How can forecasting help hotels optimize room pricing and sales? How can it improve operational planning? And why is forecasting the secret weapon for exceeding budget targets?

Occupancy Forecasts vs. Demand Forecasts

We start by explaining the two main types of room forecasts:

• Occupancy forecast. A projection of daily room occupancy, broken down by occupied rooms, ADR (average daily rate), RevPAR (revenue per available room), and revenue. 
• Demand forecast. A projection of the number of rooms the hotel could sell each day if room capacity were unlimited, broken down by occupied rooms, ADR, RevPAR, and revenue.

Both types of forecasts are an integral part of planning for all types of lodging businesses. Much like weather forecasts help people plan for future weather conditions, hotel forecasts help staff prepare for future business conditions. 

Occupancy forecasts are used for operational planning, including scheduling staff, ordering supplies, and reducing unnecessary expenses. Demand forecasts are used to guide revenue management strategies, pricing, inventory controls, and marketing campaigns. 

Forecasting & Pricing Strategy 

Forecasts help hotels anticipate periods of high demand, when there are opportunities to increase rates and boost revenue. They also highlight periods of lower demand, when the hotel may need to reduce rates to meet occupancy targets. 

Forecasting & Inventory Controls

Hotels also use forecast insights to guide inventory controls and pricing restrictions. This includes implementing a minimum length of stay, closing dates for arrival or departure, and overselling certain room types.

Forecast Tips & Strategies 

Here are a few of the strategies we share in the guide to help hotels improve the accuracy and outcomes of forecasts:

• Update the forecast as soon as you learn about new events such as a concert, sports match, or group cancellation. 
• Include cancellations and group wash in forecast calculations. 
• Forecast by market segment and room type.

Forecasting Made Easy with an Automated Revenue Management Solution

An automated revenue management solution produces demand forecasts on behalf of hotels and adjusts pricing dynamically, saving hotels valuable time and helping ensure they never miss an opportunity to maximize revenue.

Be Proactive with Smart Forecasting

With proactive forecasting, independent hoteliers can anticipate market changes, optimize pricing, and manage inventory more effectively. To learn more, check out the guide today.