Some hotels call their ‘classic’ budgets business plan or marketing plan or other synonyms, but regardless the name, they all have the same kind of information and are all an outlook over the next full year.
Over the past years, I came to the conclusion, that a revenue professional is not ‘interested’ in a budget, nevertheless the layout or the content of the presentation. Why is that?
Because of the simply fact that the moment you send your budget off, it is already outdated! A budget is more less just a forecast for a period of time, done at a certain moment – 2014 (for 12 months) made in Q3 2013.
Another fact, and we know it all, is that we write things into the budget, which will not happen. We write it to make it look good. It is a kind of bling bling in a dream world. There is only one goal to achieve – get the budget approved!
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And finally and the main reason why I don’t rely on budgets is; After all is approved, 99% of the budgets are going to garbage or into the next available drawer and are there for the next twelve months…
In my opinion our hotel environment is so fast changing, that we anyway don’t know what will be in May 2014 – is the economy still stable, has a recession started, did the currencies of feeder market fluctuate,…. And that’s what separates average from good revenue managers. The knowledge, the being up-to-date, always on top of things and happenings… Most of those unpredictable occasions were not foreseen and are definitely not in budgets or any other kind of business plans.
Doing proper forecasting for 90 days or 180 days on a regular basis might be more effective then putting a budget for the next 15 months together. A proper action plan for Sales & Marketing, E-Commerce and other revenue generating departments is more promising than those promised in any budget presentation. Just be honest and ask yourself – How often did you re-read your budget from this year and followed up with the mentioned actions, to-do’s, promotions and so on? And then ask yourself as well – How accurate are you reading your monthly reports? Are you updating yourself on changes versus expectations? Are you trying new things?
What I am trying to say is; A budget is a guideline which drives all hotel members to a goal. But if nobody follows up or re-reads or works with the current budget, then as previously said and in my opinion it’s a waste of time to have and make a budget every year. I see more potential in really working with your month end reports, with a proper up-to-date action plan and especially doing accurate analysis about past and future dates.
A ‘better’ guideline is your last year actual figures. If you are ahead, you made a good job. If you aren’t, analyze and find out why. If there is a reason behind, you will find out which and why. Once prepared, you are ready to answer any kind of questions and defend your position. A negative outcome is always a opportunity to change it into something positive. But this you only achieve by a steady and continuous work and not by doing once a year a budget.
With that said, to all who finalized their budgets congratulations and to all who haven’t finished yet, re-think the way of using and seeing your budget. Especially for you as a revenue person, be ahead of the market, be on top of things and don’t necessarily rely on things you decided over a year ago.
