Brace yourself: budget season is comingIt’s the first of August. The sun is shining, and you are looking forward to seeing your colleagues. You have just returned from your holiday and it was great. You are going to tell everyone about it during that 5-minute-pre-work-coffee-machine-chat. You walk in and you look around for your usual partners in coffee crime. No one looks up. In fact, they all seem a little on edge, some even confused. You wonder what could have caused this sudden change in behavior and then reality strikes. You need to brace yourself: budget season is coming.Budget season is for many hotel teams a dreaded period that is marked by lengthy meetings and overall confusion. No one is to blame here. Making a budget is quite difficult and when it comes to how to do it you are often stuck with vague descriptions like: “A budget should be ambitious but achievable.” Gee, thanks for the help!What not to doIn many hotels the Meetings & Events budget is made by simply adding or deducting a ‘certain’ percentage to this year’s results. How is this percentage calculated? Which actions should be taken in order to reach the foreseen growth? No one knows. What should be known is that you set yourself up for failure making the budget this way. So, what should you do? Keep reading for an actionable roadmap about creating your hotel’s Meetings & Events budget based on data and built around the best practices we came across.Meetings & Events budget: 3 stepsStart by taking a close look at the budget that was made last year. I guarantee there are valuable lessons to be learned there. Examine the predictions that were made. Pay special attention to months where budget and reality were far apart. What happened there? Which steps could be taken to make a better budget this year? Reflect!Step 1: Investigate external dataYour venue is part of its direct environment and changes to this environment impact the results of your venue. That’s why you should always start by investigating market dynamics when creating the budget. Again, market dynamics is a vague description (we hate those). Let’s make it actionable by listing some parameters worth investigating:MICE industry statisticsEven though we are in a period of economic uncertainty caused by e.g. trade wars, embargo’s and an approaching (deal / no deal) Brexit the MICE industry is expected to keep growing. In the period between 2018 and 2025 a staggering 7,8% global growth is expected. It appears people need to keep meeting anyway. Take a look at your region and make sure to incorporate the expected market growth in your budget.Source: https://www.alliedmarketresearch.com/press-release/MICE-industry-market.htmlMarket shareWhat is your market share? Are there new competitors joining your market or do you have reasons to believe your property’s market share might change for better or for worse?Make sure to also take into account less obvious causes for a shift in market share like freshly renovated properties or new incentives offered by you or your competitors.City statisticsWhat is the expected growth for your specific destination? Investigate and debate! Budgeting is teamwork.Exceptional eventsTake a look at next year’s event calendar and scan it for big events and congresses that will increase demand for your venue. Beware that it could also be the other way around and that a big event the city normally hosts doesn’t see a next edition.This may sound simple but evaluating whether or not an even will impact demand for your hotel is quite difficult especially with first editions. A thorough investigation of the event website could be helpful.Keep in mind public and bank holidays also have an impact in demand.Step 2: Examine internal dataMarket data: check! Now it is time to investigate trends in your venue’s internal data. Keep on reading to learn more about the different parameters you don’t want to miss.Our rule of thumbPast internal data holds valuable information for the future so make sure you use it.If your hotel hosts many residential meetings, meaning meetings with hotel rooms attached to it the following rule of thumb will help you get started.Ask yourself this question: How much revenue in Meeting & Events brought every room night in the residential segment? If you know the number of room nights budgeted for next year this distribution key could act as a rule of thumb to get you started. DemandExamine how Meetings & Events demand is developing for the quarters ahead. Is demand up or down compared to demand from the same period last year? An increase in demand might result in an increase of revenue on the books, but make sure not to pop Champagne toosoon and dig deeper by looking at conversion.ConversionAn increase in demand is great. It brings new opportunities to your venue to increase revenue on the books but, it is no guarantee. That’s why conversion and demand go hand in hand when building next year’s budget. Are you converting the inquiries received? Make sure to calculate conversion by both number of inquiries and expected revenue.Step 3: StrategiseNow that you have thoroughly examined both what’s happening in the inside and what’s happening on the outside it is time to decide which strategies to implement to increase revenue for the next year and to predict the outcome of implementing these strategies. The sky is the limit when it comes to strategising and what will work to increase revenue for your venue might not work for another venue. That is why I can’t list a bunch of strategies that are ready to implement. What I can do is list themes that are worth thinking about:Keep in mind that what you decide today might no longer be relevant tomorrow. The key is to keep a close eye on your data and adjust the budget in your forecast when the revenue streams aren’t evolving as expected.

How could we profit more from high demand weeks?
How could we increase demand in low demand weeks?
How could we optimize inventory?
How could we increase meeting room occupancy?
How could we improve pricing of meeting packages or meeting rooms?
How could we increase additional spend?
How could we increase revenue per delegate?
…

Adjust in forecastKeep in mind that what you decide today might no longer be relevant tomorrow. The key is to keep a close eye on your data and adjust the budget in your forecast when the revenue streams aren’t evolving as expected.Be happyWhen done correctly making the budget and having it as a close measure will work motivating to push the team towards the realistic goals set. Remember you are doing a valuable task.Pro tip: Budget one extra month after each month that passes. By working like this you will already have six plus months ready when the next budget season starts and you keep a close eye on your data.Win-win, right?
Happy budget season, everyone!

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