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Are you surprised at how much you spend on replacing items that are damaged, have been stolen, or have gone missing? Do you face recurring guest complaints due to constant equipment failures? Here are a few figures for you to consider:
- An average 200 room hotel reports around 1,500 equipment failures a month (Infraspeak.com)
- Employee theft in the US across all industries amounts to c. USD 200bn per year (Niehoff & Paul)
- Up to 65% of fixed assets are incomplete, inaccurate, or missing, while up to 30% of fixed assets are no longer owned (FMIS.co.uk)
At any given time, there can be hundreds of guests and employees inside a property, so naturally items will go missing or equipment will get damaged, and this doesn’t always get reported in a timely manner. This is exacerbated by the principal-agent problem – given the FF&E reserve mechanism and HMA fees being partially linked to revenues, an operating team is not fully incentivised to minimize damage to, or loss of, FF&E and fixed assets.
As a hotel or resort owner you should be able to quantify the current value of fixed assets on your balance sheet, which is done by having an accurate and up-to-date asset register and asset management system in place. This will allow for the better forecasting of expenses, asset maintenance and even fiscal optimization through depreciation.
What is asset tagging and why is it so useful?
Asset tagging is one of the key components of an asset management system – a process used by a company to effectively keep track of its fixed or high-value assets, including but not limited to FF&E, IT hardware and higher value OSE items. If implemented properly, asset tagging will be able to significantly reduce the impact of theft, human error, unreported damage, and the lack of asset maintenance.
Asset tags are labels typically printed on vinyl or polyester which are stuck on equipment (“the asset”) that needs to be tagged. Each tag contains a barcode and a unique ID number. When the barcode is scanned, the end user can pull up key information related to the asset, including but not limited to:
Location
Condition
Value
Model
Scheduled Maintenance
Warranty Expiration
| Asset Tag | Description | Advantages & Uses | Unit Price |
|---|---|---|---|
| Polyester | Metallized polyester tags – logos and asset ids can be printed on them | Durable, versatile, and cheap. Can be used both indoors and outdoors | $0.10 |
| Barcode | Barcodes which are printed on the tag, which allow for easy scanning | Easy to access asset information by scanning | $0.24 |
| Aluminium | Typically used as nameplates, for product identification and equipment tags | Long-lasting and durable – immune to chemical and weather exposure | $0.50 |
| Tamper-proof | Any tampering becomes evident, as it leaves a mark on the equipment when the tag is removed | Useful for assets that are prone to theft – used to track evidence of tampering | $0.20 |
| RFID | Electromagnetic fields are programmed with asset information. RFID readers read the information from electromagnetic waves that are generated by the RFID chips | Less need for manual intervention, thus saving on time and effort | Up to $1.00 |
| Bluetooth | Active tags are tracked using Bluetoothbased relays which transmit signals to a central server | Provide the ability to track assets in real-time | Up to $15 |
- Simplified inventory checks with a higher level of automation, thereby saving staff time and money.
- Easier maintenance and upkeep, reducing the incidence of equipment failure and associated guest complaints.
- A more efficient purchasing and procurement process.
- Improved cost forecasting and long-term capital planning, as the finance team has a clear snapshot of remaining useful life of assets.
- Fiscal optimization and reduced insurance premiums through proper asset depreciation and removal of ghost assets.
- A smoother hotel transaction, as both parties have a better understanding of the assets within the property.
Key steps for an asset tagging project
STEP 1: IDENTIFY STAKEHOLDERS AND PROJECT OBJECTIVES
- Meet with Asset Owners and End Users to identify the key stakeholders.
- Determine project objectives to secure buy-in and ensure project delivery is in line with expectations. Objectives include audit compliance, risk management, loss prevention, improved reporting.
STEP 2: ESTABLISH ASSET TAGGING CRITERIA
- Establish criteria used to identify which assets will be tagged – this could be a monetary threshold or specific categories of items.
- Note that there will be a trade-off between the threshold value and the complexity of the project.
STEP 3: CREATE ASSET REGISTER
- This will contain the company’s fixed assets/assets that need to be tagged plus data that needs to be embedded in the Tag. (e.g. unique identifier, description, serial number, purchase price, location, warranty expiry date).
- Asset Register will be uploaded to Asset Tagging software ahead of physical tagging process.
STEP 4: PHYSICAL TAGGING PROCESS
- Identify type of label required for each asset, with consideration given asset value, location, size, and print tags.
- Coordinate with End User to ensure access is provided to the Tagging team and minimize business interruption.
- Fix tags to each asset and bring the asset live
STEP 5: END USER ADOPTION
- The Finance team is concerned with financial tracking of assets for reporting, audit, and risk management.
- The Operations team (Owner or 3rd party operator) will use the software for preventive maintenance and physical inventory.
Points for consideration
Thought should be given to identify which assets need to be physically tagged – to a certain extent this will depend on the business’ key objective. If the primary objective is loss prevention, high value items which are easily misplaced and/or contain sensitive information should be prioritized. Setting a sensible monetary threshold will ensure that the cost of the tagging project remains reasonable.
How to secure end user buy-in
- Typically, the owner’s finance department will be responsible for the financial tracking of assets for reporting, audit and risk management purposes. They will manage the property’s asset register, organize the initial asset tagging exercise, and carry out periodic audits or stock-taking exercises.
- The Operations team (Owner or 3rd Party Operator) will primarily use the asset tagging software for preventive maintenance and physical inventory taking.
