Tips for setting your hotel’s rooms budget


It’s the time of year when collectively General Managers, Revenue Managers and Sales Directors look nervously at one another until the Financial Controller says “budget” and “ball rolling” in the same sentence. I see it across the country, everyone wanting it done yesterday and hoping against hope that the desired increase isn’t double digit!

Although some of you are ahead of the curve and have already started the pain/pleasure process of annual rooms budgeting, most are only sharpening the pencils for round one – so with that in mind, here are some top tips for budgeting for 2018 from The Innovate Room:

  1. Get an indication of expectations – be it top line or bottom line growth percentages, occupancy increases, ADR or RevPAR improvement- or a combination of all. Whether the buzz words in your hotel are benchmarking or profitability – get a sense of what the end goal for 2018 performance would look like in an ideal world. It’s much easier to lay the path for success when you know what the destination is. Don’t forget to use independent sources to get an indication of anticipated market performance – STR, PKF, PWC and Crowe-Howarth all give good insight into trends and forecasts for future years.
  2. Collect your data – whatever metrics you use in your business, as a team or as individual departments, now is the time to start collating those reports. Looking at year on year performance and variance can be a good benchmark to how much growth you can put against next year. Come together and agree what data you will be using to write the 2018 budget.
  3. Segment, segment, segment…. Try and look at your business by type– knowing what business you had by segment (corporate, leisure, group etc), the average rate you can expect from that segment and the volume of room nights you are aiming for, allows you to plan for demand generation for that segment.
  4. Know your event calendar – plot by month the key events in your location or destination. Know when the high demand periods fall and budget into those months/weeks/days accordingly. Remember to consider any key events of the current year and plot them against future years only if they are due to repeat!
  5. Don’t forget to look at business already on the books – if you have large amounts of space already committed to group business or big blank weeks, be aware of ability or restrictions you may have to grow rate or room nights for those periods.
  6. Remember to align your rooms budget against your sales and marketing activities – make sure you place your resources (human and monetary) to the areas where you will see the best return and which is in line with your segmentation goals.
  7. Understand the true cost and value of different types of business– strive to see beyond the average rate and look at the metrics of Total Guest Paid Revenue, Revenue Capture and net Revenue, Net RevPAR, Contribution to Net Profits and Expenses(COPE) and your Sales and Marketing Efficiency to determine how to move your business forward successfully.


If this sounds all too familiar and you’d like to have a chat about paving your hotel’s particular path to success for 2018, give us a call or drop us a line,

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