Key Factors for Designing the Perfect Forecast
by Beonprice - 3 September, 2018
Key Factors for Designing the Perfect Forecast
The perfect forecast is the result of information synthesized by technology. This way the profitability associated with tourism product quality can be improved.
At Beonprice we are looking to resolve any doubts that may come up in order to convey the importance of quality and how this concept can be incorporated into revenue management strategies.
Hotel Quality is a traditional and ambiguous common factor that must be interpreted from the perspective of each individual. The relationship with our product and factors such as time, place and price make the traveler perceive this parameter in terms of situations and contexts as random as a moment in life, a family situation or the reason for traveling. Quality is a variable and ephemeral concept that is important to synthesize in measurable data according to the needs and perceptions of our main market segments and profiles.
What is forecasting and why is it important?
By forecast we mean a hotel’s demand forecast in a given period of time. Accuarate forecasting helps anticipate future profits and reduce uncertainty.
Periodically preparing a forecast is important for estimating future hotel profitability, planning strategies to improve revenue, controlling periods of high and low demand to stimulate sales, anticipating resource needs for hotel operations, cross checking objective results defined in the annual budget and implement actions to correct deviations from established objectives.
To help you design a perfect forecast, we have broken down all the necessary elements, including different types of data and sources of information.
Every hotel in operation generates large amounts of data, which is why it’s important to know which data is important for designing a forecast.
First, historical data. Collecting and analyzing a hotel’s operational data is fundamental for correctly stimulating demand, understanding demand as the number of potential clients interested and the capacity to acquire our product at a certain price.
Factors to consider: occupancy rate, average price, RevPAR, hotel revenue, RevPAC, TRevPAR, average stay, average days travelers book in advance, pick up and booking rate, percentage of cancellations and no shows, percentage of extended stays and early check-outs, number of rejected bookings, important calendar days, macroeconomic situation and competitor strategies.
Breaking down data by segments, markets and sales channels allows for accurate forecasting so that we can identify the most profitable customers who can provide a substantial increase in profits.
Secondly, current data should be considered. It is essential to compare past results with current results. It is necessary to collect data for the present using previous indicators on bookings previously confirmed (On the books – OTB), and compare it with the same time of the previous year (Same time last year – STLY).
Knowledge of an existing offer at the destination helps to identify substitute products, their level of quality and their relation to quality-price. With this information we can identify our competitive positioning and the reasons why a client chooses our hotel over our competitors.
Lastly, future data also needs to be considered. Forecasting tries to predict the demand our hotel will have in a future period of time. And so we must consider all those demand generators that we can foresee and know what impact they can have on our results: fairs and congresses; concerts and other cultural and sporting events; tourist attractions; companies and general headquarters of large companies; holiday periods; destination accessibility (flights and airlines); weather and anything else that makes people travel to that destination.
Sources of information
One of the key elements of building a good forecast is having access to accurate data sources all the time. Technology helps in this regard, via tools that collect data and organize information. Some of these include:
Property Management System (PMS): a hotel management system, which collects performance statistics for past and current periods.
Rate Shopper: collects and compares data from our competitors’ strategies.
Benchmarking: provides comparative analysis of the results of a given market
Online reputation manager: monitors the establishment’s online reputation as well as their competitors.
Trend reports from INE, hotel associations, consulting agencies
Revenue Management is conditioned to sorting, filtering and qualifying data. An RMS tool allows us to synthesize information when developing a forecast and making everyday decisions.
An increasingly demanding and competitive market requires the professionalization of technology to optimize hotel resources. What appears to initially be a cost, evolves into an investment in competitiveness and performance. By using forecasting and synthesizing with the reality of our market, we will be more faithful to our clients and more effectively synchronize our product with the needs of the traveler.