compare and analyze historical data
not only make planning users extremely productive in all their activities, but dramatically increase the overall accuracy and timeliness of the whole process.
After planning the primary revenues, each Business Unit starts a second planning phase aimed at determining the Secondary Revenues (all those groups of items that do not have primary impact on the overall revenues, for example Food and Beverage, Minor operating departments, etc.)
As for the primary revenues, the associated costs and revenues are automatically calculated.
Operating cost reassessment and final calculation
In this phase, the process lead switches from the Business Units to the Departments (HR, Finance, Marketing) which reassess and review the cost automatically calculated during the previous planning phases.
Once all the primary and secondary revenues and the associated costs are planned, the next logical step is the calculation of all the other costs and expenses such as Tax, Interests and Intercompany fees.
Even if the BOARD application makes it possible to run a P&L consolidation anytime, from a logical and process perspective, the consolidation phase is the final step of the whole planning cycle.
The result is a provisional P&L that can be visualized and navigated by business units, divisions, and departments and clearly at a group level.
Furthermore, any single P&L line can be navigated down to the lowest operational detail, analyzing how this has contributed to building up the consolidated number (i.e. room revenue can be broken down by market segment or room rate).
The application does not only manage the annual budget but, at any time during the year, makes it possible to create a “To Go” version of the plans, that essentially represents the difference between actual and planned figures transposed to the year end.
“EMAAR’s project is very wide and pervasive as we are not only running hotels with rooms, attendees and spa as major drivers, but are also running many more departments: golf clubs, fitness clubs, yacht clubs, polo clubs, we have membership programs and so on. And all departments are based on different and independent logics and processes.”
“The first thing we did was build applications around each business independently. We collected all the revenues together and divided them into primary revenues, secondary revenues and management calibration, all in one standard platform.
Even if we have different business units following different kinds of budget processes – for example, the logic between golf club and hotel is totally different – we managed to work on a common platform and bring the data into one single standard budget. In fact, all the business units consolidate back to the corporate office so that the board can look at the budget across all the businesses. The entire logic is very complex I must say, but we are very happy with the final result.”
“We started operating only in the United Arab Emirates, where the currency is AED. But we are looking at multicurrency in the coming days. For example, when we started to expand to other regions – one of them being Milan, Italy – we knew we would have to report in multicurrency.
Allthe financials – which are the main features for a budgeting process – will work in their own currency, but the consolidation will work on a reporting tool with currency conversion into AED.”
By implementing BOARD, Emaar has been able to bridge the gap between financial planning and operational planning,linking high level plans with day-to-day operations and company profitability analysis, while delivering one shared, accepted output. Furthermore, the extreme flexibility achieved in managing scenarios and new initiatives allows the whole organization to stay nimble and adapt more quickly to market challenges.”
The customer's benefits - Making better decisions, faster
In the hospitality business unit, BOARD is the corporate reporting, budgeting and planning tool.
A single source of truth
“One of the main benefits in the organization is that we now have a very pervasive planning and budgeting process running on a unique data repository, the DWH, where we connect to independent applications and have one single vision of the company performance with a single source of information.
BOARD not onlymakes this possible, it alsoenables theuse of all the details collected from different applications to be used as drivers for our budgeting and reporting processes.”
Decisions “on the fly”
“Our strategy was to stabilize all the independent applications at the lower level of the pyramid. Then we rolled them up to the DWH and then to the corporate reporting tool: BOARD. Details – available at executive level – are collected from individual applications from the DWH to BOARD. This way, in looking at financials and non-financials, we are able to understand right away why the revenues are lower or higher. This links statistical information with the financials which allows the management to make decisions “on the fly”. At the same time, we are also working on feeding future data (bookings) to show future plans, cash flows and potential business allowing us to focus more on the right department and plan future actions even better.
With the market moving faster these days with future data and past experience, the management is able to make – according to previous experience and future plans – quick decisions. All in all, the benefit of the tool is to move the organization from a gut feel decision to a fact based decision-making process.”
“The whole organization is involved in the budgeting process, with 300/400 users. Each department, each division, each business unit, produces their own budget, rolls it up to the higher level and then to the management company above them. It goes to all the organizational levels.”
“The level of details and collaboration in the budgeting process has increased a lot within the organization. Accuracy has improved as well. All of this results in a strong improvement in the entire budgeting process.”
Why BOARD? Comprehensive, Easy, Fast: a perfect fit for our needs
Over the last three short listed products – Cognos, Infor and Prophix – we decided that BOARD was the most suitable product. There are some key factors that make BOARD different from the competitors:
- BI&CPM integrated solution: it is not a product but a platform where you can develop complex solutions; it is not just focused on Performance Management alone, but is integratedwith Business Intelligence, providing a great analytic environment.
- Development free environment: the platform is really easy to manage.Once you deliver an application, the power users can easily create their own reports without requiring any assistance from the IT department. Clearly the fundamental design has to be done with a consultant and the division manager of the business, but after that, should we need more development, it can easily be achieved by a power user.
- Wide experience in the hospitality field: many large hotel chains have already chosen BOARD as a Corporate solution
Lijo Mathew Kankapadan
Director of IT
Emaar Hospitality Group LLC