10 Strategies in Hotel Planning & Budgeting for 2021 - GUIDE
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GUIDE 10 Strategies in Hotel Planning & Budgeting for 2021
Index
Intro…………………………………….………................................................................. 3
1. Track down market forecast…….……………................................................ 4
2. Understand the phases of recovery……….………...................................... 5
3. Monitor initiatives to accelerate recovery……………..…….….................... 6
4. Focus on what you can control.……………………………………….................... 8
5. Prepare for multiple scenarios…………………………………….…...................... 9
6. Show leadership......................................................................................... 11
7. Find new revenue streams………………………………………….…………............. 12
8. Position your property for the next tech wave…...................………..…. 13
9. Flex the uncertainty advantage .………………………….…………………………… 14
10. Get ready for a brighter future………………………….………………………...…. 15
INTRODUCTION In any year, planning for the upcoming year is challenging because it’s impossible to predict market conditions. Usually, however, you have a pretty good idea of how things will turn out, and budgeting is a matter of adding a few points in growth to last year’s numbers—enough to keep the owners happy without overpromising. This year, things aren’t quite that simple. After being blindsided by the pandemic early this year, hoteliers now find themselves in the position of having to plan and budget for next year while the pandemic still raging in some regions, travel is severely limited, and no one really knows how things will play out in 2021. During the recent ReviewPro webinar, Hotel Leadership and Planning in Uncertain Times, 77 percent of attendees indicated that uncertainty in market demand is their number one challenge in 2021 planning. So how do you plan for next year? To help, here are 10 strategies shared by our speakers during the webinar.
1. TRACK DOWN MARKET FORECASTS
Normally, industry forecasts provide us with valuable insights into expected market
conditions during the budgeting process. If you’re having a hard time getting your
hands-on forecasts for next year, you’re not alone. It seems that no one wants to make
predictions when the market is so volatile.
According to projections from HVS and STR, recovery is expected to gain momentum in
2021 in all major regions of the world, although occupancy won’t return to pre-
pandemic levels before 2022 and RevPAR won’t return before 2023. Outcomes will
depend on the behavior of the virus and the status of restrictions on gatherings and
travel. Already, we’re seeing a second wave in some regions.
To understand how demand is shaping up in your region, consult reports from STR,
HVS, TravelClick, your destination marketing organization and other companies that
provide performance data. For updates on regional performance, check out STR’s
webinar series.2. UNDERSTAND THE PHASES OF RECOVERY
As we’ve witnessed in recent months, recovery of travel has been occurring in phases, and distinct patterns can be identified in various sectors of the
industry.
By Geography. By market segment. By property type.
Recovery started with local drive-in At the height of the pandemic, travel So far, economy and midscale
and domestic travel. During the was limited to essential services in properties have fared better than
summer months, resort properties many areas. Over the summer, we saw upscale and luxury hotels. Larger
accessible by car fared better than a soft rebound in leisure travel. properties have been hit harder than
city properties and air-only Business travel is expected to pick up smaller properties, in part due to
destinations. Not until travel slowly in the coming months but will be dependence on group business.
restrictions are lifted and people feel limited to individuals and small groups.
more confident about flying can we Full recovery won’t be possible without
expect international travel to resume. meetings, events and group travel,
which will require a lifting of
restrictions on travel and gatherings.3. MONITOR INITIATIVES TO ACCELERATE RECOVERY
What will it take to bring back travel?
A number of initiatives The search for a vaccine. A Rapid testing. A rapid-testing Travel corridors. Having to quarantine
are underway to make vaccine is the best hope for a system for travelers prior to upon arrival at or return from a
travel safer and restore quick global recovery, but it departure or upon arrival destination is a major deterrent from
people’s confidence in will take time to develop, test would help contain the spread many travelers. Some countries have
venturing out. and distribute. Many experts of the virus. But while a formed corridors to allow travel
don’t expect one to be widely number of countries have across borders without quarantine.
available before mid-2021 implemented testing regimes, But as we’ve seen in Europe,
and possibly much later. to date there are no circumstances can change quickly. If
universally accepted quarantines are reinstated without
protocols. Moreover, it can warning, travelers may be left
take multiple days for the unprepared.
virus to reach detectable
levels.3. MONITOR INITIATIVES TO ACCELERATE RECOVERY
• Immunity passports. A digital passport or stamp showing proof
of immunity would allow people who have had the virus to
travel without restrictions. But putting a system into place
would require global cooperation, and that’s proven elusive so
far. Further, scientists don’t fully understand how immunity
works or how long it lasts.
• Temperature checks. As a screening measure, some hotels,
airports and other businesses are taking people’s temperature
upon arrival. Recently, however, scientists have questioned how
effective such tests are given that many people who have Covid
show no symptoms.
