Budgeting can be a daunting & time-consuming task, however, building templates that can be used time and time again will make the process easier. A big factor in presenting budgets is confidence in the data you are presenting. Having a well-thought-out budget with good-quality data that will support your budget process is vital. Here are our 10 pointers to help first-time budgeters!
1. CREATE A TEMPLATE
If this is your first time populating a budget, firstly it is worth the time and effort to build a template that can be used annually. Any of the cells that can be automated or formulated are worth spending time on as budget processes tend to have multiple drafts & submissions. Ideally, if the excel file can take a data dump from the PMS or your revenue management system and prepopulate your excel file with up-to-date historic and future data. Some companies including our company Rate Wise specialize in recording business analysis data.
2. GATHER HISTORIC DATA
Historic data is a great starting point for the budget process, ideally if you can record and reference 2 years of data or more, by market segment. It will help you to identify trends each month, year over year. This data should be captured by market segment by month.
3. GATHER FUTURE DATA
Future business on the books should be recorded in the budget pack, so you can quickly identify any booking trends.
4. TRACKING WASH
A business that tends to book very far in advance i.e.: FITs, groups, tours, and conferences also tend to have a higher washout than normal transient business. Its good to track year-over-year washout & report more accurate expectations in the budget.
5. PLOT OUT EVENTS AND HOLIDAYS
Hotels should pay close attention to high-yielding events in their area & also a bank and school holidays that will affect their revenue performance. It is important you analyze previous trends over these events and holiday days and identify opportunities to further grow.
6. NUMBER OF DAYS OF WEEK IN EACH MONTH
Each day of the week performs differently, it’s important to know how many weekdays versus weekend days are in any given month. For instance, some months depending on how the days of the week fall can have 8, 9, or 10 weekend nights and this needs to be budgeted accordingly. Year over year, it may mean the same month in a different year has a different performance to the previous year.
7. CORPORATE ACCOUNT PROJECTIONS
Discuss with the Corporate Sales team if corporate accounts are to continue for the following year & are they expecting similar monthly room nights performance. Take into account if any corporate rates increases are planned.
8. TAXATION
Bear in mind any government changes to tax for the upcoming year. If your pre-contracted rates don’t include clauses for taxation fluctuations, it may mean you need to absorb any increases in tax.
9. FOOD ALLOCATIONS
Any changes to food allocations such as breakfast allocations on B&B rate plans, these will affect your ADR growth & need to be budgeted for.
10. COMP SET DATA
Any performance or benchmarking reports that include competitor data are great indicators of your property’s potential & help to identify opportunities for growth & how far you can push your rate or occupancy by day of the week. It is worth analyzing year-over-year trends for your competitors and identifying if your competitors are increasing or decreasing their share.
Now that you have collected all your data, you can move through each market segment for each month and start to build your budget based on expected room nights and net rate by market segment.
Author Bio: Katie McGarr is a resident writer for Rate Wise, a leading revenue management company providing cloud-based software solutions and yield management consultancy in Dublin Ireland. Aside from traveling, she also loves writing articles about hotel management and business.
