We all know that demand forecasting is the holy grail of revenue generation for hotels. As hoteliers, you need to measure room and hotel demand at various levels and for different market segments to develop profit-making strategies. It involves gathering sizeable information of the market and integrate the efforts of different departments to enhance your business performance.
How do you go about measuring demand? You could be missing the benefits that a simple tweak to your approach can bring – focusing on city demand forecasting.
Unprecedented demand offers an opportunity to earn more revenue. However, with a new or a rare event coming to your city you need to create a new Revenue Strategy to tap this demand because you do not want to land up in a situation where there are not enough rooms to sell when the hotel demand is at its peak and you miss the opportunity to sell your rooms at a premium price.
Earlier, the hotel PMS provided all the data used for forecasting within a hotel. This system holds years of historical information across a variety data types like – room types, customer segments, the length of stays and more. With that data along with booking pace, hotels generated forecasts and thus made pricing strategy. But, were those pricing decisions ideal? Perhaps not. Here is why.
Big data is providing a new facet to the hotel demand forecasting. New data sources like air booking data, social reviews, ratings, and even weather—can help hotels better understand the opportunity of their upcoming demand.
Today, there is a lot of information available about consumer shopping habits. New data points include competitor-pricing, events in your town and macro-economic & geographic factors, air booking data, social reviews and ratings, weather, and web shopping data.
• Events and other economic Factors – Advance information about events, festivals, conferences happening in your city is very important, it simply means increased demand. Other local factors, like economic or political development, can play a big role in hotel demand creation as well.
• Social Reviews and Rating—Better reviews lead to higher demand, which means you can increase pricing and maintain occupancy.
• Weather conditions – Good weather can affect hotel demand and the same goes for bad weather. If you are in a weather-driven city, the impact can be even greater.
• Web-Shopping Data—Knowing who is shopping, when and why they are not booking, can provide incredible insight.
• Air Booking Data – Following are some of the most trusted and effective ways in which you can forecast local demand through a careful analysis of booking data of airlines.
It is suggested that each data type should be measured and the most applicable information should be included in your pricing strategy.
Forecasting demand through data from airlines; an intelligent approach
From the airline reservation data, hotels can specifically check for future bookings (demand) for their city. In the case of one-day-return bookings, you can be certain that they mostly corporate meetings. By the same token, in the case of flight bookings for longer durations, vacation, would imply an increase in hotel demand in that period and dates.
Throughout the year, you must periodically check airline bookings data to ascertain the way in which the number of bookings to your city very over several months. This gives you a clear picture of the low, medium and high seasons for your business. This helps you strategize in advance for every season and derive the revenue targets accordingly. For example, if you see an increase in hotel demand for say October, say 2 months from today. A revenue manager can plan to hold some inventory for October, which they can sell at a higher price which demand rises.
Check the increase in the number of flight bookings during the holiday season. Here, you must take care of the fact that holiday seasons may differ for adults (singles) and children (read it family) and as per geography also. Say, a tourist from few countries may holiday in Aug- Sept when schools are closed and some may have holidays in December. Service class or professionals may get their annual holiday allowance in the month of December, while some school/college students have holidays in autumn. Hence, a revenue manager can design custom packages targeted at young and millennial guests much before vacation season hits to tap this segment since most travelers plan much in advance and thus plan hotel inventory distribution and price accordingly.
Keeping a check on competitor rates also helps largely. RateShopping your competitor rates will give you fair ideas of how they are priced on specific dates and period.
With all these findings it is clear that you need to focus more on forecasting demand just like any other revenue management aspect to keep your hotel business at the top of its game. However, accuracy in forecasts can only be achieved through meticulous analysis of the right kind of data. You can utilize online tools such as Google Analytics to analyze the demographics of your website visitors. For procuring realistic data and its automated analysis, you can also use Hotel Rate Shopping Tools that can help you with this analysis and insights. It will make your job a lot easier.
To yield better revenues and stay ahead of your competitors; you must measure room demand from a geographical standpoint with an emphasis on proximity to the targeted market.