Forecasting has become one of the more complex and sought after skills for revenue managers. However, this hasn't always been the case. Decades ago, there were far fewer distribution channels and forecasting was a simpler task. Fast forward to today - a complex online environment means that advanced and more exact methods are needed to better predict demand and its impact on future revenues.
Traditionally, forecasting looks at past and present data in an effort to understand market demand. This type of forecasting occurs at regular intervals to ensure that strategic decisions are being made. In this article we’ll discuss the types of data needed for forecasting, and how you can start harnessing this data to more accurately forecast at your hotel.
In short, forecasting with confidence means that you take into account all of the various factors that impact demand in your market. There are three categories of data that you need when forecasting:
The current state of the market takes into account large-scale trends. This includes: overall market performance for the current point in time in your specific region, as well as factors that are closer to home (e.g. your compset’s pricing as of this moment for specific days in the future.) This will tell you at a macro level if your market is looking up or down, influencing expectations for those future days and whether your competition shows signs of holding similar expectations.
Ask yourself the following questions:
Equally important is your past performance data. Analysing past data as recorded in your PMS on a large scale can reveal trends that you can either capitalise on, or nip in the bud.
Ask yourself the following questions:
Despite being susceptible to cancellations and modifications, OTB data has traditionally been the only indication of future performance. By labelling business OTB as demand, the industry overlooked data that indicated intent to travel (which are all the reservations that have not been made yet but that you can win into your hotel.) Now that this data is available in actionable with new solutions like Market Insight, you can make better informed forecasting decisions based on real time developments in demand.
Prior to March 2020 forecasting occurred at minimum on a monthly basis. Due to COVID-19, all of the industry standard rules no longer apply. At present, we are confronted with markets whose demand patterns evolve based on the daily news cycle. Checking in on a daily basis is advised, as each week can behave differently. Demand can be volatile, so remember to keep that in mind with every iteration of forecasting you produce.
Using the above mentioned data and questions are a good start, but require manual work. Rather than spending your time on maintaining models, you will want to rely on tools that help guide you to make better, more data driven informed decisions.
Step 1. Use Market Insight to get an overall feel for market demand before it is on the books. Market Insight reveals predictive demand 365 days into the future, based on flights and travel-related searches on search engines, including information on who you are being compared to in searches. This can give you a competitive advantage over hotels that only consider OTB data.
Step 2. Use Rate Insight to compare your rates, from Best Flex to Lowest and Mobile strategy against your compset. With Rate Insight, you'll have access to market demand indicators based on rates and availability up to 60 days ahead.
Step 3. Use Revenue Insight for forecasts based on year over year, week over week or custom timeframes - identifying trends within your own PMS data. This is where you gain additional insight on pace, customer segments and rates that may offer opportunities or require attention to drive revenue.
There you have it! You now have everything you need to begin forecasting with confidence.