With operating budgets thrown out the window by the second quarter this year, hoteliers are scrambling to find useful historical data to help guide them through the 2021 budgeting and forecasting process. Hotel operators will be better off to rely on historical drivers rather than bottom-line revenues to help them better plan for the days ahead. Knowing how to analyze trend data, such as driver value, will help operators forecast more accurately.
Use driver-based calculations rather than straight inputs:
Due to the relationship of the driver to its source, when a modification to the source is made, the calculation will cascade and update the associated values throughout the budget. When you are using straight input for each line of the budget, when a value is changed, the entire budget will need to be reviewed and possibly redone. If the driver value for reservation expense is 5% off Room Revenue, when the Room Revenue value is changed, the reservation expense will be adjusted.
Develop standards – such as Hours/Occupied Room:
Understand what the correct ratio should be. If a housekeeper should be .5 hours/Occupied Room for a select-service property, this can become the “standard” or guideline for other select-service properties within your portfolio. Compare those “standards” to generate the most accurate value as to how the amount should be calculated. For instance, if one property is spending .75 hours/occupied room and another is spending .25 it would make sense that the standard value should be .50 hours/occupied room. The budget calculation will not vary by the time but by the number of rooms that are occupied. This will also aid with the amount of labor needed to meet those standards.
Review the monthly trends of your actual data:
As we are now 9 months into an unpredictable year; review your data looking for a trend. If the linen expense in one of your FB outlets is running 5% of dinner revenue for the first 3 months and then increases to 8% for the next three months and then returns to 5%; use those same historical trends to define your upcoming year rather than taking the annual amount and dividing it by 12 giving you the same flat amount for each month. This will help especially with seasonal properties and improve overall month to month accuracy.
Develop a budget that will create a solid beginning for your 2021 forecast:
Often it is said that the budget is outdated once it is approved, so users do not spend the time on the month-to-month accuracy. If the time is spent on creating the most accurate monthly budget, this can then be used as a valuable starting point for your future forecast and your budget effort is proven to be worthwhile.
News Courtesy: HTN
