How much variance can I allow myself when making a forecast for my hotel for the next 30 days? What influences should I take into consideration? And in how much details should I go to get to more accurate results?
Influence of the Competition
It is important to keep the history of your competitors' availability and prices. That piece of information is an important part of the understanding of the demand to come to your hotel.
Does your main competitor sell more or less expensive on the forecasted period versus the same period previous year? How will that impact the demand to come to your hotel? Does your pick up curve reflect your competitors' strategies?
Elements to consider
Fully booked dates
Changes in their selling strategies
Low or High rates periods
Opening and closing of Hotels (buildings)
Rate Code, Channel and Origin Statistics
Can you develop pick up tools to analyze pick up on channels, nationalities? Which rates and/or channels your clients are booking in the future? What are the on the books (OTB) nationalities of your clients and the trends? Is it what you expected?
Top Accounts Expectations
Anticipate your top accounts production: Internet, Corporate, Consortia, Whole Sale - Tour Operators, Meetings / conventions. I.e. does the on the books of one IDS reflect the general trends of your total on the books?
Speaking of one main corporate account clients, will they book as much as in the past ? Will they book on the same days of the weeks? Will they keep spending as much as they did? Will their length of stay remain the same?
Gather information when meeting your clients, asking questions on projects, expectations... Know your sales strategies by account and analyze how it affects your global strategy. Forecasting must be as much quantitative as qualitative! Forecasting must be participative: the front-office, the sales team receives information from clients.
Accuracy of your Forecast
You should aim at 5% maximum (+/-) variance for the next month, variance between your forecast and the actual results. Take the time to analyze the variances: by day of the week? By segments? How much the room nights or the ARR variance impact to total variance?
A variance can also be caused by an incorrect on the books; before extracting your on the books, ensure that:
The segmentation is correct
Review all your definite groups. Evaluate the possible increase or decrease of the block. Ensure room blocks are well updated
Evaluate your group tentative and apply a materialization factor
Verify you do not have duplicate bookings
Ensure that you do not have pending reservations not entered yet in the PMS
Take out oversold rooms on expected cancellations and base your forecast on the number of rooms available to sell
Every room block and reservations are attached to a correct rate or rate code.
According to your yield opportunities, you may decide of a more or a less developed forecasting tool. You may also consider Computerized - Revenue Management System.
Forecasts are not perfect. It is a strategic management tool. A basic Forecast is better than none. It is the path to market and customer knowledge. It reinforces your pro-activeness in terms of inventory and rate management
Your forecast module can help to forecast the double occupancy, the number of arrivals and departures: useful for the front-desk and housekeeping. On the basis of your forecasted number of nights by segment, you can anticipate the number of guests: it helps housekeeping to forecast their costs and F&B the number of breakfasts. The forecast can help you to prevent and identify challenges in reaching your objectives: it gives time to adapt strategies or work out additional actions. The forecast can help to identify low demand period: you can develop it as a communication tool taken over by sales department to focus their efforts on sales.
Here is step 7 in our revenue management action plan:
Develop pick up tools on specific sources of business : channels, top accounts
Search for qualitative information when meeting clients to build your forecast trends.
Depending of the size of your hotel, involve team members in the forecasting process i.e. group forecast performed by the group sales manager.
Ensure your on the books is correct with systematic checks when building your forecast.
Decide of the level of details of your day by day forecasting tool: total hotel, room nights, ARR, by segments, total revenue.