As we all know forecasting is a vital tool for hotels, quite often the budgeting process has been completed in the previous year and revenue targets although still valid they may not accurately reflect what’s currently happening in the marketplace. Forecasting is so important for hotels from an operational point of view with staffing, purchasing, product waste, shortages etc and also from a financial point of view when it comes to cash flow and planning spending in the months ahead.
The art of forecasting revenue is the efficient use of data from different sources & to be able to accurately as possible estimate month end revenue for future dates.
The starting point must be your business on the books by market segment. The importance of accurate on the books (OTB) data in the PMS cannot be underestimated.
Good Reservation Practices
Good reservation practices can minimise possible errors in OTB data:
- Checking of market segments & rates for all reservations
- Up to date group, wedding, and conference blocks; with rate codes and correct room count applied
- Provisional & tentative groups; you need to allow for a wash on these blocks when forecasting
- Overbooked dates; allow for cancellations in the forecast
Then building on this look at previous performance. Pre-Covid we always looked at the same time last year, what the business on the books was by market segment and what was achieved to month end. This is not so relevant currently due to data from 2021 and 2020 being invalid but also as reservation lead time is changing in key market segment. We would recommend you look at pickup patterns for the previous 3 months to establish a pattern, allowing for variances as you move between seasons.
Forward looking data must be considered from any sources that you have available like benchmarking companies (STR) and OTAs. Looking at current pacing versus pervious periods and pacing with competitors. Knowing how the future months are performing gives you insights into customer demand.
Next look at day of week availability for each month you are forecasting. What availability do you have each day of week or midweek v weekend. You also need to be aware of any ‘dummy’ reservations or sell controls that are prohibiting bookings.
Take into account any event dates and what the expectations are for those dates on ADR and occupancy.
When you forecast by market segment you then move through each market segment taking into account, what’s on the books, current pickup patterns & space available.
Top corporate accounts, any knowledge about their booking trends and requirements for future months need to be considered.
When hotels forecast on a frequent basis and in a consistent & comprehensive manner; then the better the accuracy of the forecast will become.
Having data at your fingertips makes the process more efficient and gives the ability to forecast frequently. Rate Wise RMS has just launched a forecasting tool with there software making the process easier than ever.
Our tool gathers all the necessary data so you can easily & efficiently get on with forecasting.
If you would like further information, please reach out to the team at Rate Wise on [email protected]