Created on August 8, 2023
More creations to inspire you
Why is forecasting important?
Periods of time
How can hotels handle forecasting?
3. Changing market conditions
4. Poor understanding and use of hotel computer systems and capabilities
Challenges of the industry
2. Lack of full, accurate data on which to base a proper forecast
1. Improperly trained and inexperienced staff
Projection based on informati on available at the time of its preparation
Helps management to anticipate periods of demand and expect unit sales and revenue
- Designate a qualified staff member to be responsible for the forecasting function.
- Properly train the designated staff member in forecasting and in the use of the PMS and revenue management systems and their reporting capabilities.
- Make sure information about area market conditions is provided to the designated staff member. This can include feedback about competitors from the sales team, access to city and convention and visitors bureau events calendars, talks with the general manager about the impact of new competitors, and so on.
- Send the designated staff member to all training on PMS and revenue management systems offered by the brand or corporate office to ensure that the staff member understands system capabilities and becomes proficient at using them.
When demand levels rise above the hotel’s capacity to meet it fully, it becomes constrained.
Demand is considered unconstrained when a hotel can fully meet the total demand. This typically happens in low seasons.
Short-term forecasting Provides vital information for tactical revenue management, this forecast are much more detailed. They rely on more current and accurate data such as daily currently exchange rates, actual travel restrictions, price changes of complementary and substitute products, visitor statistics, the quantifiable impact of the latest market trends, and so on.
Long-term forecasting The long-term forecast are based both on historical data and on current key economic indicators (employment rate, inflation, and disposable income) of the hotel’s feeder markets. They use this type of indicators: Will next year’s demand be stronger than, weaker than, or the same as the current year? If change is expected, it is important to anticipate which segments will show growth or decline, because this information drives the hotel’s response.
A rolling 90-day forecast needs to be revised once a month. A 28-day forecast should be looked at on a weekly or bi-weekly basis, depending on the needs of a given hotel. If 10-day, 7-day, or 3-day forecasts are considered necessary, they should be updated daily.
Budget A hotel’s budget is the document that contains a detailed breakdown of all revenue and expenses that can be reasonably planned and expected for the budget period. The objective of the budget is to document how a given hotel will realize its financial objectives. A budget, once approved, is not likely to change unless dramatic unforeseen events force a revision