For those in leadership positions at hotels, these are interesting times for the industry. In the past couple of years alone, the global hospitality sector has amassed significant growth. Statistics from Deloitte mention that $1.6 trillion was spent for travel bookings alone in 2017. Many more tourists have opted to spend their disposable income on experiences rather than on retail and gadgets, and they also have high expectations from the hotels that they go to. Hotel establishments also enjoy the patronage of guests on official business, and those who favor the hotel’s facilities for conferences and seminars.
But a great business environment alone is no guarantee for a hotel’s success. Hotel owners and managers agree on one thing: running a hotel is neither an easy task nor a profitable venture by default. Competition is stiff amongst rival establishments, inns, hostels, and individual contractors like Airbnb. In addition, challenges to a hotel business all vary depending on the time, the weather, the season, the labor and employment sector, and the availability of necessary tools and technologies.
This is where budget management becomes crucial. A number of things can bring a hotel’s cash situation in the red, or stall its primary means of attaining revenue. A well-managed hotel budget will maximize opportunities on the property, increase bookings, preserve the hotel’s brand and reputation, and bring back the highest possible returns to the business. Conversely, if no special care is taken to manage the budget, opportunities will be lost and precious resources will go to waste.
But hoteliers take heart; there are a number of ways to stay on top of the hotel’s budget without bleeding too much cash. Here are five tips to ensure efficient hotel budget management in these exciting times.
- Implement a revenue management system. The best thing you can do for your hotel’s overall financial health is to install a revenue management system or upgrade the one that you already have to best accommodate your hotel’s needs. The revenue management system will be able to accurately show your hotel’s performance data (including your average day rates or revenue per available hotel room) and its financial situation in real-time. Having that precise data available will help you determine the clearest recourses of action.
- Upgrade the tools that are being used in the hotel. Part of efficient hotel budget management is deciding what you should spend your money on at any given time. It’s likely that your hotel’s cleaning and maintenance equipment are deserving of an upgrade. Consider, for example, purchasing commercial wet mops. The high-quality microfiber kind will aid your staff in cleaning out dirt from hard-to-reach surfaces, thus keeping the hotel’s rooms and facilities immaculate. When investing in better tools, think of getting the type that will help your staff work smarter—therefore making it easier for them to keep up with the hotel’s standards.
- Review your contracts and see if they still hold to the hotel’s best interests. A large chunk of your hotel’s budget goes into the services it contracts, such as landscaping, water, and electricity. One thing hoteliers don’t realize is the risk of being too comfortable with the “safe” option or the option that has worked for some time (but won’t necessarily work now). Take time to survey your existing contracts with the rest of the management team. Evaluate which contracts are guaranteeing your hotel the best value for money, and don’t be afraid to look for other contractors if you feel like they’d be a better match to your expectations.
- Preserve good relationships with suppliers. For this aspect of hotel budget management, however, it’s good to stick with the good things you already have. If you’re satisfied with your hotel’s suppliers for office supplies, toiletries, toilet paper, and the like, let them know that you want a partnership for the long haul. Visit their facilities and engage them about their industry niche. This will increase the likelihood of your hotel receiving personalized deals and service on the part of supplies.
- Get up to date on your booking technology and social media. The internet provides some considerable opportunities to promote and transact, thereby cutting costs like that of traditional advertising. If your hotel hasn’t partnered with listing sites like Hotel.com, Agoda, and Trivago, go through the motions of getting listed. Take advantage of the additional booking revenues that can come out of these sites’ booking infrastructure. In addition, you can turn to social media for advertising that’s virtually free and easy to disseminate around-the-clock. Use avenues like Facebook to disseminate hotel promotions, check your ratings, and interact with visitors. Internet and social media savvy could save you considerable costs and see them funneled into other areas.
Don’t forget to revisit your hotel’s budget every now and then, and tweak it if you feel there’s a need to. The hotel industry in particular is prone to fluctuation, and hoteliers have to develop a number of skills related to being flexible, resilient, and forward-thinking. Check if the budget you have right now reflects current trends in the industry, market prices for commodities, and the like. Always be in a position where you can easily forecast your expected returns and plan your future expenses.
Truly, it’s not easy being a hotelier. Keeping hotel customers comfortable and satisfied is a 24/7 endeavor. But mastery of hotel budget management will go a long way in keeping your doors open and ready for business. Best of luck in your budget management practices, and here’s to the happy experiences of your future guests!