Understanding your base business has been a fundamental starting block for preparing a hotel budget and forecast.

But as we look back on 2021 and 2020 it’s easy to see that this base business may not be as reliable as in previous years. Group bookings that are on the books or anticipated may not ultimately materialize.

As such, as you prepare your forecast for 2022 there are many more factors to consider bringing into the mix.

Here are six elements to consider when finalizing your budget this year.

• Understand the commercial strategy and how each commercial tactic will be rolled out throughout the next calendar year. Try to quantify the impact these tactics might have, the teams involved, the segments these affect, and apply those to your budget.

• Use forward-looking data such as search trends and your website traffic. These are strong indicators of what demand will come. Historically, you may have seen patterns in behavior for certain months or days of the week. Now, you need to be able to tie that back to the data sources.

• Manage expectations. There may be difficult conversations to be had. Teams need to be more aligned than ever on the plans that they'll use to achieve budget and the resources that they will have to do this, for example, sales and marketing expenses.

• Focus on distribution costs. Not all top-line revenue is created equal. There's going to be a lot of focus and scrutiny on what those distribution costs look like and how they can be utilized in different ways to build the budget and then ultimately to achieve it.

• Look beyond rooms revenue. This year DORMs will likely find themselves involved in budget conversations beyond just rooms revenue, so that could mean they may be involved in conversations for other revenue streams, as well as expenses conversations that perhaps they weren't as involved in years past.

• Widen your benchmarking. It's going to be important to benchmark against not just prior year performance but benchmark against competitive sets and market trends.

How is 2021/2022 shaping up?

Our most recent Pulse Report on key hotel metrics shows that the next few months will remain relatively flat. Moving into the end of this year, and certainly kicking off the beginning of next year, we expect a drop in demand.

Leisure travel will continue to be a focus and the data shows us a continuation of shorter-term booking windows. We expect this to continue through to at least the middle of 2022. Cancellation rates will remain high.

However, some markets did enjoy record ADR performance in this past year. Looking ahead to next year, it's going to be difficult to replicate some of that ADR performance, specifically year on year. Be realistic on your ADR growth expectations.

Hannah Weller Barrise, Director of Hospitality Solutions, Americas

This blog is an extract from our latest Special Report, Strategy Before Forecast: Open Up Your Revenue. Discover Revenue Strategy top tips from industry leaders from CBRE, ProfitSword, EY, Accenture, and more, as you plan for 2022 and beyond.

Download today:https://www.duettocloud.com/special-reports