Should we use artificial intelligence?
MMGY presented an interesting approach to building a business plan, comparing it to moneyball, the advanced statistics strategy most famously used by Billy Beane as general manager of the Oakland Athletics in the early 2000s.
The moneyball concept is designed to allow you to accomplish more with fewer dollars by taking advantage of statistical thinking. By incorporating AI into your business plan template, you can save time and effort. The real key is to use your action plans, not AI. Typically, owners are most interested in net income, not the stats that might get you there. How do you increase your net income this year?
Travelers don't want to go to your hotel unless it is a true destination resort. They do, however, want unique experiences. Share your story with prospects and invite them to see how your property stands out and is better.
Every hotelier must focus on two critical elements — the business plan and the budget.
Write your summary using AI, then generate a plan using my recommended chapter-book mindset. This is where AI can excel, in helping you generate new ideas.
Start the first chapter with macroeconomic data, such as employment, GDP growth and consumer spending. Chapter 2 can begin with an overview of your market and a review of the geographic location, using data from the local tourism authority and CoStar. Today, we have seen shifts in business and group travel, as well as domestic leisure and international travel, and each market is distinct. I like to add a graphic that lists how we compete in various areas like location, brand, reputation, amenity package and so forth. I call it our beauty contest.
Chapter 3 encompasses both fiscal and operational risks. If we are unable to pay for the necessary renovation or are having difficulty finding employees, that information is critical for the owner.
Chapter 4 identifies the key management personnel. An overall organizational chart that includes all salaried executives and key leadership is appropriate. Adding the key responsibility parameters for each of them is helpful for ownership and ensures that all are on the same page. This is a good place to discuss and budget for any training that is needed.
Chapter 5 should commence only after we have reviewed the draft business plan. This financial analysis must include all necessary capital expenses, as well as operating costs, for each department. Inflation has increased insurance, food and labor costs significantly over the past two years. Supply costs are up, and if revenues are insufficient to cover these expenses, significant decisions must be made. The numbers in this chapter will inform the final budget numbers.
Chapter 6 is our summary of how we will perform and why. For example, if your CoStar report indicates that your submarket is at 72% occupancy with a rate of $200, your understanding of where you stand vis-à-vis your competitive set informs you of how you should perform. If local tourism officials are discussing a 2% revenue per available room growth and you largely agree, that is a good starting point for your revenue projections. Add in new supply, office building occupancy and local events, and you can project.
Chapter 7 is your budget. Your budget will streamline operations and create strategic opportunities for your hotel, ensuring that every dollar spent is directed toward boosting your bookings, enhancing your reputation and generating the highest possible returns. Don't forget to budget for cybersecurity, IT, wage increases and legal costs, considering today's increasingly litigious environment.
Final thoughts
Although hotel sales processes have evolved, thousands of RFPs continue to flow through the system. Create a lead form at the front desk. Review competitor websites and social sites, including Instagram, Facebook and X.
Position your property in the proper channels with software and optimize rates for your unique location and rooms. As you increasingly provide guests with an authentic connection to your area, a well-configured hotel revenue system can help you optimize these strategies and boost revenue.
Remember that the world changes quickly as we develop this year's plan. Our 2026 trends will be released soon, and AI, sustainability and robotics might be on our list again. Digital technologies will power the future of the hospitality industry. When it comes to productivity, the promise of AI is a reality that is here to stay. To an excellent finish in 2025!
Robert Rauch, CHA, has been an owner-operator of hotels for several decades and is founding chairman of Brick Hospitality, owner of R. A. Rauch & Associates, Inc.
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