Partner Article

Best Hotel Operating Budget Advice?

Need advice on a new hotel operating budget? Whether you own one hotel or a string of them, we have some information that you want to read. First, we’re going to break down some of the basics you want to consider when creating a budget for hotel operations. At the end of the article, we have a look at one way to ensure you come up with the best budget possible.

Better Hotel Operating Budgets

Here is a look at some basic points you’ll want to keep in mind when you’re coming up with a hotel operating budget for a brand-new hotel or one that is already open.

• Know Your Objectives - Before you begin, you want to make sure you know your objectives in running the hotel. Is it to make the biggest profit no matter what? Or do you want slow and steady growth over many years? This will make a difference in the type of budget you develop.
• List the Competition - Make note of what hotels are serving the same types of people your hotel will be serving once it opens. This can be tricky, but be sure to get as much information as possible. The more you know about the competition, the easier it will be to construct your own budget.
• Know Your Costs - Whether it’s staff or the price of water every month, make sure you have an itemized list of all your expenses during a normal month in summer and winter. This will give you a good idea of where to start with your operating budget.
• Calculate Occupancy Rates - Next, you want to spend time calculating the occupancy rate of your hotel for an entire year. This is more difficult with a brand new hotel, but if you’ve been operating a while, this shouldn’t be difficult to calculate.
• Breaking Out of Red - You might find that you need to operate your hotel at a loss for one or several months when it’s first opening. In these cases, it’s crucial to have enough back-up cash on hand to make sure everything runs smoothly until revenue catches up with expenses.
• Check Your Work - Take the time to go over your operating budget carefully. Even a tiny mistake can grow out of control over the course of a year. The more accurate your records, the better budget you’re going to be able to develop for your hotels.
• Key Functional Areas - When you’re trying to balance a hotel operating budget, it’s a good idea to know the key functional areas that cannot be underfunded no matter what. Once you designate these key areas, balancing your hotel budget can become easier.
• Include Marketing Costs - One mistake many people make when budgeting for hotel operations is to not have enough set aside for marketing. In most cases, the money you spend on advertising will be returned by higher occupancy rates at your hotels. Keep that in mind when budgeting.

There is also one advice we’d like to share with forward-thinking hoteliers – include sustainable practices expenses in your budget. The amount depends on the size of your hotel – there are low cost practices for small hotels and big scale practices for those who are serious with their intention of becoming green. However including even low cost practices in your budget and everyday operations will have positive effect eventually, and it is not only about your hotel reputation but also about your yearly water and energy consumption bills.

As you can see from our short list of helpful tips for creating a hotel operating budget, a lot of time and work will need to go into the entire process. Next, we’re going to look at a way for you to make it easier.

Help With a Hotel Operations Budget

Creating a winning hotel operating budget can be confusing and time consuming if you’re doing it on your own. Fortunately, many firms offer this and other services for the hospitality industry. Whether you’re investing in one hotel or many of them, hiring a professional company to handle budgeting makes sense. Take some time to look into this option, especially if budgeting isn’t your strongest skill.

This was posted in Bdaily's Members' News section by Kevin Jones .