Hoteliers put a lot of time and effort into their annual business plans.
The process can take months as the hotel team researches trends, reviews organizational performance, gathers market data and forecasts their assets’ future revenue. They meticulously plot out their goals and strategy, going into the new year with a guidebook for success.
Our industry is great at building these plans. We know how to leverage data into results, we have seen major market shifts and have adapted to them, and we know so much about our guests that we can anticipate their needs. In my experience, however, it’s not uncommon for hoteliers to finalize their annual plans and then file them away, never to be looked at again.
The question then becomes, why are so many of us not utilizing these carefully developed plans? We put too much work into creating and approving them to have them live in an unopened file. We should be reviewing them regularly and documenting our progress. We should take opportunities to adjust our strategy as market conditions evolve. We should make the most of the incredible amount of information we have at our fingertips.
A business plan should be your roadmap to not just meeting, but also exceeding your goals for the year. If you’re not sure how to incorporate your plan into your day-to-day operations and strategy, here are a few tips.
Eyes on the prize
Goals related to market segmentation, average daily rate, revenue management and marketing strategies are typically outlined in annual business plans to help teams understand what is needed to meet the targeted top-line revenue. In turn, top-line revenue as forecasted by segmentation flows through to the bottom line.
Your annual plan should use historical data to help you decide on several key factors associated with segmentation, such as which are the most profitable segments; which segments should you limit due to commissions, fees, etc.; and how you can use this data to lead our revenue management and marketing strategies.
And it shouldn’t end there. Revisit your plan periodically so you can adjust your strategy and ensure you remain on track throughout the year.
Some questions you should potentially ask include:
- Did your hotel achieve your first-, second- and third-quarter goals?
- Was your segmentation forecast close to your actual performance?
- How can you modify your plan for an improved outcome in the months ahead?
Also, don’t fall into the trap of comparing your numbers to the previous year rather than your goals for the current year. Put last year in the rearview and focus on your industry forecast. It’s not necessarily a bad thing to be behind last year’s numbers if your segmentation was adjusted for better flowthrough — and the impact of those decisions might only be seen in the long-term.
Making the most of your marketing dollars
The work that goes into your business plan can also be leveraged for your marketing budget. Marketing budgets can — and should — be built to target the segments of business that offer the most profitability. There are tools that can help hoteliers understand the segmentation of their business that would provide their property with the highest level of profitability.
Yet, in spite of all the unique opportunities in the marketing arena, so many of our hospitality colleagues find themselves throwing money at online travel agency ads rather than targeting segments that wouldn’t require commissions. While this is definitely easier and faster than segmenting your marketing spend, it is incredibly counterproductive to a property’s overall goals. Take the time to segment out this budget, it is absolutely worth the extra effort.
Next-level commercial strategy
Your commercial strategy encompasses essential parts of doing business such as pricing, sales and marketing activities, distributor partnerships, long-term business goals and resource allocations. A strong, sustainable, growth-oriented commercial strategy is a critical component of success, and your annual business plan can help make your commercial strategy even better.
Take the market knowledge you have accumulated on current and future trends to identify the best mix of business for profitability. There are several tools, for example, that can further assist the team with this information. From there, take the mix of businesses that you have identified as the most profitable and create a plan to reduce engagement with the least profitable segments of business and increase engagement with the ones that bring the most money to the bottom line. This is not a “set it and forget it” scenario. Revisit your commercial strategy often, even weekly, to keep your entire team’s focus where it should be and help them collaborate as they work to achieve business goals.
Embrace change
Last, but certainly not least, treat your annual business plan as a living document. We all know how quickly things can change in our industry and being flexible in how you deliver on your goals will help you achieve them.
Stephanie Atkisson is senior vice president of commercial strategies at Raines.
The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or CoStar Group and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to contact an editor with any questions or concern.