Fraud and internal risks are pressing concerns for hotel general managers (GMs), especially in high-end properties where financial transactions and valuable assets are part of daily operations. In 2025, the complexities of managing luxury hotels require GMs to be vigilant, proactive, and equipped with the right tools to safeguard their businesses.
Ken Dulieu, Chairman of Capcon Argen and a leading expert in fraud prevention and risk management, explains:
“The hospitality industry is built on trust, both among staff and guests. However, this trust is also its Achilles’ heel. Without robust systems to prevent fraud and mitigate risks, hotels are leaving themselves vulnerable to financial and reputational damage. Proactive risk management must be a top priority for today’s hotel general managers.”
Common Types of Internal Fraud in Hotels
Hotels, especially luxury ones, face unique vulnerabilities when it comes to internal fraud. Some common risks include:
- Cash and Payment Fraud: Skimming cash, fraudulent refunds, or unauthorised discounts.
- Inventory Theft: Misappropriation of food, beverage, or other assets.
- Collusion: Staff working with external parties to bypass security systems or misreporting expenses.
- Guest Data Exploitation: Misusing sensitive guest information for personal or third-party gain.
Strategies to Identify and Prevent Fraud
- Implement Strong Internal Controls
Fraud thrives in the absence of oversight. Regularly reviewing transaction logs, cash reconciliations, and inventory records can help detect anomalies early.
Ken Dulieu’s Tip:
“Transparency is critical. Implementing audit trails and regular checks helps create a culture of accountability, ensuring that fraud risks are minimised from the start.”
Capcon Argen’s Solution:
Capcon Argen provides Fraud Risk Audits, which assess vulnerabilities in your hotel’s operational processes. Paired with our Mystery Guest Services, Capcon Argen’s audits offer insight into employee performance and adherence to hotel procedures, providing another layer of protection.
- Leverage Technology for Monitoring
Modern risk management requires advanced tools. AI-driven systems can flag irregular transactions or discrepancies in real time, providing an additional layer of security.
Case Study: Fraud Prevention at an Exclusive Hotel in Bath
An exclusive five-star hotel in Bath, renowned for its spa facilities and fine dining, experienced ongoing discrepancies in its procurement process. Despite routine checks, unexplained variations in supplier payments and stock levels for premium wines and ingredients persisted.
The hotel partnered with Capcon Argen to investigate. Through a thorough and discreet investigation, including a Fraud Risk Audit and a detailed review of their stock control procedures, Capcon Argen uncovered collusion between a member of the procurement team and a supplier. The team member had been inflating purchase orders and receiving kickbacks, causing substantial financial losses.
Capcon Argen’s intervention not only resolved the issue but also helped the hotel recover some of the lost funds. To prevent future fraud, Capcon Argen implemented strengthened stock control measures, including clearer inventory tracking, stricter supplier oversight, and regular cross-departmental audits.
Ken Dulieu comments:
“This case highlights how essential strong stock control measures are to fraud prevention. By tightening procurement processes and conducting regular audits, hotels can identify vulnerabilities and build systems to ensure long-term protection.”
- Conduct Employment Screening
Hiring trustworthy staff is critical in fraud prevention. Employment screening ensures that new hires are thoroughly vetted, reducing the likelihood of hiring individuals who may exploit their roles.
Ken Dulieu’s Tip:
“Fraud often starts with poor recruitment practices. Comprehensive employment screening, including background checks and reference validation, is a simple but effective step toward protecting your business.”
Capcon Argen’s Employment Screening Services:
Capcon Argen offers Employee Screening as part of your recruitment process, providing detailed background checks that include previous employment verification, reference checks, and criminal record screening where necessary. This helps hoteliers build trustworthy teams and protect their businesses from the inside out.
- Conduct Regular Staff Training
Staff awareness is vital in fraud prevention. Employees should understand the importance of integrity and the consequences of fraudulent activity.
Capcon Argen’s Training Programmes:
Capcon Argen offers Bespoke Staff Integrity Training, helping teams understand their roles in safeguarding hotel assets and the legal ramifications of misconduct.
- Engage in Proactive Risk Assessments
Routine risk assessments are essential to staying ahead of potential issues. These assessments should cover financial transactions, inventory control, and data security measures.
Ken Dulieu’s Tip:
“Risk assessments aren’t just a defensive strategy – they’re a proactive way to strengthen your operations. By identifying vulnerabilities early, hotels can avoid costly mistakes and protect their reputation.”
- Mystery Guest Services for Real-Time Insights
Mystery guest visits are a discreet way to identify fraudulent behaviour, lapses in service, and areas for operational improvement. By posing as regular guests, mystery shoppers can evaluate the behaviours and practices of staff, including adherence to cash-handling procedures, upselling practices, and inventory controls.
Capcon Argen’s Solution:
Capcon Argen’s Mystery Guest Services provide hotels with actionable insights into their operations. Whether it’s detecting irregularities in how services are offered or uncovering fraudulent activity, mystery visits offer a clear picture of what’s happening on the ground.
Ken Dulieu adds:
“Mystery guests are an invaluable tool for understanding your hotel’s strengths and weaknesses in real-time. They reveal not just service gaps but also potential fraud risks, enabling hotels to make targeted improvements.”
- Foster an Open Reporting Culture
Encourage whistleblowing by ensuring staff feel safe reporting suspicious behaviour. Anonymous reporting systems can help uncover fraud early without fear of retaliation.
Capcon Argen’s Support:
With Capcon Argen’s Whistleblowing Framework, hotels can establish confidential channels for employees to report concerns, protecting their identity while addressing issues promptly.
How Capcon Argen Supports Fraud Prevention
Capcon Argen is a trusted partner in fraud detection and risk management, offering a suite of services tailored to the hospitality sector:
- Employment Screening: Vet candidates thoroughly to ensure trustworthy hires.
- Fraud Risk Audits: Comprehensive analysis of hotel processes to uncover vulnerabilities.
- Mystery Guest Services: Provide real-time insights into staff behaviour and procedural compliance.
- Staff Integrity Training: Educate employees on fraud prevention and their role in safeguarding hotel operations.
- Whistleblowing Support: Set up secure channels to encourage transparency.
Ken Dulieu adds:
“Capcon Argen combines expertise with proven strategies to give hoteliers the tools they need to safeguard their businesses. From screening new hires to uncovering operational risks, our solutions are tailored to build trust and ensure success.”
The Bigger Picture: Managing Risk for Long-Term Success
For hotel general managers, managing risk goes beyond fraud prevention. It’s about creating a culture of accountability, trust, and vigilance. By implementing robust systems and leveraging Capcon Argen’s specialised services, luxury properties can ensure financial security and protect their hard-earned reputations.
Ken Dulieu’s Closing Thought:
“In the hospitality industry, prevention is far better than cure. By proactively managing risks, training staff, and using tools like employment screening and mystery guest visits, hotels can maintain trust, profitability, and success.”
Ready to protect your business and secure your operations?
Contact Capcon Argen to find out more about how our tailored fraud prevention, risk management, and security solutions can safeguard your hotel and ensure a secure, profitable, and resilient business.
