Hotel Spa: Effective Budget and CapEx Preparation
By Kristi Dickinson Director of Spa & Wellness, Rancho Valencia Resort & Spa | December 08, 2019
Investing time during budget season to plan the details of the approaching year will pay dividends in the ease of operating your business from a thoughtful strategy. Preparation should include more tools than just an operations budget. It is ideal to update your business plan, draft a marketing calendar and map out capital expenditures before making the budget. Lead with the "how" and the "why".
Begin by understanding the objectives of your ownership group or corporate office. For example, are you in a growth phase and planning to make significant investments in capital, service levels, and earning accolades? That will require higher labor and amenity costs or possible downtime while capital projects are underway. Is the goal to maximize short term profits and prepare for a sale? This will require more skill in revenue management and cost controls and less creativity in programming and culture leadership.
Next, review the effectiveness of the strategies from the current year's business plan. I prefer a simple "One-Page Business Plan" with 3-5 quarterly goals which contribute to 5 annual goals with a simple explanation of the strategy. It should also include a section of key performance indicators (KPIs) so you can measure the results. This simple format allows a quick glance at your plan to ensure you stay on track, rather than a 300-page volume that took hours to prepare and was likely set aside, never to be executed.
Research for updating your business plan should include national economic indicators such as consumer confidence, unemployment, and inflation. Ample time should be spent understanding changes in the local market, as new competition will attract both your guests and your employees. Determine how your product is different and make note for your marketing plan. The business plan should address opportunities and challenges. Outline collaborations necessary with the sales and marketing teams.
The Global Wellness Summit, Spa Business Handbook, American Spa, and Well + Good are great resources for trends reports. Although it is not advisable to chase every trend, these articles are amazing sources of inspiration as you develop your programming and special events.