June 2001 - The last thing one thinks of when sweeping through the porte-cochere of the beautiful salmon colored Don CeSar Beach Resort towering above the Gulf of Mexico in St. Petersburg, Florida, is strong financial

The Don CeSar Beach Resort & Spa

"We want to be the preferred management company of choice and, because of our ability to both increase the value of our clients' assets and to report financials in almost any format the owner desires, we are accomplishing that goal," said Greg Smith, Interstate's Vice President and Corporate Controller.  Smith noted that while Interstate is known for working hard to fulfill its owners' needs, installing Execuvue®, a business intelligence application from Pittsburgh-based Aptech Computer Systems, Inc., in November 2000 raised Interstate's responsiveness to the Five-Star category.

Customized Owner Packets

"We have many owners who need to consolidate financial data from their hotels with their other businesses," Smith explained.  "They may perhaps own a shopping mall.  When they do their month-end report, they need to summarize the hotel, but their chart of accounts may be totally different from ours.  With Execuvue, we can create a standard corporate form, customize it for each owner, and then download their hotel's financial results into their desired format."

Interstate uses the Internet to distribute monthly owner's packets that include the hotel's customized financial statement and balance sheet. The packets can be picked up electronically by the owner's accounting system and opened with a web browser.  Execuvue extracts all data from the general ledger making line item details available for analysis and for use as an early warning system of developing trends.

Increasing Asset Value in Tight Economic Times

"Currently we are facing challenges with a slowdown in the economy," Smith observed.  "We use our business intelligence system to create forecasts at rapid speed to see what trends are out there.  Then our marketing division can quickly analyze different revenue sources to help evaluate potential shortfalls."  As examples, Smith cited being able to look at how a hotel's weekend - or weekday - business compares to other hotels' revenue, or looking at the cost of occupied rooms in a group of properties. "We evaluate each hotel with a similar set of numbers to its peers. If there's a variance, we quickly drill down to where the problem is," said Smith.

Jack Wolford, Interstate's Director of Information Technology, pinpointed another area where trend analysis is valuable: utility costs, which are rising in several parts of the country.  Wolford explained that, by using their business intelligence application to spot regional trends, when California's utility costs began spiking last November the company quickly instituted energy conservation measures to help offset this increased expense. Wolford also confirmed the same trend is surfacing at Interstate's Florida and Northeastern properties and similar steps have been implemented.

Public Financials

Publicly traded Interstate Hotels (Nasdaq: IHCO) operates full service and limited service hotels through their Interstate and Crossroads Hospitality divisions, respectively.  Combined to become Interstate Hotels, the two divisions include approximately 140 hotels with more than 27,000 rooms at properties in the United States as well as Canada, the Caribbean and Russia. Interstate operates more than 25 different franchise brands and multiple independent luxury hotels and resorts in all market segments.  

"As a result of being publicly traded, we have tight financial deadlines to achieve for reporting.  Prior to November the process was very time consuming because we had to combine the results of two divisions that have different accounting systems.  We pulled the data into spreadsheets and spent time verifying to ensure accuracy," Smith explained.  "Now everything is automatically extracted from the general ledgers, and Interstate uses Execuvue to combine financials from the two divisions."

"In 1988 Interstate developed a custom application with IBM on an AS/400, so we could consolidate all the hotel financials into a central database and run monthly statistics," Smith continued. "This product,  written in COBOL, was not very user friendly and it became difficult for the operational people to write programs to manipulate new views of the data."

My-sized Financial Access

With Interstate's current business intelligence application, which attaches to back office accounting software from Aptech and other vendors, Smith said, "Everyone is able to use the program.  That includes operational regional teams by discipline: marketing analyzes revenue centers, development staff review financial analysis of acquisitions, and the finance department evaluates balance sheet fluctuations."

"It is part of our corporate culture to access all of our hotels' financials on a monthly ad hoc and historical basis," Smith went on. "Operations personnel don't have to wait anymore for the IT department to generate the reports they request. They can be on the road, dial in, and create their own reports as needed."  

Smith also observed that Execuvue has helped his team work in a more flexible environment.  "With this system our staff can work from home or anywhere on the road and be able to access the information they need.  They can take an hour or two on the weekends, if they wish, and dial in from home." 

It is this Five-Star level of flexibility and control that ensures when guests sweep through the porte-cocheres of Interstate Hotels, whether in San Francisco, Waikiki, or Moscow, that their extended stay is safeguarded by the steel girders of Interstate's strong financial controls and reporting capabilities.