Key budget tips for 2023

Hotel budgeting is a way to engage your teams, align them and achieve financial results.

#1 - Start with the end in mind

Start thinking about what a good year might look like.

"What would a great 2023 look like? Over the past few years, most hotels have experienced a lot, but have also learnt new things to keep costs under control. So it is good to start with a vision that usually comes from the general manager or someone with a view from above. Someone who can see the whole operation and also understand the competitive market and other macro factors."

As an example, tell your teams that you expect to increase room revenue by at least 7%, based on what you have heard from your revenu manager.

#2 - Zoom in on zero-based budgeting

Get into the details with zero-based budgeting, where you start from scratch and figure out category by category which expenses are essential. Nothing is skipped in this. By going through this exercise, everyone involved has a better idea of how much each thing costs, which is valuable in case costs need to be cut at some point.

"If you have never done zero-based expenses before, you should start with that. If you haven't created or used a staff guide before, you should. These things will give you more details about what is happening in your business. They will help you work much more effectively than if you just take last year's expenses and add an expense increase of 5% to it to create your budget."

This is especially important in a world that has been very volatile in recent years with dramatic budget cuts and now high demand at many hotels.

"Having done this hundreds of times, I can guarantee you that if you don't create a zero-based budget, you will pay for things you don't even use because people just keep sending you invoices. I found things like hotels paying for pagers that hadn't been used in years. That's why it's so important to get into the details."

#3 - Make an income budget by day

After delving into the details of expenses, it is also wise to make a daily income budget.

"If you don't make a day-by-day budget, you are missing something. Many people just make revenue forecasts month by month and say July is their busiest month. But doing this on a day-by-day basis for at least your key market segments will give you a better understanding of rates and revenue potential."

#4 - Create a marketing plan that generates demand

Invest in marketing to create demand captured by a smart revenue strategy.

"Where will you invest to generate the income that will pay for everything? It is important to revisit this because markets are always changing - especially now. If you have had a group hotel in the past, you can no longer rely on it because travel is changing rapidly. Many hotels see business travel at a lower level than in the past. But every market is different and you need to understand where the opportunities are and how to create more demand for your property." So take a good look at where new opportunities lie and what you want to capitalise on.

Publisher:

www.hoteloperaties.com