Strategies to Approach Impactful Hotel Revenue Forecasting
Forecasting is the lifeboat to your entire hotel revenue management strategy. The hotel managers will have the advantage to make ideal decisions on pricing, distribution, and promotion. Hotel revenue forecasting will help you state the demand and performance in different areas of your operations.
Hence, you can proceed with amendments and set the profit expectations right. You can always hire a professional revenue management service to get consultants working on your revenue strategy and optimization. But, educating yourself with the ideal ways is still an important task to judge what’s right and wrong for your business growth.
The article explains a few ways hotel revenue forecasting can be implemented. These tips will help you overcome limitations and make higher turnovers every year.
Importance of Hotel Revenue Forecasting
Hotel revenue forecasting involves several touchpoints, including property evaluation, auditing brand presence on online travel agencies (OTAs), rate management, pricing strategies, etc. With all this data and more, your managers can determine the loopholes eating up the business profits.
It will help you set up an optimized revenue forecast for the forthcoming year by making the necessary amendments the business desperately needs. Most hotel businesses use Revenue Management Systems (RMS) to get timely assessment reports on key metrics that affect the inflow of money to the business.
Some of the benefits of hotel revenue forecasting that will explain its importance are:
- Optimal cash flow and management of credits
- Better sales analysis
- Proper budgeting for investments
- Impactful decision-making potential
- Proper planning approach
- Informed scheduling of services
Ways to Make the Most Out of Hotel Revenue Forecasting
Here are a few of the ways for you to implement and experience the profitable change in your business growth with revenue forecasting:
1. Maintain Accurate Records
No forecasting can take place if you are losing your valuable data. The first step to implementing strategic revenue forecasting is maintaining accurate data records. Some key data metrics you must hold onto are occupancy, revenue, room rates, and others.
Do your math on the income you made by multiplying the number of rooms sold and the average room rates. Along with that, you must also calculate the average overall spend per room. If you have collected these sets of data from the last year, then add them up to your forecasting plans for the coming year.
2. Demand Forecasting
The demand of customers cannot be static throughout the year, and it fluctuates. The fluctuations depend on the season, economic conditions, and important events. Hotel demand forecasting is the strategy that will help you analyze the information associated with past demand along with current and future events.
Your managers can use this data to predict the increase or decrease of the demand at any particular time of the year. In accordance with that, you will be able to predict the right marketing, pricing, and distribution strategy to cope with the demand with adequate supply. Hence, the overall revenue will also increase.
3. Customer Segmentation
Forecasting the growth potential of your hotel business demands you to segment your customers into different types of travelers. For instance, you need to segment business travelers, leisure travelers, healthcare travelers, backpackers, and others in different categories. It is because different types of travelers have varying needs and expectations.
With proper segmentation, you can plan out rates with firms that make frequent business trips, organize trip plans for leisure travelers or offer discounts to loyal or regular customers. In this way, you will potentially be able to categorize the amount of revenue you are earning from each segment. You can prioritize your marketing efforts towards the segments that contribute the most to your revenue.
Some of the data that you must acquire under the segmentation criteria include:
- Duration of stay
- Purpose of trip
- Booking channel
- Demographic factors such as age and gender
- Traveler’s status (new, repeat, or regular guest)
4. Breaking Down Forecasting Patterns
While you are on revenue management forecasting, you can try implementing this strategy to assess the factors in different areas first before measuring them collectively. You can determine forecasting by origin, business type, distribution channel, and room type to have a clear picture of what area is affecting or boosting your hotel revenue.
Try implementing this strategy along with customer segmentation aspects to get filtered data for setting up near-accurate revenue prediction for your next financial year. Moreover, use the data to improve the areas that are not performing well.
Suppose the forecast by distribution channel is not working well with current channels. In that case, try changing the channels, updating the content, and upgrading your upselling bundles.
5. Using Revenue Management System (RMS)
Most hotel businesses want to save time and hassle on manual forecasting methods. Instead, they want to use digital and automated tools to do things on their behalf. These systems are trustworthy and have helped hotel businesses with accurate forecasts as well.
The only thing is that you have to bear a nominal cost against using proper RMS software, which is a worthy investment if you want proper time utilization for your hotel business. This software will assess the performance data and analyze it to predict consumer behaviors and demand cycles with utmost accuracy.
The decision-makers of your business will be able to decide on reasonable pricing based on the predictions set by the RMS. Moreover, you can also optimize your channel manager to link with the right distribution channels that are giving you a good scope of revenue for the next forecasting period.
Integrating with low-scope distribution channels will eventually cause revenue leakage for your business. So, using an RMS tool will be productive for your overall hotel revenue forecasting needs. Some of the benefits you acquire by using RMS software are:
- Better analysis
- AI-based decision making
- Lower costs
You can also look for revenue management as a service and take the help of dedicated consultants to run human-based analysis on your operational data. They can verbally explain the loopholes in your current management procedures affecting the revenue cycle. Amend them, and you can determine the accuracy of your revenue prediction.
Automated Software Solutions can Streamline Hotel Revenue Forecasting for You
The strategies listed above are effective when you work them out yourself. But that will cost you time and effort, which can be useful in other operational aspects. So, to save that time and hassle, it is better to rely on automated software solutions to pick up the pieces and help you with optimal revenue forecasting for your hotel business.
AxisRooms offers highly proficient RMS software that supports intelligent pricing features, auto optimizer, and great analytics. It is obvious that upon revenue forecasting, you will need to make necessary changes to your distribution channels as well. So, AxisRooms offers you its channel manager software as a bundle with RMS.
If your business needs to go along with direct booking channels, you can get optional upgrades for the booking engine and property management system (PMS). To learn more about it, you can always check out the website and request a demonstration.