As we turn the calendar to 2025, hotel owners and operators are finalizing their annual budgets and ensuring they align with the latest market conditions. With STR forecasting modest growth for 2025, it’s critical for hoteliers to move beyond static budgets, take dynamic market conditions into account, and put operational strategies in place to meet and exceed budget. Here’s how to navigate the year ahead with a combination of operational adjustments and dynamic forecasting.
STR and Tourism Economics project a modest economic outlook for 2025. Occupancy is expected to grow modestly by 0.4 percentage points but remain below pre-pandemic levels. ADR and RevPAR are forecasted to rise by +1.6% and +1.8%, respectively, driven by higher-end hotel performance. Profit margins are anticipated to improve due to lower labor costs, bringing inflation-adjusted GOP closer to 2019 levels.
Economic drivers such as consumer spending and business investment will support growth, with gains in group travel and international visitation acting as tailwinds. However, challenges like the high cost of living and fluctuating demand underscore the need for proactive financial planning.
Finalizing Your 2025 Budget
Ideally, by now your companywide 2025 financial budget has all its required signatures and is bookmarked, and you can begin using it to create a more dynamic forecast that you can adjust weekly at minimum. But, it’s an arduous process that, when done manually, can often bleed over into January.
If you’re still finalizing, keep these tips in mind:
Choose the Right Budgeting Methodology: A top-down approach can align corporate goals efficiently but may miss granular needs. Zero-based budgeting, where all expenses are justified, ensures cost control and alignment with profitability goals.
Use Your Own Historical Data: While benchmarking is important, the base of your budget should be built on your own hotels’ historical data, and adjustments based on forecasted demand or expenses should roll up from the hotel to the overall companywide budget.
Empower Local Teams: Incorporate insights from GMs and Directors of Sales who understand street-level demand. Combine this with corporate data for a comprehensive forecast.
Engage Stakeholders: Collaborate across departments – operations, sales, marketing, and finance – to ensure realistic projections. Use hospitality-specific drivers, such as RevPAR growth by market segment or labor cost per occupied room, to refine assumptions.
If you’re still building your 2025 financial budget in spreadsheets, consider hospitality-specific budget software like Otelier TruePlan that streamlines the process by allowing you to collaborate seamlessly on single plans across your portfolio.
Transforming Your Budget into a Dynamic Forecast
Now, after all the work that went into it, we know that your annual budget will immediately become outdated. With the goal of making real-time adjustments that will help you meet or exceed your budget, adopting frequent forecasting is key.
Your 2025 financial budget can become the base for your real-time forecast, which you should update weekly and review monthly moving forward to reflect changes in booking windows, consumer behavior, and macroeconomic trends. For instance, use occupancy forecasts to adjust labor schedules and procurement, and analyze lead times by channel to optimize marketing spend.
Integrate data sources from your PMS, revenue management, and accounting systems into your forecast for real-time insights. Ensure you’re analyzing the right metrics that align with 2025 trends, such as group booking windows, customer acquisition costs, and digital spend ROI.
A key part of forecasting is building “What-If” scenarios that prepare for multiple outcomes, such as unexpected demand spikes or renovations, to maintain financial stability. Scenario planning allows for proactive adjustments to your operational and financial strategies.
To help turn your annual budget into a cloud-based dynamic forecast with predictive modeling, consider hospitality-specific budgeting and forecasting software like Otelier TruePlan.
Success Story: Hotel Equities’ Approach to Budgeting and Forecasting
At Hotel Equities, managing a portfolio of over 250 hotels has required the company to implement a dynamic budgeting process. Using Otelier TruePlan, Hotel Equities has reduced budgeting time by leveraging real-time data integration, which minimized manual processes and enabled efficient revisions. They enhanced forecast accuracy by relying on hospitality-specific drivers, producing detailed forecasts for individual properties. Collaboration across departments ensured accurate expense modeling and demand forecasting, driving better financial decisions.
“Our goal is to shrink the amount of time we’re working on budgets – to have the most updated data already in place, which reduces that gap period at the end of the year and cuts down on revisions,” says David Rosenberg, executive VP of Operations at Hotel Equities. “While the data is always changing, our teams’ ability to skillfully navigate that year end projection, matching our RevPAR Index with revenue goals, has resulted in more accuracy for our portfolio.”
Read more about how Hotel Equities dominates budgeting season.
Operational Adjustments Based on Forecasts
Lastly, to thrive in 2025, hoteliers should align these budget and forecast insights with operational strategies that drive success. Use integrated tools to align forecasts across departments. For example, housekeeping can adjust staffing levels based on forecasted occupancy, while F&B can plan inventory against projected demand.
Relying on automation and cross-training can help reduce labor costs while maintaining service quality. For example, implementing technology to streamline check-ins or automate routine back-office tasks allows staff to focus on guest engagement. Cross-training employees across roles ensures flexibility during periods of fluctuating demand.
Monitoring competitor rates and building unique revenue strategies is another critical approach. Rather than engaging in a price war, develop tailored promotions or exclusive packages that differentiate your property. This could include curated experiences or partnerships with local businesses to enhance value for guests.
Regularly tracking GOP by hotel and by department enables more precise financial management. By identifying underperforming areas and reallocating resources effectively, hotels can maintain profitability long into the future.
Looking to turn your 2025 budget into a dynamic forecast or put the tools in place to streamline 2026 financial planning? Ask about Otelier TruePlan.
About Otelier
Otelier is a hospitality performance optimization platform that puts data and efficiency at the heart of hotel operations. The solutions enable hotel owners, operators and brands to run world-class operations by automating back-office tasks, improving budget and forecast accuracy, and gaining real-time insights into property and portfolio performance. Otelier serves more than 10,000 hotels across the globe with DigiAudit, DigiPay and Rec to streamline back-office workflows; TruePlan for more accurate budgets and forecasts; and IntelliSight to turn comprehensive data sets into actionable insights. For more information, visit otelier.io.
Jason FreedHospitality Data Evangelist+1 330 221 6068Otelier
