Thursday, 29 October 2020

Budget Management Strategy and Planning For Hotels


More than ever, budget management is the keystone of running a successful and profitable hotel. As each department in the hotel manages their own revenue, the overall budget management strategy and planning should keep all departments focused on specific goals. It's a crucial resource for the entire hotel. 

Budget management requires a strategic plan which maps out how to achieve your financial goals. In this article, we'll take a look at the strategies that will help you maximise hotel revenue and profit.

What is budget management strategy and planning for the hotel industry?

Budget management refers to the strategic distribution and pricing tactics you implement to deliver your services to the right guests at the right time, thus enhancing your business revenue. 
Your rooms, amenities, and food & beverage offerings are all included in your hotel budget. 


Why should budgets be reflective of strategic or business plans?

Developing a good marketing budget ties all of your activities to tangible objectives.

An effective business plan will also help hoteliers manage resources better, e.g. pausing spending on PPC campaigns when occupancy is already high or promoting special offers during quieter periods. 
In addition, if you know how much you're spending on marketing, you will have a clearer picture on the return on investment and profit. 

hotel budget

What are the key steps for budgeting management strategy and planning?

 

Set your annual objectives 

Goal driving strategy may be a common term but to achieve it requires good planning. You need to set your business goals first and then plan your budget to achieve them. Your goals should be organised into two segments:

Numeric goals. Quantitative objectives such as total revenue, profit, RevPAR, ADR, number of guests. 

Strategic goals.  Expanding into a new market, targeting a new segment (e.g. conferences, leisure) or reflecting changes in your business.

Specify your positioning in the luxury hotel industry 

To differentiate your offering from your competitors, it is very important to have a positioning strategy. Brand strategy is a crucial element to weather any storm and communicate with the market. Your brand is an absolute reflection of what your customers should expect from you. It combines many factors e.g. your mission, values, tone of voice, ambition, social media signals and market position.

Define any plans for your services 

Your plan should address everything there is to know about your services to better support your positioning in the market. A periodic deep dive into all areas of the business should be scheduled to avoid any slippage in service levels or to spot any opportunities for improvement or change.

hotel budget management strategy

Develop your tactical goals plan.

In order to develop your tactical goals plan: 

  • Consider developing new compensation strategies or implementing staff training
  • Audit how you manage existing guests
  • Look at new distribution channels and increasing revenue through existing channels
  • Consider the CPA (Cost Per Acquisition), model. This will clearly demonstrate the percentage of revenue generated in each area of the business
  • Scope out areas where revenue opportunities remain. 


Define your major marketing campaigns

Develop a calendar where you outline your major promotional campaigns for the year and plan your budget. Consider the top three campaigns you will run to generate leads. Also determine the media, tools, technologies and resources you will use and how to access them e.g. do you require an external agency?

Evolve a marketing budget  

Don't just allocate your budget based on last year's spend - keep revising it as the year progresses. When you are specifying your major campaigns and marketing requirements, you should use ROI to better determine your numbers. 

Revise your budget management and planning regularly 

Revising your plan is essential otherwise it is easy to lose focus.  At a minimum, review the plan quarterly and ensure you have defined metrics to measure your progress. 

When you switch to Aró Digital Marketing, we guarantee strong marketing strategies with high ROI and focused budget planning and management.