Budget season in hospitality can feel like trying to land a plane in fog—numbers are everywhere, and every decision impacts your property’s future. This is where the Budgeting Playbook This guide is a practical, clear and actionable tool that will help you create a budget-driven strategy that balances the market reality with your operational goals.
This playbook will help you to focus, forecast and move forward confidently, whether you are deep into your business plans or just starting out.
Step 1: Understand Market Conditions & 2026 Projections
Zoom out. The best budgets are grounded in what’s happening around you—not created in a vacuum. Consider key market indicators, and their projections through 2026. Resources like STR or CBRE provide valuable data that can be used to benchmark performance and predict trends. You should always start by establishing a clear market projection. This is the foundation of a realistic, aligned and successful business strategy.
Step 2 – Forecast your property with logic, not guesswork
Turn your focus inwards once you have the market projections. You can start by evaluating occupancy and ADR indices from your last STR report. Use the formula below to determine property-specific targets:
(Property Index ÷ 100) × Market Occupancy or ADR = Projected Performance
Newport has an internal tool which automates the calculations. This ensures consistency. You can make a rational prediction for the remainder and 2026 based on both the market assumptions and the target indexes. Do not limit yourself to rooms. You can forecast expenses and revenues by using your year-to date PORs, or Per Occupied room. Check for fixed costs and identify major variances. Smooth out your running rates to reflect a realistic pace. It is important to address small details in order to avoid major surprises down the road.
Build your segmentation mix
Once you have your revenue projections, decide how to drive them. That means outlining your business segmentation strategy—what groups, negotiated accounts, or transient demand you’ll pursue in the coming year.
Validate your segmentation approach using historical data. Compare it with your current business plan.
- Do we focus on the best performing segments?
- What changes can be made to the mix of products in order to maximize rate or lower cost?
Our teams can use tools to align marketing strategy with revenue planning.
Step 4: Close the gaps and address line items
Line-item budgeting can be the most time-consuming portion—but if you’ve built a strong forecast, you’re already halfway there. To guide budgeting on a departmental basis, use the percentages and fixed costs that you developed earlier. Adjust for known changes. Seek savings wherever possible. And plan strategically in areas that require increased investment. Add notes to your budget if there is any ambiguity. Include a brief explanation if, for example, you’re budgeting a new service. This helps to avoid duplicate entries, and makes the approval process easier.
Step 5: Align your team and communicate
Great budgets don’t live in spreadsheets—they live in how your team understands and applies them.
- Early leadership meetings are important to review assumptions and goals.
- Plan with department heads.
- Accessible tools allow you to share summaries, updated calendars and schedules.
- Consistency can be reinforced through pre-shift meetings and daily stand-ups.
Treat your strategy launch as a rally. Build momentum, align your expectations, and gain buy-in in all departments. Your results are not just dependent on a good plan but also on how everyone contributes to it.
Last Thought: Budgeting Is a Connected Proceß
Each part of your budget—market data, internal forecasting, segmentation, and expense planning—should reinforce the next. Together, they create a picture that allows you to lead with confidence and adjust with agility. We provide our teams with tools, coaching and financial systems that turn pressure into performance. Connect with me today to learn more about how we can help you. Living Hospitality to life—behind the numbers.
