With the shelf life of a single day for a hotel room, hoteliers aim to maximize its value. And, forecasting is the key driver of the pricing management decisions/inventory management decisions. Agree? Any inaccurate forecast(s) can lead to reduced profit margins for your hotel business.

If you’re among those hoteliers who have not tried effective hotel room forecasting yet, then you’re missing out on at least 9 advantages to your hotel revenue management approach. What are those 9 benefits? Read on to find out more. 

9 Undeniable Benefits of Hotel Room Forecasting

  1. Marketing Strategy

A reliable room forecast is critical in the effective execution of a hotel’s marketing strategy. As hoteliers use forecasting mechanisms to plan their promotion offers (period, targeted territories, etc.), the interrelation between room forecasting and marketing strategy is quite obvious. This is a key trigger for the hotel’s Sales and Marketing team to activate sales & marketing initiatives to attempt and create demand, at the same time promotions are introduced for the same effect. On this strategy table, hotels identify the market segment that can be targeted to make up for the drop expected from the other segment.

For example for a forecast of low occupancy for an upcoming period, hotels can decide to run a promotion on all online channels to create an incremental demand as well hotel sales team can run customized promotions for their offline customers to fill up the hotel.

  1. Yielding across various channels

An accurate forecast of occupancy and room revenue empowers a revenue manager to yield across various channels.

For example, if a property is forecasted for a high occupancy owing to high unconstrained demand then the revenue manager can choose to yield and sell on low cost/high rate channels to maximize profits. 

  1. The Rooms forecast is a forerunner to Financial Forecast

Hotel Financial Controller needs information on forecasted room revenue for multiple purposes; to understand cash/credit flow for the hotel as that needs to be considered for multiple expenses that will be generated in different departments including rooms.

For example for next month hotel revenue manager makes a forecast that Corporate Groups & Corporate FITs will be dominant in occupancies and Transient segment will be below expectations, a financial controller will have to adjust the outflow of cash since most corporate bookings tend to be realized much later than actual check out when payment from these corporate offices hits the hotel’s bank.

Also, additional revenue that will be generated from other departments like F&B, Laundry, etc., is proportional to Room occupancy.

As discussed, Hotel Financial Controller creates a cash flow forecast (a forecast of cash coming into and going out of business) on this forecast by revenue manager and this forecast is periodically compared with the hotel budget to track deviation. 

  1. Forecast for other Revenue generating departments

Though hotel rooms might be the biggest contributors to revenue, but there are other revenue-generating departments too which have their forecast dependent on room forecast, for example, room occupancy will help F&B to know how many resident guests are expected at Breakfast and other meals, similar forecast for other departments like Laundry, Mini Bar, etc.

  1. Purchase Decisions

The purchase of perishable as well as non-perishable improves by a good forecast. For Example during a low occupancy period, a hotel may decide to cut down its buffet offerings in the coffee shop and thus need to purchase a lot of perishable food items that will not be there.

  1. Action Plan for Near Future

This is base on which hotels plan their course of actions in all areas for the near future, say 3 months, and move accordingly.

  1. Expansion Plans

Maybe not relevant for every forecast but a demand forecast of unconstrained demand might be referred to by hotel management to plan an expansion if needed.

For Example, on a regular basis, the unconstrained demand forecast for a hotel is high which may lead the management to a decision to expand the size of the hotel, if possible, and increase its inventory owing to observed regular high unconstrained demand.

  1. Decision about staffing

Room occupancy forecast will also be referred by all departments for their staffing purposes as well as, if needed, for hiring too.

For Example; hotels generally encourage their staff to take their annual leaves in the low season of occupancy so that during their high occupancy period they have staff at full strength to ensure smooth operations.

  1. Hotel Maintenance

Hotels tend to utilize low occupancy forecasted time for periodical maintenance.

For example; the annual renovation of rooms and other areas in a hotel is generally carried out when the forecast is for a low occupancy for a long period.

A reliable forecast has a direct impact on the bottom line.

Helping Meliá Hotels increase ROI with 90%+ demand forecasting accuracy