Hotels are masters in finding new words as excuses for why something did not go as planned.
NB: This is an article from Demand Calender
In the aftermath of the pandemic, hotels do not think they can trust historical data. Therefore the industry has invented a new term, “forward-looking data.” The idea is to base decisions on what the future looks like, not on facts.
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“Forward-looking data” sounds like it is based on facts, but the truth is that people do not have the facts before it has happened.
The concept of forward-looking data in hotels is very similar to a forecast or prediction about the future. Forward-looking data refers to information that provides insights or predictions about future events, trends, or conditions. In the hotel industry, this data is used to inform strategic decisions and optimize performance. The job is the same as it has been for a long time: Hotels must forecast demand to set the proper rates.
The calendar predicts the future
There are two types of forward-looking data relevant to hotels. The first is the reason for traveling to the destination. Unless the beach or the ski mountain disappears, the reason for traveling to the destination remains the same as before the pandemic. If there is an event at the destination, people will likely travel to the event and need overnight accommodation. The forward-looking data is what events are planned at the destination. All the “forward-looking” data will be found in the calendar, just like before the pandemic. The calendar drives demand for hotel rooms in the hotel industry, so look into the future through the calendar.
Changes in how people work
The other type of forward-looking data is changes in consumer behavior. Hotels dream that consumers have not changed their behavior and will soon start to travel as much as they did before the pandemic. The dream is unrealistic. When did anything in history go back to how it used to be once something profound changed? That has never happened. The pandemic changed consumer behavior permanently. The critical question is to what and how much. The short answer is that not much has changed. However, some things have changed, and they will not return to the old way. People will continue to hold and participate in virtual meetings and replace physical meetings with virtual meetings. A small part of the workforce will work from everywhere and might need to stay in hotels, but will likely find other types of accommodation. People have become more aware of a better work-life balance and will not return to the rat race they used to be in before the pandemic. The needs of business people staying in hotels have only changed marginally. However, with virtual meetings, digital tools, and a focus on life in work-life balance, it will take some time until the economy has expanded with new companies and jobs until business travel returns with the same volumes as pre-pandemic. The way business people work has changed permanently, but the economy will continue to grow and therefore add more business people that also will travel to some extent.
Few changes in leisure travel
Restrictions in travel during the pandemic made it difficult to travel for leisure. This was a temporary setback for the tourism and travel industry, but as soon as governments scrapped the restrictions, leisure travel increased dramatically. People talked about revenge travel because of missed travel plans. The demand is strong, and more people will travel as soon as possible. Once China starts outbound travel, they will spend massive amounts abroad and push the industry well above the pre-pandemic volumes. Consumer behavior when traveling for leisure has not changed much either. People are not as flexible as you might think. Children have gone to school Monday through Friday for the past 150 years. People tend to work Monday through Friday. Families can travel during religious holidays and other days off during the year. The pace of life following seasons and an already set calendar has not changed after the pandemic and is not likely to change in the next hundred years.
Revenue managers looking for help
The pandemic confused hotel revenue managers since many old habits, forecasts, and predictions became more difficult. Many revenue managers and the rest of the world population did not understand how to predict the future. Everything seemed gloomy, and tourism and travel came to a complete stop. In this situation, hotels started looking for other data types to help predict the future. Hotels looked at booking intent, website traffic, airline capacity, and many other variables that might predict demand for overnight accommodation. Hotels tend to look for the holy grail – one piece of data that makes predictions easy and accurate. Unfortunately, all the new data points did more harm than good. Now that the pandemic is over and travel has rebounded to almost the same levels as pre-pandemic, all the old forecasting and prediction models are slowly working again.
Back to basics
The word “forward-looking” data will be less used, and hotels will go back and talk about the good old calendar with seasons, holidays, events, specific day-of-the-week patterns, and many other factors that affect people’s daily life visualized in the calendar format. 99 % of all hotels provide a standardized hotel experience that does not fit anyone but works for all of us when we need overnight accommodation. There have not been any significant changes in consumer behavior that will force hotels to change the standardized hotel experience dramatically.