Digital Transformation at NH Hotel Group: Checking in to the Future of Treasury

Spanish-based hotel group, NH Hotel Group, was operating a manual, decentralised treasury structure, which was hampering cash visibility and control. Here, Luis Martínez Jurado, SVP Financing & Treasury, NH Hotel Group and Máximo Sanz, Senior Cash Management Executive, BNP Paribas, explain how they collaborated to deliver an impressive digital transformation for the group, resulting in an automated, fully centralised treasury – and one of the most global and innovative treasury management solutions in the hospitality marketplace today.

Every treasurer dreams of complete cash visibility and control, but often the nature of the legacy treasury structure makes this difficult to achieve without a significant overhaul. This was precisely the situation facing NH Hotel Group. 

“Before we implemented the digital transformation project with BNP Paribas, we were operating four treasury centres in Europe: Madrid, Amsterdam, Berlin and Milan,” notes Martinez Jurado. “We had more than 1,500 bank accounts across those treasury centres, and with no treasury management system (TMS) in place, we were using the proprietary banking platforms of every bank we had accounts with. Not only to issue payments, but also to download statements and keep track of transactions. This was a highly manual process with low cash visibility and a number of obvious process inefficiencies. Ultimately, this translated into high operational risk – which was unacceptable.”  

So, with the support of BNP Paribas, NH Hotel Group embarked on an ambitious project to manage and control the treasury needs of five European countries (France, Belgium, Netherlands, Luxembourg and Italy) – from a single European treasury centre in Madrid. “As well as centralising treasury operations in Madrid, we wanted to achieve full automation of all of our bank transactions via a TMS and implement SWIFTNet as our main e-banking channel,” he explains. 

In addition, NH Hotel Group was keen to “achieve optimal control on their liquidity, so worked with BNP Paribas to implement an international cash pooling solution to centralise their balances,” says Sanz – who worked closely with NH Hotel Group throughout the project. 

Picking the right partner

For Martinez Jurado, choosing BNP Paribas to collaborate on this award-winning treasury transformation was a simple decision. “When you decide to launch a project like this, you need to have the right banking partner on board. Previously, we were working with numerous local banks in different countries. This was not only inefficient, but their product offerings and digital capabilities did not necessarily match up to our ambitions. 

“So, we needed a banking partner with a focus across our main markets in Europe. The bank also needed to offer platforms with full connectivity to our TMS, as well as having international cash pooling expertise. We already had a very good relationship with the BNP Paribas team in Madrid – the team is highly committed on all fronts and understands the business well, so for us, they were the obvious choice.”

With the TMS vendor (Kyriba) and BNP Paribas now selected, it was time to get under way with the project. Given its ambitious, international scope, it was clear that a well-defined plan would be needed. As such, the project was divided into four pillars:

“Having this plan in place meant that the project could be addressed from different angles, with multiple tasks being worked on simultaneously, to help NH Hotel Group achieve the highest level of efficiency on the execution of the numerous processes involved,” notes BNP Paribas’ Sanz.

Delivering digital 

Over the course of three years, the four pillars have been worked on consistently – and the project was successfully completed in February 2018. The results speak for themselves (see Box 1).

Kyriba has now been fully integrated as NH Hotel Group´s global treasury tool to manage the group’s entire liquidity position, not only in Europe but also in America. The treasury team receives automatically detailed balance and transaction information on a daily basis and this is fed into the ERP system and other treasury tools, without any manual intervention.

SWIFTNet has also now been implemented as NH Hotel Group’s main bank communication channel, for payments and reporting, and is fully integrated with Kyriba. BNP Paribas went the extra mile here, says Martínez Jurado, to configure Connexis, BNP Paribas’ e-Banking system, as a back-up solution to SWIFT. “It is fully operative and reinforces the stability and reliability of the new set-up. And, for treasury, that peace of mind is invaluable.”

To maximise the efficiencies derived from the Kyriba and SWIFTNet roll-out and build a state-of-the-art cash and liquidity solution, “BNP Paribas also worked with NH Hotel Group to implement transaction automation and international cash pooling,” explains Sanz.

“As such, banking transactions are transferred from SAP to Kyriba, where they are authorised and sent to SWIFTNet, and then transmitted to the bank for execution, thereby avoiding any manual intervention,” he explains. And as Martínez Jurado notes, “This has led to a radical improvement in terms of transactional security, with reduced risks and errors, as well as greater control and process efficiency.”

What’s more, some of the functionalities implemented for SWIFTNet, such as the payment status report and FSR file status report, have delivered far greater traceability, substantially improving the level of control and monitoring that NH can have on the files sent to the bank. Such functionalities provide real-time information, meaning that at any given moment, NH hotels can check the transaction status and see that it is running smoothly, on an automated basis. 

In order to complete the treasury solution, BNP Paribas also put in place an international zero balancing cash pool across the five geographies involved in the project. As alluded to earlier, this flexible solution centralises NH Hotel Group’s liquidity into a single location – the new European treasury centre in Madrid.

Sanz explains the logistics: “BNP Paribas’ cash concentration engine automatically generates a zero-balancing sweep between subsidiary accounts and the master account. Incoming funds are swept from the subsidiary accounts to the headquarters (H/Q) master account and the subsidiary accounts are automatically funded from the H/Q master account, if needed.  BNP Paribas also runs the in-house bank for NH Hotel Group.”

Under this set-up, balances on subsidiary accounts are always kept at zero on a value date neutral basis. And after the sweep has been performed, the master account presents an accurate picture of the group´s net cash position. “Furthermore, since BNP Paribas worked with NH Hotel Group to ensure that the cash pooling structure is directly connected to Kyriba by SWIFT messages, the H/Q master account holder is able to monitor the entire cash pool and charge or pay interest on the intercompany loan balances that have been created by the daily sweeps of the physical pooling system.”

The benefits for NH Hotel Group’s treasury department have been manifold. “The cash pooling solution not only increases efficiency from a resource-management perspective, but it also vastly improves the control we have over our liquidity. As a result, treasury is now able to allocate funds in the most effective way,” says Martínez Jurado.

Raising the bar

All of this was achieved as a result of close collaboration between BNP Paribas and NH Hotel Group. “The bank has been incredibly supportive throughout the transformation project,” he notes. “The BNP Paribas team understood our needs very well and were always extremely proactive, with dynamic dialogue taking place throughout the project.

“We were also given excellent service by BNP Paribas, with a single point of contact, regardless of which of the five countries we were liaising with them about – which made things a lot smoother and simpler for us,” says Martínez Jurado. “This is part of our certified ISO9001 approach and guarantees the quality of service, the competence and the training of the bank’s teams,” Sanz explains.

“As well as the highest level of service, the rigorous ISO9001 certified project methodology also guarantees efficiency and transparency, as well as a phased approach to ensure the project runs as smoothly as possible,” he adds.

Through this collaborative transformation project, NH Hotel Group and BNP Paribas have centralised the group’s liquidity at local and global level. As Martínez Jurado summarises: “The bank’s physical cash concentration solution has enabled treasury to optimise our liquidity across geographies. This was supplemented by SWIFTNet and Kyriba to gain visibility and control over our daily transactions. 

“As a result of this ambitious project, I’m proud to say that our cash management set-up is now market-leading in the hospitality sector, especially in terms of automation and efficiency,” he adds. This has recently been confirmed by the market too, with the joint project being recognised as the ‘best digital transformation’ at the EuroFinance Treasury Excellence Awards 2018. All in all, a job very well done.