Forecasting has become one of the more complex and sought after skills for revenue managers. However, this hasn’t always been the case. Decades ago, there were far fewer distribution channels and forecasting was a simpler task.
Fast forward to today – a complex online environment means that advanced and more exact methods are needed to better forecast demand and its impact on future revenues.
Traditionally, forecasting looks at past and present data in an effort to understand market demand. This type of forecasting occurs at regular intervals to ensure that strategic decisions are being made. In this article we’ll discuss the types of data needed for forecasting, and how you can start harnessing this data to more accurately forecast at your hotel.
What kind of data is needed for forecasting?
In short, forecasting with confidence means that you take into account all of the various factors that impact demand in your market. There are three categories of data that you need when forecasting:
1. Current market data
The current state of the market takes into account large-scale trends. This includes: overall market performance for the current point in time in your specific region, as well as factors that are closer to home (e.g. your compset’s pricing as of this moment for specific days in the future.) This will tell you at a macro level if your market is looking up or down, influencing expectations for those future days and whether your competition shows signs of holding similar expectations.
Ask yourself the following questions:
- Is current performance in line with what I had expected when we set the forecast for this time period previously?
- Has there been an increase or decrease of visitors in the past year? Has there been an influx of certain traveller segments due to changes in certain economies?
- What holidays or events are coming up that may influence demand?
- How does your compset impact demand in your market?
2. Past performance data
Equally important is your past performance data. Analysing past data as recorded in your PMS on a large scale can reveal trends that you can either capitalise on, or nip in the bud.
Ask yourself the following questions:
- How did we perform in high and low season last year? What is likely to change this year? How can we prepare?
- Which bookings were most profitable for us last year? How can we maximise bookings from that channel going forward?
- How does my on the books (OTB) data compare year over year? Am I pacing ahead or behind?
- What does my OTB data tell me about my direct booking strategy? Looking at upcoming and current reservations, upcoming promotions and offers, and web traffic – is it contributing to the number of direct or repeat bookings?
