6 Ways To Survive Hotel Budget Season
September 9, 2016 8:40am
As budget season approaches, we’re here to help you plan for a profitable 2017 with six smart hotel sales and marketing budget strategies.
The most vital component of your budget planning is taking time for thorough introspection, honest reviews of what is currently working and not working, and open conversations with your hotel owners, colleagues, sales staff, guests and even your comp set. This due diligence will give you real information and real numbers to build your budget, instead of blindly relying on your gut for what will work and what won’t.
Here are six proven best practices from our in-residence DOSM, Jeff Spaccio, to help you navigate hotel budget season:
1. Find out Exactly What Hotel Owners/Managers Expect From You
Before you can carefully consider what resources you need for 2017, you must determine exactly how much your hotel owners/management company expects you to contribute to overall revenue targets. This discussion should occur early in the process. The more questions you ask, the more insight and clarity you will get. Typically, corporate-level execs and senior management already receive direction early in the budgeting process, so talking with them first will save you from wasting time and making costly assumptions and guesses.
A common budgeting mistake that hotel marketers make is leaving it up to their owners or managers on how much funds get allocated to marketing. By telling your management team, “I’ll do the best with whatever money you can give me,” you are actually placing your entire marketing team in a dangerous position, as they will now be tasked with producing the impossible and will be held responsible when you can’t make that goal. Instead, use your management team’s revenue goals and outline exactly what is needed to achieve that figure. In addition to outlining how much money you’ll need, tell them whether you will require new staff or if hotel product improvements are needed to achieve their targets.
2. Expand on Your Recent Success
Before drafting a budget, take a step back and evaluate this year’s performance and reflect on what brought you the most success in 2016. What trends, markets, promotions and tactics produced the most revenue? Whatever drove the most bookings and highest profits, continue that in 2017.
Too often, hotel marketers are so eager to be innovative and ahead of their competition that they invest only in all-new ideas, tools and trends each year. Or, even worse, they play it too safe and stick to “what we’ve always done” whether it is working or not.
While you shouldn’t ignore promising new trends, the best budget strategy is to focus on what is driving your largest amount of conversions right now. You also need to show hotel owners and managers how your work has contributed to this current year’s revenue. By calculating this year’s marketing cost per sale (MCPS), you can leverage this figure to help you justify what’s required to reach your 2017 revenue targets.
3. Focus on Quality, Not Quantity
The idea of keeping budgets simple and straightforward is an often overlooked characteristic of successful budgets. Complicated budgets don’t create profits. They will only leave you weighed down and flustered throughout the year.
Instead, base your budget on a handful of quality initiatives and resources, not on a bevy of disjointed marketing ideas that will create small bursts of revenue. Simple, uncluttered budgets have the most impact on your hotel. Not only will they keep you organized and frictionless, they will allow you to be nimble and make quick decisions if opportunities arise or if certain programs become less profitable throughout the year.
4. Gather Valuable Intel From Line Staff
There’s no reason why your group sales, front desk staff and catering staff shouldn’t be involved in budget planning. In fact, some of the best insight for your budget will come from front line staff who interact with guests and group clients and know what guests are looking for and complaining about. DORM’s and DOSM’s don’t often have enough personal contact with guests and meeting planners, so talking with staff will cover those blind spots.
Unless you ask, your staff is unlikely to willingly share their perspective or knowledge. So, leverage budget season as a forum to gather feedback from these valuable employees.
Further, don’t ignore your own marketing staff, even those in entry-level positions. Your hotel’s marketing success and profitability is directly connected to the people who execute the campaigns and help generate bookings. Ask them what is needed to amplify their efficiency, and what can make their job easier and more impactful. Give them the freedom to tell you what they need, what worked for them, what didn’t and their own ideas to drive more profits.
5. Talk With Your Competition
This may seem counterintuitive, but DOSM’s and senior management should have strong relationships with their comp set. Reach out to peers from your comp set and discuss market perceptions, direction of the economy, future capital improvements and any anomalies they see in the upcoming year. These peer-to-peer discussions will broaden your budget outlook and unearth components you may not have considered.
6. Leverage Guest Reviews to Justify Budget Requests
In the end, it’s all about your guest. Understand what is currently impacting the guest experience for better or worse this year by combing through TripAdivsor, social media reviews and any other direct guest feedback. Knowing what your guests want and need will help you determine your marketing budget in a more thoughtful way. If your hotel product requires additional investment to effectively compete for more direct bookings, now is the time to bring it up and back it up with guest reviews.
For more information on how to survive hotel budget season, download our free hotel marketing budget worksheet
Tambourine uses technology and creativity to increase revenue for hotels and destinations worldwide. The firm, now in its 30th year, is located in New York City and Fort Lauderdale. Please visit:www.Tambourine.com
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