• Health insurance. Another impediment to travel is fear of
catching the virus while abroad and requiring medical
treatment. Travel health insurance can help allay these fears,
but many insurance companies are denying to cover
international travelers for Covid-related illnesses.4. FOCUS ON WHAT YOU CAN CONTROL A big frustration for hoteliers these days is the lack of control over things that are having a huge impact on business. Successful 2021 planning means accepting the things you can’t control. This includes travel restrictions, government regulations, people’s willingness to travel, market conditions and the speed of recovery. Instead, focus on the things you can control, like cleanliness and safety measures on property, communications with guests and staff, guest satisfaction, team motivation and being prepared to overcome obstacles and seize opportunities as they arise.
5. PREPARE FOR MULTIPLE SCENARIOS
During the webinar (held on September 29th), we polled attendees on where they were in the 2021 planning process.
Here are the results:
Our 2021 budget and plan We’ve started the We plan to start soon
are already done process
17% 36% 19%
We’re waiting until we We probably won’t do a 2021 Not sure
know more budget this year
11% 6% 11%5. PREPARE FOR MULTIPLE SCENARIOS
In a separate survey of members of the Spanish Association of Hotel Directors, presenter Ramón Adillón Sastre, Director of Quality and Environmental
Systems at Paradores de Turismo, found that hoteliers were taking a “realistic-pessimistic approach" to 2021 planning.
The three most-mentioned approaches were:
Do nothing (wait and delay Create two budgets (good vs. bad Budget like it’s an opening (setting a
budgeting as long as possible) scenario) three-year growth horizon)
By now, you may be well into the budgeting process. If you’re still delaying, be careful not to be caught without a plan should travel rush back or take a turn
for the worse. If your property is closed, you may have no choice but to wait.6. SHOW LEADERSHIP It’s been a challenging year for everyone, but if you’re a hotel manager it’s been especially difficult. In addition to dealing with closures, historically low occupancy, downsized teams, multitasking and anxious guests and employees, you’re expected to provide a clean and safe environment for all. Meanwhile, everyone is looking to you for answers and reassurance. How can you motivate your team when you may be feeling discouraged yourself? Brian Tapson, Cluster General Manager at Apex Hotels in London, recommends building trust with your team by being honest, open and realistic with expectations. “Being kind is especially important at this time when people may be experiencing struggles at home, may have lost loved ones or may be fearing the future,” he said. Tapson stressed the importance of providing the support, tools and resources your team members require for continued learning and development. “As difficult as it may be financially at the moment, it’s important to put significant training budgets in place for the long-term to enable agile and slim structures,” he said.
7. FIND NEW REVENUE STREAMS
To offset losses from traditional revenue streams, hoteliers are
getting creative about finding new opportunities. Depending on the
property, this may include:
• Reallocating sales and marketing resources to target local
and domestic markets
• Renting out guestrooms as office spaces and Zoom rooms
• Repurposing function space for hybrid meetings with in-
person and remote attendees
• Converting outdoor spaces for meetings and events
• Offering learning spaces for students, schools and
companies8. POSITION YOUR PROPERTY FOR THE NEXT TECH WAVE A top priority for 2021 is to find efficiencies and save costs while minimizing human-to-human contact. For solutions, hoteliers are turning to technology. “Many of the big changes that were starting to take root in hospitality before the pandemic have taken on a new degree of urgency during the pandemic,” said Tim Towle, Cofounder of ReviewPro. He pointed to four areas that will impact hospitality in both the short term and the long term: automation, artificial intelligence (AI), workflow and connectivity. “AI and automation allow guests to serve themselves and to involve staff only when necessary,” he said. For example, ReviewPro’s chatbot can respond to inquiries, take reservations and room service orders, and decide when to hand over a query to staff. The Guest Experience Automation™ platform uses automation and AI to help organizations manage communication with guests on multiple channels, connect with other applications and manage workflows in a seamless manner. Going forward, AI will change how hoteliers look at data, manage revenue, understand guest profiles and design lobbies and restaurants, Towle said.
9. FLEX THE UNCERTAINTY ADVANTAGE Some organizations are better at managing uncertainty than others, according to research from BCG. A few even thrive on it. “They find opportunities in places where others aren’t looking and shore up their organizations so they can anticipate volatility earlier and spring back faster,” the company reports. BCG calls this the “uncertainty advantage.” With the right data, processes, commitment and mindset, your company can build this advantage too.
10. GET READY FOR A BRIGHTER FUTURE
“As we rebuild our businesses, it’s the perfect opportunity to
reevaluate and reestablish our purpose, values, brand and
vision,” said Tapson of Apex Hotels. “We need to ensure that
they’re echoed throughout all our strategies, processes, systems
and guest and employee interactions.”
He added, “We also need to be thinking ahead. Covid has
disrupted our lives. We don't know how tomorrow is going to
look, or next week, or next year, but we still need to be proactive.
We need to take advantage of opportunities that come our way,
to be passionate about what we do and to be resilient. And we
need to believe in a better future beyond the now.”www.reviewpro.com info@reviewpro.com @ReviewPro
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