Hotel Budgeting

1
Hotel Budgeting

• A guide for planning and controlling processes
  in hotels
• Prepared by Cem Adiguzel

2
Influences of Decision Making
News
Market share Local trends Channel mix Deviation
Analysis Promotion Effectiveness
Report
Consolidation Management reports Performance
measurement Product performance Customer Analysis
3
Targets of Hotel Managers

• Increase hotel occupancy rate
• Increase profitability of sales
• Cost control
• Owners of revenues and expenses
• Relating expenses and revenues

4
Benefits of Budget System

• Focus on future and preparation for possible
  outcomes
• Enhanced communication
• Information for different parties
• Benchmark for performance control
• Achievement oriented organizational behavior
  (combined with compensation system)

5
Industrial Comparisons

• Uniform System of Accounts for Lodging Industry
• New York City Hotel Association
• First published in 1926
• 9th revision
• Based on
• Service standards
• Region and type of property

6
Management Functions and Budget
Planning
Organizing
Leading
Controlling
Feedback
7
Reasons of Failure

• Top management support
• Organizational conformity
• Responsibility accounting
• Wrong internal or external information
• Time schedules
• Flexibility
• Evaluation of actual results
• Reflecting evaluation results back to business

8
Before starting...

• Current years activity figures
• General economic and industry conditions
• Competitive environment
• Prices (rates) being applied
• Industry forecasts and trends

9
Structure of the Multi-Property Operation

• Summary profit loss schedule
• Revenues
• Rooms
• F B
• Outlet rents
• Laundry
• Expenses
• Cost of Sales
• Departmental Expenses
• Payroll and related expenses
• Undistributed expenses
• Cumulative profit loss figures

10
Structure of the Multi-Property Operation

• Ratios
• Operational ratios
• Occupancy rate
• Double occupancy rate
• Average stay
• Average room rate
• RevPar
• FB spending
• Cost of sales ratio for FB outlets
• Payroll and related expenses ratio
• Total cost per occupied room
• Profitability ratios

11
Structure of the Multi-Property Operation

• Single Property profit loss schedule
• Departmental Budgets

Summary Profit Loss Schedules
Property 1
Property 2
Property 3
Laundry
Laundry
Laundry
FB
FB
FB
Rooms
Rooms
Rooms
12
Cost Drivers and Department Budgets
13
Budgeting Mechanics
Parameter 1 Reservation Source Option 1,1 -
Local Travel Agency Option 1,2 - International
Travel Agency Option 1,3 Internet,
Parameter 2 Price Category Option 2,1 Rack
Rate Option 2,2 Corporate Rate Option 2,3 - CIR
1 Option 2,4 - CIR 2
Identify Market Segments
Corporate base information
Enter Sales Estimation
Parameter 3 Room Type Option 3,1 Single
Room Option 3,2 Double Room Option 3,3 Suite
Complete Departmental Budgets
Collect Merge
Final Approval
Collect Merge Property Budgets
Final Corporate Approval
14
Framework for Successful Budgeting
15
Budgeting Tools

• Spreadsheets
• For small sized hotels with minimum outlets
• Specialized budgeting software
• Large scale hotels with more than 200 rooms
• Hotel Chains

16
For more information

• Download complete research
• http//www32.brinkster.com/unaweb/hotelbudgeting.d
  oc
• Hotel budgeting software
• http//www.servushotel.com
• Uniform System of Accounts
• http//