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?
Your rooms, amenities, and food & beverage offerings are all included in your hotel budget.
Why should budgets be reflective of strategic or business plans?
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.
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
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
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.