The Hotel Budget

Braidwood assists our clients with the preparation of budgets; tailoring the degree of detail to their individual and specific needs. Our hotel budget templates are quickly adaptable to your hotel’s business model incorporating trends from revenue, expense and historical market segmentation. For new hotels that lack historical trends, we research historical market trends in your area using data from hotels within and outside your competitive set.

Why do I need a hotel budget? Other than the obvious reason of calculating annual revenues and related expenses associated with operating a hotel, no rational manager would operate without one as it allows managers to understand forecasted revenues by department, forecast and project labour cost, calculate occupancy, average rate, RevPar and room revenue, estimate depreciation, measure actual results against budget, project net income on an annual basis and project cash flow.

Budgets are prepared, be they formal of informal, to provide answers to owners and managers during the daily operation of their hotels.

In limited service hotels it may only be necessary to prepare a room’s division budget that would include guest room revenue and related expense along with other revenue from such things as local & long distance calls, parking, Internet and movie rentals etc. In full service hotels the budgeting process is a more complex and daunting one.

One important factor in the development of a hotel room’s division budget is the understanding of which market segments are driving business to your hotel. This is important over time, as historical trends are one of the factors used in establishing rates and occupancy and for identifying emerging market segments as well as alerting you when historically strong market segments show signs of weakening due to competitive practices or other economic factors.