Tourism leader uses financial forecasting in turbulent times
While many Australian tourism operators remain uncertain about their prospects following September 11, SARS and the war in Iraq, one of the country’s leading tourism operators is in total control of its future.
Voyages Hotels and Resorts, which operates in spectacular wilderness locations such as Uluru-Kata Tjuta and Kakadu National Parks, the Daintree Rainforest and Great Barrier Reef, is using Mondelio, a leading corporate modelling solution, to provide a clear and accurate idea of where it’s headed, regardless of industry or world events.
General Manager of Finance and IT at Voyages, Mr Damien Thomas, said Mondelio has facilitated his department’s move away from focussing on historical events to planning for the future of the company.
“For over a decade, accountants have been talking about how much time we waste compiling and analysing data on past events,” Mr Thomas said.
“There has been very little opportunity for accountants to value-add to a business because it takes them 30 days to tell us what happened 60 days ago."
“Mondelio enables my finance team to look at where we’re going and, for a company that is focussed on growth in a recovering industry, that is the type of intelligence we need.”
Mondelio is a revolutionary corporate modelling solution that is changing the way medium and large organisations manage their future.
It is a single, integrated solution that is used to develop and manage budgets, run feasibility studies and provide detailed reporting and forecasting.
Mondelio supercedes spreadsheets and OLAP tools. Its power lies in its automation and ability to utilise historical data to manage both the past and the future in one software solution.
Voyages was using spreadsheets for all budgeting and forecasting procedures, a process that was lengthy, labour intensive and inaccurate.
“The spreadsheets were slow and difficult to manage. Our size and the number of our cost centres meant it took five months to complete the budget and nine hours to calculate the figures,” Mr Thomas said.
“If there were errors, the entire process was prolonged. We couldn’t afford such delays.”
Another issue was that the spreadsheets used for budgeting and forecasting were not integrated with the company’s financial software.
Voyages needed a system that was integrated with the general ledger to eliminate all the multiple data entry, errors and wasted time in preparing budgets and forecasts.
It wasn’t until September 11, 2001 that the value of being able to quickly understand where the business was headed was realised.
Mr Thomas: “Prior to September 2001, we were not too concerned about detailed forecasting as business levels were good and cash-flow management was simple.”
“September 11 was followed a few days later by the Ansett collapse. Both events hit us hard. We knew then that it was time to get serious about understanding the future direction of our company and being prepared for it.”
Voyages undertook a search of global providers of planning, budgeting and modelling solutions and eliminated all but Mondelio as they were not true modelling tools.
“They were simply OLAP cubing tools, not actual modelling tools,” Mr Thomas said. “With OLAP products, to get a forecast, you have to cut and paste and slice and dice all the financial data to get the information you want – they don’t automatically produce a forecast.
“We identified Mondelio as the only solution on the international market that takes historical data and produces a forecast without requiring involvement in every line of data.”
The fact that Mondelio is an Australian made product by a wholly Australian-owned company was also a major factor in its selection.
“There was the added benefit of having local support and direct access to the people who developed the software. This is impossible with large international software houses.”
Working closely with the Mondelio development team, the solution was customised to Voyages’ exact requirements.
Mr Thomas: “The entire process only took three months which is incredibly fast considering we got a custom-built solution and a total redesign of our financial solution, SunSystems.
“At every stage, Mondelio under promised and over delivered. Now we have it exactly how we want it. The system will run itself forever and a day without the need for upgrades.”
Mondelio has become Voyages’ entire corporate model that underpins all financial, HR, sales and marketing functions.
Mr Thomas said having accurate information on how the business will perform in any given period has been the greatest benefit of Mondelio.
“Mondelio has provided us with a level of understanding of where we are and where we are going that we never thought possible. For a rapidly growing business operating within a turbulent industry, that is invaluable,” he said.
“I can’t put a price on having information telling us where we’re going. It’s priceless.”
“Once we finalise our budget, we roll it into a forecast and continually forecast 12 months out from any given period so we know exactly where we’re headed,” he said. “The data is incredibly accurate. In October 2003, our busiest month for that year, the projected bottom line forecast 30 days out varied from the actual result by only 0.75 per cent of revenue. With further refinements, we can expect even more accurate results in the future.”
Mr Thomas also conducts ‘What if’ analyses to understand the impact of any future event on the company’s operation.
“If occupancy rates drop by 10 per cent at Ayers Rock Resort, I know the impact it will have on every aspect of the operation from housekeeping to tour numbers to how much beef we need to order for the restaurants,” Mr Thomas said.
Voyages has made significant time savings by having a central budgeting and modelling solution that is fully integrated with the company’s accounting system.
“I no longer have an accountant to design a spreadsheet to extract data. It’s all there in real time at the touch of a button. This has led to major time and salary savings. To produce a group forecast, which took me eight hours every month, now only takes a few minutes.” With all financial data in Mondelio in the correct hierarchies, Mr Thomas is able to produce reports instantly for any level of the company.
“I can now go to my Board and CEO with accurate and timely reports on where we’re going to be at any point in time for any cost centre or department within the organisation,” he said.
“At the click of a button, I can generate and print out Board reports on how profitable the food and beverage division is or how much HR is costing in every one of my cost centres.”
Please click here to see the video by Damien Thomas, Voyages General Manager of Finance and IT, relaying his experience with the business modelling solution.
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