Ladies and gentlemen, it is now the time for the Hotel Operations to take on the budget:
- We have the board revenue covered
- As well as booked rooms
- And the overnight stays plan.
The next step is the calculation of the operational revenues including other accommodation revenues, revenues from food and drinks à la carte, trade goods revenue, sports and wellness revenue (if it is a part of the offer), rental revenue, sale of tours and transfers revenue and other types of revenues.
Other accommodation revenue (further in text: OAR) is considered to be the main generators of revenue from parking, revenues obtained from pet fees, exchange rates revenues, day use stay, conference hall rental and additional tent (at the campground). This also includes revenue from ‘no-show’ charges, but this revenue is not budgeted – it is entirely accounted for in the accommodation’s gross revenue. This category is best planned according to planned overnight stays. The previously realized OAR should be divided with respect to the monthly distribution by the realized overnight stays for the specific month, and, as a result, we get OAR/overnight stays for each month of operation of the facility. The simplest way is to multiply the unit revenues by the newly planned overnight stays, and we will get the newly planned OAR. However, if we are increasing the price for services like pet fees or daily parking, for example, we can’t use this linear approach. By adding OAR to our already planned net room revenues, we obtain the Total Accommodation Department Revenues.
It is now the time to expand our revenues by those obtained from the domain of food and drinks. We all know very well which outlets we have in our facility – lobby bar, aperitive bar, à la carte restaurant, tavern, grill bar, cocktail/beach bar etc. The à la carte food and drinks revenues should preferably be planned separately for each of the outlets since we are familiar with the realized operating figures and how profitable a certain bar or restaurant is. It is good to have calculated indicators for revenue per HIP à la carte / overnight stay and revenue per HIP à la carte / seated place for each of our outlets. Then, the number game starts again, combinations, considering any changes in the offer, price increases etc. On 1 January 2020, we had a decrease in the VAT rate for à la carte food from 25% to 13%, and of course, this was included in the new plan. It would be great if there was also a VAT reduction for beverages. In case our outlets also sell trade goods (e.g., cigarettes and packaged ice cream), it is necessary to plan those revenues as revenues obtained from trade goods. Budgeted HIP à la carte revenues and revenues obtained from trade goods should then be added to the HIP board, concluding the second big category of revenues – Total Food and Drinks Revenues.
Sports revenue encompasses renting sports fields, sports equipment, individual training in our fitness center and the rental of sunbeds and parasols. When it comes to wellness services, the tickets for the sauna or relaxation zone as well as treatments and trade goods are to be included. The planning principle for these revenues is the same as for OAR because these revenues are indeed dependent on our guests in the facility. Rental revenue depends on whether we have commercial spaces that we can lease and as for other revenue categories, we also know whether we offer our guests additional excursions, activities and transfers that are provided by other entities whereas we earn a commission revenue. There are many more details to consider, but I won’t delve too deeply into them in these basics.
Finally, adding all those up, we have reached the total net revenue. It may seem like a task requiring a lot of work and calculations, but, honestly, the real work is yet to come when we include all the expenses. But do not get discouraged – this is all a game that has rules and frameworks, just like Ludo, or even chess. The game is to be continued in our next blog post focusing on operational expenses. Thank you for your attention, until the next reading!
