The last few years have been unprecedented, both globally and in the hospitality industry specifically. This means that extraordinary measures have been necessary for the industry to adapt, and a level of creativity and adaptation is still essential in all aspects of the industry, including financial planning.
So, what should you do differently when it comes to financial planning for 2023?
1. Resource allocation
A critical component to the success of a business relates to the rigor around business processes such as resource allocation. Budgeting is top of mind and many hospitality companies are well entrenched in a process of top-down driven business planning at this time of year. The past several years have been some of the most difficult in the history of our industry which is why the year-end budgeting process has almost been meaningless due to the expected rate of recovery being relatively difficult to project.
However, for many markets heading into 2023, it is now estimated that RevPAR levels, particularly average rates in real terms, may reach or exceed 2019 levels. On top of this recovery is also the impact of inflation. It is critical in this environment that businesses allocate the time for a bottom-up review of operating costs at all levels of the business to determine those costs that are critical in the delivery of the business plan. Some cost-cutting has, of course, been implemented for the survival of the business, but as the business rebounds, we need to ensure that some of these costs do not automatically creep back in if they are not indeed required.