How to forecast hotel revenue like a pro

Forecasting hotel demand can be a challenging thing to do — whether you’re a revenue manager, an operations manager or a hotel business manager. It can feel like a constantly moving target that’s nearly impossible to perfect.

Forecasting is, however, an incredibly valuable practice that helps hotels predict the time frames throughout the year that will bring them higher or lower than normal occupancy, demand and revenue.

A good demand forecast can help make the most out of the ‘peaks’ and better avoid the ‘valleys’ through proper room rate decisions, staff allocation, property maintenance and hotel operations.

Data and analytics are making this increasingly more efficient and effective, providing hotels with a better way to determine future marketing and pricing strategies to drive successful changes.

Looking holistically at forecasting, there are typically three types of forecasts in a hotel: operational, financial and revenue management.

Hotels often overlook the differences between these forecasts, but it is important to distinguish their differences because they are used for different functions.

An operational forecast is often used to manage the hotel’s resources such as: how many housekeepers will be needed to clean rooms, how many people will be checked into the hotel, or how many guests will dine in the restaurant.

Financial forecasts are often used to determine the end fiscal results to provide owners and investors with an outlook on revenues and profitability.

A revenue management forecast, however, is intended to estimate the expected future demand for a hotel so they can manage that demand to achieve the hotel’s ultimate revenue objectives.

This may also be referred to as an unconstrained demand forecast.

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