Juggling

Nobody likes budget development.  So let's talk about budget development.

One reason budget development for hotels and resorts is often such a headache is  because of starting at the wrong end. With tactics.

If you start with a list of tactics and assign costs next to each one, you will almost always end up with more than you can afford. Do you start with a list of "things to do" like advertising, PR, SEO, PPC and so on and simply put a cost next to each one? Let's re-think that. Don't just start with last year's tactics.

Start with goals and expectations instead. Be clear in your mind what your goals and expectations are. Build occupancy? Increase rate? A little bit of both? Or just maintain and not lose any ground?

We've put a thought-starter spreadsheet in the Thinking section of our website that can help you determine a budget level – and you'll see how having goals in mind can help you settle on what that budget figure ought to be. This worksheet lets you play around with different revenue goals and budget scenarios.

The point is, have your goals and expectations and a budget figure all lined up. Now you can think about tactics. But this way, you're looking at which tactics will help you reach that goal the most cost-effectively.

You still may find that they don't all fit within your budget. But at least this way, you have some parameters with which to evaluate and prioritize those efforts and determine which will bring you the best return. That's good.

And one reason it is good is that it might force you or whomever you work for to examine exactly how serious you are about your goals. If you have aggressive goals, but aren't willing to apply aggressive resources to them, well then, the whole budgeting exercise can seem a bit pointless.

If you've approached this the right way – setting goals and expectations first, then setting your budget figure, then prioritizing the tools you need to reach those goals and you simply can't get there from here, it's time to go back and re-think your goals or your budget. That spreadsheet makes it pretty easy to do either one.

This is a big topic that could go on forever, so we posted a downloadable paper in the "Thinking" section of our website with more on it. Help yourself.

But if you're like many in the hospitality industry, when budget season comes around you are asked to do more with less. This might be a business-based argument to take to the CFO.