It’s budget time - but are you budgeting for your hotel, or someone else’s?
Effective hotel budgeting is not just about balancing the coming year’s books – it is about aligning past performance, present priorities and future ambitions. Historical data provides the foundation: occupancy trends, RevPAR shifts, while guest’s insights identify what has and has not worked. Budgeting must also respond to current realities - whether that is rising operational costs, evolving guest expectations or new sales opportunities. Complementing these areas are the long-term view: a three- and five-year business strategy that guides capital investment in areas including the accommodation experience, technology, sustainability and brand positioning. When these three lenses - past, present and future - are considered together, the budget becomes more than a spreadsheet. It becomes a strategic tool for growth.
As hotels undertake their budget process for the new financial year, the spreadsheets come out, historical data is reviewed, the forecasts roll in - and so does the commentary. From your staff’s wish lists to the feedback from industry colleagues, everyone seems to have an opinion on how your budget dollars should be allocated. But here is the question you should be asking yourself; are you prioritising what your property truly needs, simply echoing what worked for someone else or reflecting the thoughts of a well-meaning friend.
It is easy to get swept up in the echo chamber of advice. “Invest in AI,” says one person. “You must upgrade your spa,” insists another. While peer insights can be valuable, they are not always specific to your market, the needs of your guests or your operational demands. And just because someone is knowledgeable in their respective field does not mean they understand the hotel industry; nor do they necessarily know your occupancy patterns, your guest demographics or your long-term business objectives.
When budgets are influenced by external opinion rather than internal strategy, hotels risk ignoring their business priorities and misallocating funds - overinvesting in unnecessary upgrades, committing to something that can wait until the business achieves an identified financial milestone, while underfunding the essential guest experiences. The result? A budget that might look good on paper but does not make a positive contribution to the current requirements of the business, nor deliver a return on investment.
In these instances, a second opinion – ideally from someone outside your social circle - can be extremely beneficial. A fresh set of impartial eyes - whether from a financial advisor, seasoned revenue strategist or a trusted outsider - can help you cut through the noise and refocus on what truly drives value for your property. Balancing ambition with realism is not about ignoring advice; it is about filtering it through the lens of your operational needs that drives guest satisfaction, your strategic business plan and your long-term objectives.
The best budgets consider market trends but are built on truth. Truth about the expectations of your guests, your operational strengths – and weaknesses - and your long-term vision. So, before you commit to that swish rooftop bar renovation, shiny new tech stack or extravagant marketing campaign, ask yourself: is this what we need, or what someone else thinks we should want?
On a final note,
When undertaking the budget process, we always recommend prioritising with purpose: budget with clarity, not just consensus. Make deliberate choices that align with your hotel’s identity, guest expectations and long-term vision - rather than reacting to trends or peer pressure. Instead of spreading funds thinly across every ‘must-have’ suggestion, purposeful prioritisation asks: what will make a noticeable and significant difference for our property that will achieve a measurable result or positive change that is substantial enough to be noticed or contribute to a larger goal? Whether it’s investing in the guest experience, sustainability or digital transformation, the objective is to ensure every dollar supports a defined outcome. When purpose leads the process, your budget becomes a blueprint for progress - not just a list of expenses.
Published: June 2025
