Hotel Budget Season: How RM Technology Optimizes Budget Strategy (3 of 4)
Hotel budgets are impacted by myriad factors like seasonality, economic conditions, events, and competition. Even unanticipated occurrences such as extreme weather conditions have the ability to dramatically skew your budgeted figures.
NB: This is an article from Rainmaker
A science-based revenue management system (RMS) goes beyond just revenue management and can guide you in profit optimization. It enables you to optimize your budget strategy in ways that drive not just top-line revenues but ultimately higher overall profits.
Accuracy & Efficiency
Eliminate human error, improve accuracy, and efficiency within your budget planning process by using a RM solution armed with business intelligence (BI). Quickly collect and analyze data from multiple internal and external sources, basing critical budget decisions on science and fact verses intuition and guesswork. In addition, utilizing a cloud-based system means your budget information can be accessed at any time, anywhere, by any user.
Revenue managers like their numbers and tend to eschew graphs in favor of complex spreadsheets. Not all members of the revenue team, however, may process the data in the same manner. Therefore, it is important to have a tool capable of distilling the data into graphic visualizations – colorful, easy-to-read graphs, charts, and reports – for every department on your property. Guide your budgeting process with detailed insights on historical and real-time data, as well as access to key performance metrics.
Competitive Set Analysis
Understanding changes in your market’s balance of supply and demand, and knowing your competition, are crucial factors to consider when creating your budget. It’s impractical and time-consuming for hotel staff to manually check competitor rates and other key metrics in real time. A state-of-the-art RMS can easily integrate with your rate shopping tool to leverage the pricing of the competitive set.
Local Market Conditions
Many external factors impact a hotel’s annual budget. Research from CBRE found that 75 to 80 percent of a hotel’s performance is dictated by local economic and market factors. As you finalize your 2018 budget, a good RMS allows you to build local events and factors, such as holidays, into the solution so they can properly impact forecast numbers.
Expense & Revenue Optimization
Top-of-the-line RMS software accounts for occupancy rates, guest booking patterns, and other essential elements to help you determine staffing and operating expenses for the upcoming year. It allows you to appropriately adjust your budget spend by identifying areas of inefficiency (and the reasons behind that inefficiency) where you can make changes to save costs, and high revenue-generating areas that you can capitalize on.
Distribution Channel Analysis
An important focus of your hotel budget planning for 2019 is figuring out which distribution channel “ponds” are reeling in the biggest fish. Although recent research shows a decline in the number of websites travelers visit before booking, it’s still a challenge for hoteliers to evaluate which of their distribution channels delivers the greatest ROI. RMS analytics holds the key, determining which channels are underperforming and which provide the best return – garnering greater consideration in your budget planning for next year.
Demand & Pricing Optimization
RMS solutions offer an unprecedented level of agility, building on a multitude of data points like local events, historic trends, as well short-term performance to create pricing strategies based on fluctuations in demand. The right solution can help you balance business mix by optimizing your guest mix towards your highest-value guests, thus avoiding leaving money on the table by either overpricing or underpricing your guestrooms, meeting space, and even ancillaries.
Planning your hotel budget is both an art and a science. The right RMS works the same way, combining your expertise and next-gen technology in ways tailored to your specific property. An RMS ensures your budget presents an accurate and thorough business plan designed to maximize your property’s potential for 2019.