In our previous article, we shared insights and advice from global hospitality experts on how to make the 2024 hotel budget process as smooth and painless as possible.
Here, we share five ways to improve budget accuracy and performance in uncertain times.
NB: This is an article from HotStats
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1. Benchmark Against Competitors
In the last article, we discussed the importance of strategic planning, aligning stakeholders, and harnessing relevant data. Another key element of the budgeting process is to benchmark performance against competitors.
“Benchmarking is critical,” Pete Sams, chief operating officer of Davidson Hospitality Group, told us. “We look at the first step of the budget process as understanding the competitive landscape. We conduct a lot of due diligence surrounding our competitors.” The company projects RevPAR indexes and competitive dynamics at each hotel such as a renovation, change in management, or new offering, he said.
“We diligently and meticulously review our HotStats hotel benchmarking data to understand how we stack up within the competitive landscape,” he said. The company tends to use the data as aspirational. “We strive for excellence, so we have very competitive comp sets. We want to continuously identify opportunities to be better and more efficient than our competitors.”
2. Leverage Technology to Increase Efficiency
Fortunately, hotels have access to better technology solutions than ever to help aggregate and analyse financial data and connect the dots across data sources.
“Utilising technology or a uniform template helps to minimise the inefficiencies of the [budgeting] process,” said Elena Ladisova, vice president of Brookfield Asset Management. She cited the Uniform System of Accounts for the Lodging Industry (USALI) as a key source for accounting and benchmarking standards in the industry.
Valor Hospitality Partners has built a model that links the financial forecasting and budgeting tool with the software used by the revenue team, said Paul Nisbett, chief financial officer. “We have our fixed cost register and a manning guide… We don’t need to guide it by the year, we can do it by day and by month. With our tool kit, as long as the information is being dealt with and updated all the time, the budgeting [process] doesn’t take too long… It’s about looking at what parts move and what parts don’t.”
“HotStats is one of the key tools we use throughout the budget process,” said Sams of Davidson Hotels & Resorts. With other data platforms, “there are a lot of restrictions in terms of competitors and brand mix and things of this nature,” he said. With HotStats, hotels can choose to benchmark performance against aspirational comp sets in addition to direct competitor sets. “So, we’re able to be more aspirational,” he said.
Dimitris Manikis, president, EMEA, at Wyndham Hotels & Resorts, stressed the importance of preserving the human side of budgeting. “Everybody is talking about artificial intelligence and how you don’t need to budget anymore because AI will have all the answers,” he said. “In reality, what data does is create one source of truth. Now, the truth can be interpreted in very different ways. So, data is extremely important, but so are the people who interpret the data and build the narrative for our team members and business partners. That is absolutely critical.”