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.

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