It’s budget season. Hoteliers across the country are putting in the extra hours to develop their 2026 budgets. Budgets are the foundation of a hotel’s financial strategy: they set expectations, allocate resources, and provide the framework against which performance is measured.
NB: This is an article from TCRM, one of our Expert Partners
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Advanced tools available today, such as revenue management systems and AI, have made budgeting easier. When I learned how to budget, revenue management systems were in their infancy, and AI was science fiction. This meant most of the work was done manually. I know I’ll date myself by saying this, but budgets were not based on RevPAR growth or RevPAR Index Growth.
Believe it or not, there was a time when RevPAR was a new concept. It wasn’t universally accepted in the hotel industry, nor was it the focal point of budget growth. So, how did hotels budget back then, and what was benchmarked? We used trend analysis for Rooms revenue budgeting.
What is Trend Analysis?
Let’s start with that. Trend analysis is the process of studying historical data over time to identify patterns, shifts, or directions, which helps in forecasting future outcomes and making informed decisions.
When I learned to budget, this was a very manual process that involved entering room nights and revenue data (derived from reports printed out of the PMS with actualized statistics) into spreadsheets. This process is now much more automated with the advanced reporting tools available today.
At the same time, these new, advanced tools may have diminished hoteliers’ skills at forecasting and budgeting. Trend analysis may no longer be considered part of the process, especially when given RevPAR targets in advance, since it often doesn’t tell the whole story.
“Budgets are not based on hope – they should be grounded in trends.”
Trend Analysis in Use
The way I learned was simple. We looked at the last three years of actualized room nights and revenue statistics on a day-by-day basis, broken down by market segment and day of week. For example, I would enter the actualized room nights for the first Monday, first Tuesday, first Wednesday, etc., of a month into a spreadsheet, then do the same for the second Monday, Tuesday, Wednesday, and so on.
