Budgeting for the Future of Hospitality

Jacki Schroder

Budget season is officially upon (most of) us. While budgeting for the upcoming year can be an incredible effort across multiple teams and can take quite a bit of time, it’s also an opportunity to reassess goals for the business and look to the future. A seasoned general manager knows that success depends on balancing three goals:

  1. Creating exceptional guest experiences
  2. Empowering their teams to deliver
  3. Keeping costs down

According to a study by McKinsey, 70% of buying experiences are based on how the customer feels they are being treated. We often say hospitality is a people first business, and keeping guests satisfied should always be a top priority. Giving your teams the tools and resources they need to deliver on that goal is the only way to truly succeed. Goal #3 brings to life a harsher reality – delivering exceptional service comes at a cost. Keeping costs low is crucial to profitability, and, of course, there is no room for error.

As you begin to budget for 2019, now is a great time to assess your current challenges and market opportunities. Thinking to the future now will give progressive, truly forward-thinking hotel GMs the benefits of a first-mover advantage in the coming years. So how are you planning to tackle your challenges next year?

 

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Top 3 Challenges of the Future

1. Competition and Changing Expectations

The hospitality industry is constantly changing and new competitors are emerging. OTAs are consistently evolving, like Booking Holdings announcing they will no longer support Rate Manager for small and medium hotels. And let’s not forget how often startups disrupt the space.

With brands like Netflix, Uber, Amazon, and Starbucks, guests expect personalized experiences with speed. Their daily engagement with such brands carry over to their expectations of all companies they interact with, including hotels. Anyone who doesn’t start shifting to a more customer-focused mindset will begin to see their successes diminish.

Recommended Article: Delivering an Unforgettable Guest Experience [White Paper Download]

2. Ensuring a Sustainable Approach to Growth

Growing your business will always be a goal of any company, but determining a strategy for sustained growth over time in a competitive market takes a bit more effort to map out. You can start by working to balance your market mix and finding ways to optimize revenues, while keeping costs low. Determine the ideal mix of transient and group business, then prioritize marketing to new audiences through different channels and developing new relationships that align with those priorities.

3. Ensuring Success When Failure Isn’t an Option

While expectations may be changing, there are some expectations that have solidified over time. At the core of hospitality, it is imperative to deliver clean, functioning spaces with efficient service. With online reviews dominating property selection, one mistake could cost significant business, particularly for independent hotels that lack strong brand name recognition to help overcome mishaps. Working with your teams to improve communication and processes will help deliver the expected experience… and hopefully much more.

 

Technology in Hospitality

While being a people-first business means focusing on the wellbeing of your guests and staff, technology can help support your future success in operational excellence. It’s important to begin budgeting for it now if you’re looking to make any changes in the upcoming fiscal year.

“Keeping cost down is important, but technology needs to be efficient. If it can allow any one of us to do our jobs better or faster, there’s a price for that. Time is really important and very expensive.”

— Chris Chapin, The Olympia Companies

Technology in hospitality is about finding tools that can enable your team to be more efficient and focus on what matters most, the guest. It’s about making your people more efficient. With the aforementioned shifting guest expectations, every team member needs to be productive in a way that is more personal. Teams need to communicate quickly and clearly. Information needs to be consolidated for deeper insights into individual guests, groups, and the overall business. That’s a lot to put on anyone’s personal development plan without providing new tools to supplement their efforts.

 

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Evaluate Your Systems

Where are you in your technology evolution? Take some time during budget planning to review your current systems and determine where investments will deliver the most influential returns.

  • My systems were recently updated. Now make sure they are integrated with your other solutions to ensure consistent data and analytics.
  • My systems aren’t new and exciting, but they work… for now. It can be hard to make the case to upgrade a system that seems to be working, even if it isn’t as efficient as you would like.
  • My systems are underperforming. If your team’s daily tasks have become a struggle and you find you have a lot of duplicate effort, duplicate data, or it takes forever to load a single screen, you need to think about making room in the 2019 budget for an upgrade. Not only are underperforming systems inefficient, they can create significant frustration and even cause you to lose good talent.
  • My systems are being discontinued. If you have any software being discontinued, it’s imperative that you plan to upgrade in the next budget cycle. Operating old and/or unsupported software can lead to significant security risks for both your property and your guests. Plus – an upgrade could be just the thing you need to get you thinking about the future.

 

Finding the ROI

How can you afford innovative technology that promises to empower your teams and enhance your guest experiences in so many different ways? Solutions exist to overcome these challenges in an affordable, practical, and easy-to-implement manner that fits your business needs.

While you may feel like upgrading or purchasing new systems may be out of your reach for 2019, it’s always worth considering both (A) what could happen if you don’t make an upgrade and (B) what the return could be if you do upgrade.

Recommended Article: How to Influence Approval for a New Hotel Management System

A stellar guest experience can truly make you more profitable and there’s data to prove it:

 

Exceptional guest experiences are the number one goal for hotels of the future. It’s figuring out how to deliver on that promise that gets a little more complicated. There’s a lot more to talk about when it comes to operating the hotel of the future. If you’re interested in hearing more, check out our new eBook, Hotel Management 2020.

 

Download Hotel Management 2020 eBook

 

Are you ready to talk 2019 budget planning with us? We’re happy to help talk about options that make sense for your business goals in the upcoming year. And happy budgeting!

 

 

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