A budget enables you to plan for your business and evaluate the resources you have to achieve that plan. Projecting income and expenses for the year ahead helps you make better operational decisions. It’s like taking a road trip. You may get where you’re going if you simply drive off into the sunset, but your odds are better if you bring a map. Your budget—or map—keeps you from cheerfully speeding over a cliff. 

If you haven’t created a budget for your hotel before, here’s a checklist of things to include to get you started on the right track. 

Revenue

You don’t know how far you can go unless you know how much gas is in your car. Your revenue is the starting point for determining the resources you have for growing your business. Look at your occupancy, ADR, and RevPAR to project room revenue for the coming year, but don’t neglect other income streams. How much does your spa bring in? What about parking? There are creative ways to make money that have nothing to do with heads in beds. 

Know where your demand comes from and when it’s at its highest. For instance, if you’re a romantic resort, Valentine’s Day is a big deal for you. 

Delve into your property management system (PMS) to find all the numbers you need. Evaluate your hotel’s past performance, but take into account that the future may change. If you have more fall reservations than in previous years, it could mean revenue will rise. Pay attention to market trends and seasonal shifts. After such a long, charbroiled summer, people may be interested in fall bookings, in addition to cooler destinations. Spend what you need for future growth, but remember that you won’t see boom season revenues every month. 

Wages

You can’t retain staff if you don’t pay them appropriately for the market. With inflation and an industry–wide staffing shortage, what’s appropriate for the market has changed. Salaries are on the rise, and you have to consider benefits as well. As with many other budget aspects, you can’t simply plug in last year’s numbers and call it a day…let alone pre-pandemic numbers. 

Training

This is another item that goes along with employee retention…and with your profits. Employees cannot hit their goals if they don’t know where to aim. “Flying by the seat of your pants” may sound like a bit of daring-do, but it creates extra stress for both staff and guests. Go the extra mile—and the extra dollar—to ensure everyone knows what they’re doing. 

Technology

The right technology is an investment in your property’s immediate and future success. Don’t just think about what your needs are now; think about what they’ll be five or ten years down the line. Do your research before buying and keep abreast of where technology is going. However, you don’t have to purchase every shiny new system that comes along. Ask yourself how it will benefit your staff and guests. 

Guest Messaging >> Phone calls and smoke signals are no longer the best ways to reach guests. For one thing, those phone calls take more time. Look into alternative communication methods such as email, text messaging, or web-based apps. Hint: 82 percent of smartphone users in the USA open every text. WebRezPro partners with leading guest messaging platforms, including Akia, Canary, and Duve. 

Digital Tipping >> Everyone carries their phone. Not everyone carries cash. Guests may be willing to tip but not have cash on them. A digital tipping solution gives them the option to be generous even without it. 

Self-check-in >> Post-pandemic, people don’t always want to stop by the front desk when they walk in your door. This is true for any number of reasons whether they’re avoiding germs, or they’re really tired after hopping off that red-eye. Use your PMS (see below) to complete guest registration online and deliver their digital keys before they even arrive. 

Cloud PMS >> Your property management system is your main junction. All information from other parts of your tech stack flows through here. Make sure your PMS integrates seamlessly with your other systems and provides you with easy yet secure access to your data. 

IT / Security >> Invest in systems with strong security, including SSL encryption, EMV certification, two-factor authentication, and IP-restricted access. It’s also a good idea to select an internet provider that specializes in hospitality. Because hotels gather guest data, such as contact information and credit card numbers, they present hackers with a prime target. Data breaches not only cost you money but credibility as well.

Marketing 

Spend the time and money to ensure that your website, digital advertising, social media, and email campaigns are all up to snuff. Guests judge your credibility by your marketing messaging (a website designed in 1993 won’t help), and they can’t book with you if they don’t know you’re out there. 

A cloud PMS such as WebRezPro can help automate and personalize email campaigns without using up too much of your time. Consider your audience and take aim before releasing that marketing budget! 

Maintenance

Keep on top of building maintenance so that little things don’t turn into big things…and cost you a lot of money later. For safety reasons, sprinklers, fire alarms, and fire extinguishers should be checked once a year and replaced if required. Carbon monoxide detectors should be checked once a month while electrical systems also need regular attention. This is where WebRezPro’s housekeeping reports and maintenance alarms come in, ensuring that nothing falls through the cracks—literally. 

Miscellaneous Expenses

Take the time to comb through your expenses department by department and category by category. The more precise your budget, the less chance you have of veering off course. 

In addition to fixed and regular expenses, including mortgage, utilities, interest, and tax payments, miscellaneous expenses like water bottles and toilet paper can add up. Maybe your guests don’t need those water bottles after all; you could decrease your expenses and your environmental impact…

Stick to the Plan & Be Prepared

Though a budget or roadmap gives you directions from Point A to Point B—a profitable hotel—you still have to drive there yourself. Numbers don’t do any good if you don’t take action on them. 

What will you do in the coming year to ensure the revenue you predicted? What contingencies do you have in place if market forces change and certain revenue streams are no longer available? Set aside a buffer fund for unexpected expenses. You don’t always know what’s around that bend in the road… 

Budgeting isn’t the sole dominion of your finance team. The leaders of each department should be involved, including ancillary departments such as food and beverage. Ask each team leader where they’re getting their numbers (the answer shouldn’t be “inside my head”) and what the context for those numbers is. An ounce of prevention in the mapping stage can save you a pound of cure later.