By Nick Doble, Partner Services Manager at Booking.com and member of HSMAI's Revenue Optimization Advisory Board.
We all face challenges with budgeting and forecasting. From projections that are misaligned with the industry to unrealistic expectations from owners, this resource-intensive process presents numerous challenges.
So how do you make the budgeting and forecasting process more efficient, realistic, and aligned with industry trends and stakeholder expectations?
Challenges identified:
- Misalignment of industry projections: Industry projections often do not match the budget schedule, leading to discrepancies and unrealistic forecasts.
- Resource-intensive: The budgeting process consumes significant resources, diverting attention from revenue-generating activities.
- Owner Expectations: Misaligned expectations between hotel management and owners can lead to last-minute changes and inefficiencies that could have been avoided.
- Inflexible forecasts: Fixed revenue targets based on current projections can result in unrealistic budget expectations, especially if initial projections are overly optimistic.
Potential solutions:
- Frequent updates: Sector projections should be updated more frequently to better align with the budget process, ensuring more accurate forecasts.
- Streamlined meetings: Breaking down the budget process into shorter, more frequent meetings can reduce the time spent on revisions and ensure ongoing alignment among stakeholders, while ensuring that all relevant stakeholders are involved.
- Year-over-year growth: Focusing on year-over-year growth percentages rather than fixed revenue numbers can provide a more flexible and realistic approach to budgeting.
- Involve owners early: Involving owners early and often in the budget process can help align expectations and reduce the need for extensive revisions later..