PKF Warning on Hotel Sector Fraud

Tuesday, January 17, 2012 Print Email

PKF is warning that hoteliers need to take greater steps to protect themselves against fraud, which it estimates could be costing the sector over £2bn a year.

The Resilience to Fraud of the UK Hotel Sectorreport, published by PKF and the University of Portsmouth, assessed counter fraud activities for a range of sectors using a 50 point scale. The results show that the hotel industry has an average score of 25.4 points compared with 30.6 points for the private sector as a whole.

Only 27% of hotel respondents sought to estimate the cost of fraud or used losses estimates to make judgements about how much to invest in countering fraud. Less than a quarter reviewed the effectiveness of their counter fraud work and only a third (35%) ensured that counter fraud staff regularly refreshed their skills.

Separate work by PKF and the University of Portsmouth indicates that average losses to fraud currently run at 5.7% of an organisation’s expenditure. Applying this figure to the sector’s annual turnover of £40bn, PKF suggests that hotels could be losing over £2bn annually.

Stuart Collins, national hotels partner at PKF, said: ‘Reducing fraud losses is one of the least painful methods for hotels to minimise business expenditure in the current economic environment because fraud costs - unlike expenses relating to staffing, property and utilities - are unnecessary and unproductive. Moreover, as fraud costs have not historically been given a particularly high priority by management, there is significant scope for losses to be reduced in the sector as a whole.’ 

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