Hotel Business Plan Development 2018: Getting Ready for 2018 Budgeting
September 7, 2017 10:58am
By Robert A. Rauch
Before we complete our business plans for 2018, a review of macroeconomic data is in order. China’s growth might be slowing but we anticipate a fairly steady U.S. economy in 2018. We will likely slow to about a 2 percent GDP growth rate over the next year as this economic recovery reaches the 100 month mark next year.
Unemployment is low, consumer confidence is solid and household spending is strong. Interest rates remain low, business confidence is strong and nothing to derail the economy is imminent. Oil prices have been unusually flat notwithstanding the speed bump caused by Hurricane Harvey.
All of this information bodes well for the hotel market in the U.S. which should lead to our estimate of 3 percent RevPAR growth in 2018. Last year at this time, we projected 4 percent RevPar growth for 2017 and stand by that number. Naturally, the caveat is that unexpected “event” that could stimulate a precipitous decline in demand. We believe that can be averted in 2018 despite the craziness in the Middle East, North Korea’s chest pounding and the turbulent economies abroad.
As we are now nearing the end of summer of 2017, this means budget and market planning time is here. While many operators merely look at last year’s numbers to budget and forecast, the only meaningful way to budget is to analyze the market thoroughly. Whether you are opening a new business or getting ready for 2018 budgeting, now is the time to begin the planning process.
The following action needs to be taken:
Use this process now or risk losing your competitive edge! And do yourself a favor and do not create the budget without first reviewing your Business Plan – otherwise you are just entering numbers to make yourself feel good. Remember that all business is local – national trends are merely the foundation of your plan.
Enjoy the end of summer and Q4!
Tags: robert a. rauch,
business plan development
Bob Rauch, CHA, is a nationally recognized hotelier and President of RAR Hospitality, a leading hospitality management and consulting firm, and one of the fastest growing hotel management companies in the industry. Rauch has more than 40 years of hospitality-related management experience in all facets of the industry, and is currently a Faculty Associate at Arizona State University where he teaches Entrepreneurial Recreation and Tourism.
Contact: Robert Rauch
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