Hotel Budget plan for 2024
If you want to prepare your hotel budget plan for next year, it's important to evaluate your targets, budget, and plan of attack. Consider what REVPAR and GOPPAR you need to achieve and whether you have outlined all actions in detail. Ensure that all team members know the objectives and the steps to take to reach them. You may have already created a budget or are in the middle of doing so, and you should decide on the methodology to use, such as adding a percentage increase each month or drilling down per segment, channel, account, and day.
It's crucial to start building your hotel budget plan as soon as possible, as a good plan cannot be made overnight. You can read a step-by-step guide on how to prepare for 2024 using the best hotel budgeting practices from a hotel management company.
It's essential to create a hotel budget plan that outlines how revenue will be generated and spent each month for the upcoming year to achieve goals and objectives. The budget will show how much money you will make and can be seen as a roadmap of how next year will look in terms of performance. The hotel budget season typically starts towards the end of August, but it's important to take factors such as booking windows, cancellations trends, increasing room rates, and inflation into account.
Budgets are crucial for hotels to compete in a highly competitive industry. Without sophisticated planning and reporting in place, it is nearly impossible to maximize results. Every department should be involved in the budget-making process to understand how each one contributes to the hotel's performance. The budget should be adjusted throughout the year by comparing it with the forecast.
Not everyone goes into as much detail when making their budget, which can lead to problems. For instance, making budgets per person rather than per room can make it impossible to reach the total revenue target, and not taking into account possible changes in demand can result in revenue levels below last year.
If Before diving into the specifics of budgeting, it's important to establish some ground rules. Here are a few tips for maximizing accuracy and improving communication:
Provide context around the numbers: Rather than just listing out figures, tell the story of how revenue will be generated in the coming year and which factors contribute to bringing in business. This will help your team understand and contribute to the plan, leading to a higher quality end result.
Consider multiple scenarios: Trends can shift rapidly, so taking a proactive and agile approach is key to navigating market fluctuations.
Simplify explanations: Keep reports and jargon straightforward. Clear communication makes it easier to get your team on board.
Once you've laid the groundwork, it's time to start creating your hotel budget plan. Here are some key considerations to keep in mind, broken down by department:
Revenue Management:
Start with a detailed demand calendar to create a basis for your target or budget.
Map out events, conferences, expositions, trade fairs, concerts, holidays, vacations, long weekends, etc. from the previous year and shift them to the coming year.
Perform displacement calculations on all segments, channels, and accounts to uncover hidden revenue potential.
Incorporate channel distribution costs (e.g., travel agent commission, agency fees, and marketing investments) and payroll for sales, marketing, and reservations to determine the true net value of each segment.
Marketing:
Consider how much revenue you expect your hotel website to produce next year and what growth you're expecting from the current year.
Determine the balance between print and internet marketing and whether you're shifting the budget from offline to online.
Plan to attract more traffic to your website and increase conversions.
Consider launching new online marketing initiatives and collecting more guest contact information.
Focus on attracting different client target markets and niche guest segments.
Measure the ROI of all marketing actions and determine how much financial and human resources to dedicate to each initiative.
Website Redesign or Optimisation:
Consider links from local and travel directories, search engine marketing (SEM) / pay per click (PPC), search engine optimisation (SEO), banner advertising, advertising on meta-search, review websites, and travel forums / communities, interactive campaigns/promotions, email marketing, mobile website, online reputation management, blog output and maintenance, video, backlink building, analytics / ROI tracking, and webmaster tasks.
Determine whether to use an external hotel marketing agency.
Revenue Management & Distribution:
Identify new local or international sales channels your hotel needs to be on.
Determine your key segments, niche segments, and feeder markets.
Consider travel agency channels or forums that can help you attract these customer target markets.
Manage a healthy balance between direct and indirect (third-party) sales online.
Protect your hotel from brand hijacking by online travel agencies (OTAs).
Ensure FIT and wholesalers are respecting the contract.
Prevent wholesalers from distributing and publishing package rates as room-only deals on OTA websites.
Control your cost of distribution and use rate parity as a strategy to drive business through more cost-effective distribution channels.
Guard against cannibalisation by costly distribution channels like flash, group, and last-minute sales websites.
Avoid getting caught up in website trends and hypes that only lead to an erosion of the hotel's net rate.
Rooms Division:
Consider the expenses associated with rooms / housekeeping, minibar, cost of guest amenities, staff cost to clean rooms, cleaning products, complimentary / turndown gifts, uniforms (cost per uniform, laundry, reparations, tailoring fees), training, printing costs, software & hardware tools, complimentary services.
Cheers,
Daniel Bermejo Oyarzun
