Unprecedented times are upon us and budgeting for the future of your hotel has never become more important. Due to Covid-19, the hospitality industry has entered a sort of limbo due to the strict travel restrictions in place and mandatory quarantine policies in place in many countries. Now, more than ever, business owners and managers are looking for ways to save on costs to preserve what they do have and ensure that they at least do have something to return to.
The hospitality industry has been one of the hardest hit during this worldwide pandemic with hoteliers facing tough decisions over their businesses. Over 4 million jobs and more than $21 billion in revenue have been lost so far. This isn’t permanent though. The numbers will rise as soon as we pass this storm but it’s up to us now to focus on the right measures to preserve what we have and come out swinging. Knowing how to budget during this time, how to ride the wave and what to invest on now will ensure you’re ready to win when travel resumes.
Top 3 challenges of the future in hotel budgeting
1 – Ever-changing business landscape
With every type of business, there are things we can predict and forecast that are cyclical. But with that being said, there are things that can arise that disrupt the entire industry. In just the last decade, OTAs have risen to dominate the online booking sphere and no one could have predicted that. New hotel chains and hotel business models are constantly emerging and disrupting the space, making it even more competitive for mid to large hotel chains to stay innovative.
With Covid-19 at it’s horizon, one can online imagine what the industry will be like when it sets. Who will come out profitable and winning? Will we see newer, smaller businesses that emerged in the last few years dominating because they are able to act quick and be agile due to their size? Or will hotel giants like Marriott and Hilton still be the undisputed dominant players within the industry?
2 – Evolving customer expectations
Hotels have always been a customer-first business. At the core of every business decision should be exactly that: your customer, and that’s the same when thinking of hotel budgeting. Business landscapes are constantly changing but so are travellers. Understanding what your traveler wants, how they want to be communicated to, and what really pushes their buttons will only allow you to better serve them – and that’s where you’re going to see the difference on your bottom line. Online reviews dominate property selection nowadays and traveler expectations are changing quicker than the seasons. Investing in your customers, instead staying status quo with what has “always worked” will ensure you’re staying competitive and that you’re focussing on the right things.
3 – Sustainable growth trajectory
Focussing on growing your business right now during this economic down-turn may not be top of mind. But for that reason alone, it should remain a top priority. Growing your business is always the goal of any company, but the strategy behind it is what determines if you achieve that goal or not.
Things you can focus on right now are upgrading systems and fixing ones that are broken. Start doing research and audit your firm to see what can be cut, what is essential, and what can be improved. Re-work those forecasts to reflect current day trends and face the reality of where your hotel fits within the scheme of things. Now it’s time to get creative. Think of it this way: those who are just waiting for this to end and for the industry to go “back to normal” aren’t spending that time innovating. Those who are coming up with new ways to prospect, optimize revenue channels, cutting costs where possible, and rebalancing their marketing mix, for example, are all going to be that much more ready to come out of this economic slump winning.
What to invest in now
Remember when we touched upon “investing in your customer”? So what does that mean here? So you’ve cut down on labor costs and other operational expenses and are now looking to upgrade and update broken systems within your organization. Your hotel’s business decisions should always resolve to creating an even better experience for your customer. You’ve evaluated your systems and done the market research and you understand that the one thing that has revolutionized our world and the way that we do business is technology. Budgeting for technology now is an investment for your hotel’s future. Technology can keep costs down by automating many jobs, improving the customer success journey, keep your team accountable, and do multiple jobs better or faster. However, that does come at a price. Time is a key factor here, but hey, think of it this way: time really is in abundance right now.
Because client expectations are constantly evolving, technology has the power to keep up and ensure your hotel stays competitive. It’s not about taking away jobs from people, it’s about making your people more efficient with effective hotel budgeting. Technology can automate mundane tasks, allowing your staff to focus their time on what matters the most: the guest. Technology allows you to communicate more openly and quickly with customers, and create a more seamless experience. Information is more transparent and available to your organization, and reporting has never been more efficient, making decision-making more impactful. What are you waiting for? Go ahead and give your tech-stack an evaluation and see if it’s really making the cut with these challenges of the future: changing business landscapes, evolving customer expectations, and business scalability.