For years, revenue managers and hoteliers have typically forecast demand by looking at historical booking information and then the pickup or pace of ongoing reservations leading up to an actual stay date. By charting past and present, hoteliers have been able to get an idea of how much future demand there will be for any given date. This is important to not only establish room rates to maximize revenue, but also for operations teams to set staffing levels.
While those sources of data are critical, they are also incredibly limiting. By utilizing only historical and current bookings, hoteliers may get a decent view of future demand for the next month or maybe two. But when very few reservations are on the books, it’s hard to predict much further out. Fifteen years ago, before we even had a name for online travel agencies, that was more than enough information to run a successful and profitable hotel.
In today’s competitive and complex environment, it’s not. Not when OTAs are using more sophisticated information to sell your hotel rooms and charge a higher commission. And not when there is a wealth of readily available data that can not only augment, but also improve your forecast.
It’s time to look beyond inward- and backward-looking data and better understand what unconstrained demand really is. It’s often defined as the forecast or number of rooms a hotel could sell if it had an unlimited supply of rooms. But to measure that, most hoteliers are looking only at the world of people actually purchasing rooms at their property. Unconstrained demand has really been measuring unconstrained purchases and not all consumers who are shopping and convertible.
True unconstrained demand—not just those buying but everyone potentially shopping—is more measurable and predictable today with the wealth of new consumer-centric data available.
Competitive pricing information has become a valuable piece of the puzzle, but it alone is not enough. Tracking the prices of a hotel’s competitive set provides insight into market demand, but other data like local events, flight arrival information, social reviews, web shopping data, and even weather can paint a far more accurate picture of true unconstrained demand.
Events, which any good revenue manager takes into account, are an obvious source of potential demand. If a new festival attracting 100,000 visitors is announced for next summer, a whole new world of potential buyers will be entering the market for those dates. Forecast demand—and pricing—should increase even before a noticeable pickup is seen.
Click to read full article: Lodging Magazine