Every business needs a budget to estimate how the year will pan Every business needs a budget to estimate how the year will pan out financially. A budget serves many purposes including making sure the right resources are allocated properly.
For the purpose of making a budget, you need to follow the simple process:
Calculate all the revenue, Make a list of all the expense, subtract the 2 and get your profit or loss for the period.
That is the most simple form of making a budget, however, if you are running a hotel, you will have various departments and you will need to calculate department wise numbers for the same. Add in the complexity of ARR, RevPAR, APC and other statistics, you will need a template to accurately make the same.
If you work for a branded hotel, your brand will provide you with the templates, however, if you work for a freestanding hotel or own an unbranded hotel, you can buy the template on the site to make the budget.
How to use the file that you purchased
Before you start to use the file some key notes:
- Most of the cells are locked so that you accidentally don’t change the formula
- You can enter figures in the blue cell only as per the requirement
- The file is from April to March or the Indian financial year, In case you need to change the cells to the calendar year from Jan to December, please write to me
The rooms_ input is the first tab that you need to start to make your budget. The sheet is protected so you can only change the blue cells
At the top, enter the number of rooms in your hotel in the inventory line.
The Segmentation explained
- Premium rooms: Suites and Higher categories of rooms
- Standard Rooms: Base category rooms
- OTA: Online Travel Agents
- Corporate: Companies you contract locally or nationally
- Travel Agent – FIT: Rooms from Travel agents that are not Groups
- PSU/ Defence: Special rates for Government and Defence sector as per their perdiem if contracted
- Packages: Any packages being sold, for an e.g room with breakfast and airport transfer
- Advance Purchase: A discounted rate for buying in advance. It is usually prepaid and can be offered online on your website
- Senior Discount/ Other discounts: Should you wish to offer any ad-hoc discounted rooms.
For every segment enter the number of rooms you expect to sell every month. As you start putting in the figures for various segments, you will see the occupancy numbers getting auto calculated.
Once you have added the number of rooms to be sold, input the Average room rate you expect for each segment of a business. To add the ARR you need to simply put down the ARR for the base category room and add a factor of discount or premium to the various segments. An indicative discount pattern is already put in the file, please feel free to change it in case you wish to reduce or increase the discount or premium for a particular segment.
Once you have done this, the sheet will auto-populate the month wise room revenue.
After you have added the room revenue, go to the next tab which is the rooms tab and enter all the expenses like salaries, and other controllable expenses. The sheet will give you the department profitability and Cost per occupied room as a statistics.
On the Food and beverage budget, start with ADD or all day dining tab. Add the monthly covers and the expected APC and you will get the revenue. Add the Beverage and other revenue in the cells below and the other expenses. Once you finish ADD, do the same with all the other food and beverage tabs. Use the tabs as per your requirement. If your hotel does not have a particular tab, leave it blank.
All the data from the sheet will add up to the Fnb sheet before the ADD tab.
SPA and Other Revenue: Add the revenue and Expenses for the departments.
Admin: Add the expenses for all admin departments
Utilities: Add the HLP expenses in this tab
Repairs and Maintenance: Add the engineering cost in this tab including the salaries and wages for the department
Sales and Marketing: Add the expenses for the Sales and Marketing department including salaries and benefits in this tab
Once you have finished entering all the expenses and the revenues, return to the monthly statement tab to get a month wise GOP view. If you need to adjust any expense evenly to ensure consistent profit, you may look at this sheet to revise any numbers you wish to change
After doing that, view the Yearly budget tab and head down to column 44 and add any other additional expense your hotel may have
Once you finish all the input, you will have a sheet which you can present to the owners.
And if you are interested in training your team, do check out our training plans for hotels