Running a hotel business is hard; there are unforeseen risks involved. But you can always try to predict and plan for future events.
NB: This is an article from eZee Absolute
Hotels should try performing a systematic estimation of guests’ future preferences and align their operations accordingly.
This is where demand forecasting helps.
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Demand forecasting in hotels is nowadays crucial. But it isn’t easy. Which is why most hotels struggle to understand and predict guests’ behaviour.
Are you also finding it difficult?
If so, then don’t fret! I am here to help.
With this article, I will walk you through all the significant aspects of hotel demand forecasting and help you understand how hotels forecast demand the right way.
What is Demand Forecasting in the Hotel Industry?
Hotel demand forecasting uses historical data to predict future guest demand over a defined period. Which helps hotels in managing inventory in a much effective fashion.
Over and above, predictions such as turnover, profit margins, cash flow, capital expenditure, and risk assessment, also depend on it.
Meaning, the precise you are with your forecasting, the better business decision you can make for your hotel.
Types of Forecasting in Hotels
In a hotel, there are essentially three types of forecasting. Such as:
1. Operational forecasting
Operational forecasting in a hotel is about focusing on the operational aspects such as frontdesk, housekeeping and POS.
It considers factors of:
- how many housekeepers will be needed to clean rooms;
- number guests are walking into the reception area;
- how many guests will dine in the restaurant (number of covers for breakfast, lunch and dinner);
- what will be the average spend per cover;
- what should be the purchasing pattern for both perishable as well as non-perishable restaurant products and equipment.
2. Financial forecasting
This forecasting approach to hotel demand is about predicting how much the future expenses and revenue of the hotel will be.
It is essential when a hotel’s revenue depends on a particular period (season).
For example: A beachside hotel that mostly hosts surfers is likely to get more business during that time of the year when the waves are bigger and the swells are more reliable. So, financial forecasting is done to estimate the finances of the hotel during periods of low demand.
3. Revenue management forecasting
Revenue management forecasting is vital for hotels to stay profitable. This forecasting is done to predict when consumer demand rises and falls with the help of market data, including competitor pricing, and overall market performance.
So, if you want to set effective room rates and maximise your profit, then revenue management forecasting is a MUST for you.