The hospitality industry is a highly competitive, ever changing market. Consumers have more options today than ever before when choosing a property for business or leisure travel. With so much at stake, budgeting and forecasting methods must be accurate and efficient. However, given that most hospitality budgeting still lives in spreadsheets, there’s plenty of room for human error.
One of the best ways that hotels can improve accuracy and efficiency in their budget planning process is to use a science-based RM solution combined with a comprehensive business intelligence (BI) tool. By utilizing the right systems you’ll gain more insight into your projections, profits, and spending. Here are five specific ways that your revenue tech stack will help you plan your budget efficiently and accurately.
1. Define Your Strengths & Weaknesses
One of the most important ways that a robust software suite can improve your budgeting process is by helping you understand which segments of your property are high performers and which ones are less profitable. Once you have a clear picture of your core segments you’ll be able to hone in on what’s working and capitalize on their strengths. Great software can also help segments that are lagging behind previous projections by showing you the ‘why’ behind what happened. A powerful software system will drill down into the specifics of why a certain segment isn’t meeting its goals. Once you’re able to see where your brand’s high and low segments are and the reasons behind the data, you can adjust campaigns and your budget spend accordingly.
2. Identify Trends
A powerful tool for analyzing your own market and organization’s trends is a detailed examination of your historical performance over the past three to five years. This reveals seasonal fluctuations in both revenue and expenses. Start with realistic data, and leverage year-over-year (YOY) insights to gain a big-picture view of how your business is changing. Look at historic key performance indicators (KPIs) such as average daily rate (ADR), occupancy, and revenue per available room (RevPAR) for your hotel versus your comp set. Combine this information with what you have in your pipeline and balance it against economic conditions and industry data to help determine if your budget makes sense. Looking at your property’s performance across multiple views helps you make realistic and defendable decisions concerning your hotel’s future performance.
3. Know What Your Comp Set & OTAs Are Doing
Understanding changes in your market’s balance of supply and demand, and knowing your competition, are crucial factors to consider when creating your budget. It’s impractical and time-consuming for hotel staff to manually check competitor rates and other key metrics in real time. A state-of-the-art RMS can easily integrate with your rate shopping tool to leverage the pricing of the competitive set.
4. Expense & Revenue Optimization
Top-of-the-line RMS software accounts for occupancy rates, guest booking patterns, and other essential elements to help you determine staffing and operating expenses for the upcoming year. It allows you to appropriately adjust your budget spend by identifying areas of inefficiency (and the reasons behind that inefficiency) where you can make changes to save costs, and high revenue-generating areas that you can capitalize on.
5. Customized Reports & Data Visualization
Ensure every member of your team is up to speed on budget expectations with a BI tool capable of transforming relevant information into customized reports and data visualizations. Data visualizations help decision makers – particularly those without a statistical analysis background – to easily comprehend analytics through graphic elements like graphs, charts, and tables. Each department can quickly identify trends and understand the relationship between their daily operational performance and its impact on the overall hotel bottom line. Further, using a cloud-based system provides clarity by making it easy to share budget targets and allowing teams to keep tabs on how their department revenue and spend are aligning with the overall budget plan.
Navigating hotel budget season can be a challenging prospect, so your expertise and technology need to work together. Looking at the wrong data, or even looking at the right data with the wrong perspective can drastically skew your results. The right software will ensure that your budget will be an accurate and thorough representation of your property’s potential.