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. That’s where the Budgeting Playbook comes in as a clear, actionable guide to help you build a strategy-driven budget that aligns market realities with operational goals.
Whether you’re deep into your business plan or just getting started, this playbook is designed to help you focus, forecast, and move forward with confidence.
Step 1: Understand Market Conditions & 2026 Projections
Before you dive into your own property’s numbers, zoom out. The best budgets are grounded in what’s happening around you—not created in a vacuum. Look at key market indicators and projections for the remainder of 2025 and into 2026. Industry resources like STR and CBRE offer valuable data to help benchmark performance and anticipate trends. Whatever tools you use, set a strong market projection first. It’s your foundation for a realistic and aligned business strategy.
Step 2: Forecast Your Property with Logic, Not Guesswork
Once you have market projections in place, turn the lens inward. Start by evaluating your occupancy and ADR indexes from your most recent STR report. Then use the following formula to set property-specific goals:
(Property Index ÷ 100) × Market Occupancy or ADR = Projected Performance
At Newport, we use an internal tool to automate these calculations and ensure consistency. With both market assumptions and target indexes in hand, you can build a rational forecast for the rest of the year and into 2026. Don’t stop with rooms. Use year-to-date PORs (Per Occupied Room) and percentages from your financial statements to forecast non-room revenues and expenses. Check fixed costs, identify major variances, and smooth out your run rates to reflect realistic pacing. This step is about addressing small details now to avoid big surprises later.
Step 3: Build Your Segmentation Mix
With topline projections in place, determine how you’ll drive revenue. That means outlining your business segmentation strategy—what groups, negotiated accounts, or transient demand you’ll pursue in the coming year.
Use historical segmentation data to validate your approach. Compare it to your current business plan and ask:
- Are we leaning into the segments that perform best?
- Where can we shift mix to optimize rate or reduce cost?
We have tools designed to support this process and help our teams create alignment between marketing strategy and revenue planning.
Step 4: Tackle Line Items and Close the Gaps
Line-item budgeting can be the most time-consuming portion—but if you’ve built a strong forecast, you’re already halfway there. Use the PORs, percentages, and fixed costs developed earlier to guide department-level budgeting. Adjust for known changes, seek savings where possible, and plan strategically for areas requiring increased investment. A best practice: add notes to your budget where ambiguity may exist. For example, if you’re budgeting for a new service, include a brief rationale. This prevents duplicate entries and smooths the approval process.
Step 5: Communicate and Align the Team
Great budgets don’t live in spreadsheets—they live in how your team understands and applies them.
- Hold leadership meetings early to review goals and assumptions.
- Engage department heads in planning discussions.
- Share summaries, calendars, and updated schedules through accessible tools.
- Reinforce consistency through daily stand-ups and pre-shift meetings.
Treat your strategy launch like a team rally. Build momentum, align expectations, and create buy-in across departments. Your results depend not only on having a great plan, but on everyone understanding how they contribute to it.
Final Thought: Budgeting is a Connected Process
Each part of your budget—market data, internal forecasting, segmentation, and expense planning—should reinforce the next. Taken together, they form a complete picture that helps you lead with confidence and adapt with agility. Our teams are supported by tools, coaching, and financial systems designed to turn pressure into performance. To learn more about our approach, connect with me to explore how we bring Living Hospitality to life—behind the numbers.
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