During COVID-19, the hospitality industry took a significant hit. Many restaurants and hotels closed temporarily or shut down permanently. Now, as the market revives, employers again need to be vigilant. Fraud is ever-present and fraudsters are always on the lookout for opportunities. Employee theft is a major problem in many industries, and the hotel industry is no exception.
According to the Report to the Nations on Occupational Fraud
and Abuse, a 2020 global study performed by the Association of Certified Fraud Examiners, the typical organization in the hospitality industry loses 5% to 6%
of annual revenue from fraud perpetrated by employees and guests. For example,
a hotel operator earning annual room revenue of approximately $10 million may
experience losses ranging between $500,000 and $600,000. Losses from fraud
would be amplified for organizations owning a chain of hotels.
SDC CPAs, as a forensic accounting firm, is no stranger to analyzing claims involving employee theft occurring at hotels. Hotels face a unique set of challenges when it comes to employee theft, as they often have a significant number of employees and a variety of valuable assets that can be targeted. Just how is employee theft perpetrated at hotels and how can employers prevent these incidents?
How Does it Occur?
Common methods hotel employees use to steal include, but are
not limited to:
·
Theft of Cash and Valuables
One of the most common types of employee
theft in hotels is theft of cash and valuables. This can include stealing money
from the cash register, taking tips that are meant for other employees, or
stealing guests' belongings from their rooms. This type of theft can be
difficult to detect, as it often involves small amounts of money or items that
are easy to conceal.
·
Food and Beverage Theft
Another type of employee theft that is
common in hotels is food and beverage theft. This can include taking food and
drinks from the hotel restaurant or bar without paying for them or stealing
food and drinks from the hotel's inventory for personal use. This type of theft
can be especially damaging to hotels, as it can result in significant losses
and can damage the hotel's reputation for quality and service.
·
Time Theft
Time theft occurs when employees are paid for
hours that they did not work. This can include clocking in and then leaving the
premises, taking extended breaks, or falsely reporting hours worked. This type
of theft can be difficult to detect, as it often involves small increments of
time that can add up over months and years.
How Can Employers Prevent Employee Theft?
Preventing employee theft in hotels requires a combination
of strategies, including careful hiring practices, employee training, and
monitoring and surveillance. Here are some tips for preventing employee theft:
·
Conduct thorough background checks before hiring
employees.
·
Train employees on the importance of honesty and
integrity.
·
Implement a system of checks and balances to
monitor employee behavior.
·
Use surveillance cameras to monitor high-risk
areas, such as the cash register and inventory storage areas.
·
Regularly audit cash and inventory to detect
discrepancies.
Employee theft is a major problem in the hotel industry, but
there are steps that hotels can take to prevent these incidents from occurring.
By being proactive and vigilant, hotels can protect their assets and maintain
their reputation for quality and service. It is important to remember that
prevention is key, and that taking steps to prevent employee theft is much
easier than dealing with the consequences after the fact.
--
Association of Certified Fraud Examiners. “Report to the
Nations on Occupational Fraud and Abuse.” Association of Certified Fraud
Examiners, 2020. https://www.acfe.com/fraud-resources/global-fraud-survey.
Last accessed April 15, 2023.
Shah, Smit. “As the Hospitality Industry Revives, Expect
Fraud to Follow.” Berdon, July 1, 2021. https://berdon.com/as-the-hospitality-industry-revives-expect-fraud-to-follow/.
Last accessed April 15, 2023.
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