Forecasting by Revenue Stream in Total Revenue Management

By Nicholas Tsabourakis Founder & Managing Director, Bespoke Revenue Management | June 24, 2018

Co-authored by Katia Savoca, Head of Revenue, Europcar

Accurate demand forecasting is extremely important for a business as it drives strategic planning aimed at optimising sales, increasing operational efficiency, improving customer service and maximising profit. Predicting what the customer wants, anticipating the sales of products and services helps managers understand revenue opportunities and make informed decisions about pricing and business growth strategies.

With a holistic revenue management plan, a hotel can be confident it is still running with the most profitable business mix while all revenue streams are optimized and designed to improve customer service.  Much has already been discussed about the components that are vital for an effective Total Revenue Management process (TRM) in earlier installments in this series. This article will focus on forecasting by revenue stream as a necessary tool for a successful total revenue management plan.

What is forecasting?

In simple terms, forecasting is the process of predicting future developments in any hotel by using past and present data. It involves attempting to gain an insight into the future while relying solely on past trends and present events. Forecasting is the scientific version of crystal gazing and while future events may deviate from past trends, the intelligent insights obtained from forecasting, provide a reliable platform to build upon.

Forecasting hotel demand and revenue accurately can prove difficult. Though the seasonality lends some much-desired predictability to the task, factors such as changes in the market, consumer behavior etc., still make it seem like trying to hit a moving target. But it must be done and done right if a hotel is to maximize revenue & profitability. Vital business decisions bordering around pricing, advertising, distribution etc. are all made based on the conclusions drawn from a forecast.

Choose a Social Network!

The social network you are looking for is not available.

Close

Hotel Newswire Headlines Feed  

Marky Moore
Marc Stephen Shuster
Larry K. Kimball
Steven Ferry
Michelle Millar
David Ashen
Maurice Martin
Bonnie Knutson
David Benton
David Foliot
Coming up in February 2019...

Social Media: Getting Personal

There Social media platforms have revolutionized the hotel industry. Popular sites such as Facebook, Twitter, Pinterest, Instagram, Snapchat, YouTube and Tumblr now account for 2.3 billion active users, and this phenomenon has forever transformed how businesses interact with consumers. Given that social media allows for two-way communication between businesses and consumers, the emphasis of any marketing strategy must be to positively and personally engage the customer, and there are innumerable ways to accomplish that goal. One popular strategy is to encourage hotel guests to create their own personal content - typically videos and photos -which can be shared via their personal social media networks, reaching a sizeable audience. In addition, geo-locational tags and brand hashtags can be embedded in such posts which allow them to be found via metadata searches, substantially enlarging their scope. Influencer marketing is another prevalent social media strategy. Some hotels are paying popular social media stars and bloggers to endorse their brand on social media platforms. These kinds of endorsements generally elicit a strong response because the influencers are perceived as being trustworthy by their followers, and because an influencer's followers are likely to share similar psychographic and demographic traits. Travel review sites have also become vitally important in reputation management. Travelers consistently use social media to express pleasure or frustration about their guest experiences, so it is essential that every review be attended to personally. Assuming the responsibility to address and correct customer service concerns quickly is a way to mitigate complaints and to build brand loyalty. Plus, whether reviews are favorable or unfavorable, they are a vital source of information to managers about a hotel's operational performance.  The February Hotel Business Review will document what some hotels are doing to effectively incorporate social media strategies into their businesses.