FEATURE ARTICLE
Budget forecasting
– a flexible approach
Now before I even start . I am just going to say it . You don ’ t bank RGI ( revenue generation index ) but you do bank the dollars from outperforming the competition .
The Current Approach
The typical budgeting approach is quite straight forward . A hotel will agree on how much the market or competition is going to grow in the next reporting period and make an assessment of whether the individual properties percentage change will be the same , higher or lower . This makes sense it provides a comparison and considers the broader factors .
But what happens if the market doesn ’ t perform at the agreed percentage growth ? It inevitably will either be higher or lower .
This traditional method although sound , misses a number of important points and opportunities . Firstly , it is a statement at one point in time . It is inflexible to movements in the market , and it doesn ’ t truly challenge hotel teams to outperform the market .
Example – although this hotel beat the budget growth target , it rode the market coattails and actually lost market share . Conversely on the right although the budget target was missed market share was won .
22 Better Revenue I Better Industry I AUS & NZ