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 building 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
Business that tends to book very far in advance i.e.: FITs, groups, tours and conferences also tend to have a higher wash out than normal transient business. Its good to track year over year wash out & 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 bank and school holidays that will affect their revenue performance. It is important you analyze previous trends over these event and holiday days and identify opportunities to further grow.
6. Number of Days of Week in each month
Each day of week performs differently, its important to know how many weekdays versus weekend days are in any given month. For instance, some months depending on how the days of 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.
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 properties potential & help to identify opportunities for growth & how far you can push your rate or occupancy by day of 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.