Budgeting for Profit, Not Just Revenue: Webinar Recap

Author: Avanti Joglekar

In the second installment of Rainmaker's Webinar Series, VP of Hospitality Solutions Angie Dobney tackled the topic of how to budget for profit, not just revenue. With more than two decades of experience in revenue management and hospitality operations, Angie provides guidance and hands-on optimization of total resort profit to Rainmaker's industry-leading gaming and hospitality clients. 

Budgets vary by the type of expenses they account for. The Operational Budget is one that forecasts revenues and expenses associated with the operations of the hotel. Understanding the moving parts that an operational budget contains can help increase profits for the property.


It is recommended that revenue management professionals comprehend each component that goes into a Rooms Profit and Loss Statement (PNL). A PNL makes sure that all decisions made are profitable ones because it allows you to understand the impact of the strategies set. If all the department heads are informed of what the promotional or advertising plan is from an operational standpoint, from the top down to the guest-facing roles, then the impact of the strategy can be fully realized by your property. 

If you manage all the way down to the bottom line, you will be viewed as someone who fully understands all rooms business. To ensure that you become known as someone who thoroughly understands your property, be involved at the pre-planning stage of every decision impacting revenue in your organizations. When you maintain a revenue-based focus, it renders decisions as much more strategic. And the first step to reducing operating costs is to track them. 

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One place to take a closer look at, within the operations budget, is to know exactly what is listed under the "other hotel revenue" bucket. From an expense standpoint, revenue management professionals should truly understand and have an impact on Comp Expense, Group/Travel Agent Commissions, Credit Card Fees, Allocations/Call Center, Advertising, Dues and Subscriptions, Travel, and Promotions. For an in-depth look at the effect of each of the expense categories listed, download the full webinar recording.

Finally, understanding behaviors of each segment over time and what to expect from them can be accomplished in several ways. Use guest past records, financials, and pace reports, and always conduct a monthly (at least) post-mortem to identify lost opportunities or where you outperformed your expectations! Understanding what you did right is as important as identifying what you did wrong. Have weekly strategy meetings with department heads to socialize your thoughts. Work with the head of finance to understand everything that goes into your ADR, REVPAR, etc. calculations, and work with your department heads to understand allocations for items such as advertising and promotions, labor scheduling, and expenses. 

Want more tips on handling budget season? Check out the next installment of Rainmaker's Webinar Series, on Planning for Profitable Groups!

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