5 Ways to Improve Your Demand Forecast
As hotel rooms are perishable goods, with a shelf life of one day, it is important for hoteliers to maximize their value proposal.
The clearer the image of the demand for our offer, the easier it will be to prepare many of the operational phases of the accommodation, all the way from the reception staff to the Marketing or Revenue Management Department.
Predicting demand allows us to identify needs and build a strategy based on a projection of occupancy. Demand forecasting is a complex discipline and, at times, it will inevitably overwhelm us, since there are many factors that affect this analysis. Similarly, if the accommodation is clear about its objectives at an occupancy level, and the speed at which rooms fill up, this work will prove very motivating. A clear example would be an important event in our area of influence, with its respective increase in new guests. This will help us understand possible price changes and thus maximize revenue.
Hoteliers can and must start to build daily demand forecasts by market segment. We, at Beonprice offer you 5 tips on which to base your demand forecasting strategy and thus predict the expected demand for your accommodation:
Use appropriate data. A forecast can be as simple or as complex as the precision that we are willing to implement when taking our decision. We can proceed from an approach based on our own previous experience using complex mathematical algorithms. The first analysis to make a reliable forecast is usually based on historical data on occupation rates and income from previous years. The most important pieces of information to bear in mind are the reservation date, the rate code, the arrival date, the departure date, and the income per day. As an additional way of optimizing results, we can expand our database by extracting data at the market level, taking information such as demand for future flights, weather reports and geographic data (e.g. where bookings come from at specific times of year). While the latter source of forecast data is more complex, it will nonetheless improve our understanding of market movements.
Segment your forecasts. It is important to carry out a separate analysis of the results for the different segments or traveler types that we have established, be groups of elderly people, schools or families with children, just to give a few examples. We must take them into account independently before superimposing them in our analysis. These segments can be crossed with the different events on which our hotel can be interesting in analyzing booking dates, days of stay, spending levels, etc. If you can segment by clearly defined groups and shared booking behaviors, forecasts will be more accurate and actionable. On the other hand, making subgroups within the segments for selected channels will allow us to have a relevant factor and an important cost for the hotel.
Monitor the web. The task of tracking purchase behavior on a hotel website can be a very complex one, but it can provide valuable information about current and even future demand. Current analytical tools allow us to analyze arrival times on the web and, therefore, have proof of how relevant our website is when it comes to last-minute reservations or early bookings. Seeing which sections or offers on the web are most interesting in terms of traffic volume, and which parts of the web are being neglected, will be important factors when establishing an idea of the user profile that visits our website. On the other hand, if we know what a potential or current client is looking for on our website, we can mold future versions or make decisions based on traveler perception.
Monitor the calendar of future events. Planning events in a hotel’s area of influence is a mandatory task for the Revenue Management Department. The ability to make forecasts before important events such as New Year or Holy Week, or nearby sporting events, will allow us to make decisions in advance and focus our commercial strength. The key to this factor lies in better understanding how these events will affect the market and in assigning them a numerical value. Using historical data to obtain a clearer picture of these events function and investigating new variables will be prove essential when attempting offering a really useful analysis. When looking at past events we must pay attention to the booking rate in order to adapt our strategy and anticipate demand.
Know your competitors. Build the competitive set by identifying nearby hotels of similar size that operate in an equivalent market segment and have similar prices, or even have notes in similar online reputation portals. The main point to bear in mind, and one that we should never lose sight of, is the price. RMS (Revenue Management System) tools as Beonprice allow to analyze in real time and with a great level of detail the rates of our competitive set. In addition, its use allows an in-depth analysis of competitors' prices on their different channels where it is distributed, both on the hosting website and in OTAs or metasearch engines. In this way, the distribution of our competitors facilitates our understanding of the market and allows us to act accordingly.