documents should be saved to provide an explanation of the reasoning behind the

decision made while preparing departmental budget plans. Such records may also h
elp in resolves issues that arise during the budget review. These supported docu
ments may also provide valuable assistance in the preparation of future budget p
lans. If no historical data are available for budget planning, other sources of
information can be used to develop a budget.
Many hotels refine expected results of operations and revise operations budget a
s they progress through the budget year. Re-forecasting is normally suggests whe
n actual operating results start to vary significantly from the operations budge
t. Such variance may indicate that conditions have changed since the budget was
first prepared and that the budget should be brought into line.
Budgetary control
Budgetary control cycle begins with establishing realistic financial goal for ho
tel organization, followed by developing an action plan that will implement thes
e goals. The actual results are then compared with projected results; subsequent
ly corrective action is taken where appropriate to facilitate improvement. Those
items that are appropriate for management are determined from analysing the var
iance and determine those that are essential. Budgetary control process incorpor
ate several important aspects, some of them are Regular Comparison
Controlling the budget involves the regular and continued comparison of actual p
erformance against the set standard (of the budget).
Ensure Financial Awareness
This ensures that the hotel is aware of its financial goals, whether it is meeti
ng to stated goals, if not, where should look to find out the problem.
Identify Variances
When reviewing the budget performance of a hotel, the significant variances betw
een budgeted figures and actual figures need to be identified.
Take Corrective Measures
This will, hopefully, enable the cause of variance to be ascertained and correct
ive action to be taken. In order to achieve stated budgetary objectives, it is i
mportant to take corrective measure against the detected variances on a priority
base.
Forecasting room revenue
The objective of each and every plan (whether in relation to market survey, reno
vation, offering discount, channel marketing, minimum length of stay restriction
, rate averaging, etc.) is to maximize the revenue. But to achieve this revenue
objective, it is important to forecast the future accurately and effectively. Fo
recasting in relation to room revenue is used as a foundation for making current
planning for determining room rates, discount policy, estimated expenses and so
on. Some important basis which serves as a foundation for room revenue forecast
ing are given below Standard Formula to Calculate Forecasted Room Revenue
Forecasted Room Revenue
xpenses (Direct + Indirect)

= Expected Room Revenue - Estimated Operating E

Or
Forecasted Room Revenue

= Lettable Room Available x Occupancy Percentage

x Average Daily Rate (ADR)

Note.
Expected room revenue is calculated by adding net revenue generated by each type
of room. For example, net standard room tariff multiply by number of standard r
oom, net suite room tariff multiply by number of suite room. At here, the term n
et tariff/revenue shows = Room tariff
Discount (if any).
In estimated operating expenses, you should include the operating costs of compl
ementary room, extra beds, etc. The tariff of extra bed should add in expected r
oom revenue while the tariff of complementary room should be treated as a discou
nt or zero revenue.
Historical Booking Models
Historical booking models only consider the final number of rooms or arrivals on
a particular stay night. One of the best ways to predict future outcomes is to
look to the past history. A here, the term history is used in both group and tra
nsient room analysis. History is defined as the documented record of historical
data. Looking at how a hotel performed in the past is a good way of predicting h
ow it may perform on a given night in the future. On the term of historical data
you require to go through the percentage of previous
Early arrivals (No. of early arrivals / No. of arrivals X 100)
Early departures (No. of early departures rooms / No. of Expected check outs X 1
00)
No shows (No. of no shows /No. of room reservation X 100)
Walk ins (No. of walk ins / No. of room arrivals X 100)
Cancellations (No. of cancellations / No. of room reservation X 100 )
Over stay (No. of overstay rooms / No. of expected check outs X 100 )
A historical data can apply to determine many things in hotel. For instance, wit
h the help of historic data, the group sales people can determine that what coul
d be the actual group booking in relation to group block. Hotel management can a
lso anticipate the ancillary revenue generation by various point of sale outlets
, such as restaurant can determine that how many covers should be laid.