Imagine you're the manager of a bustling city-centre hotel. You've seen your share of busy seasons and unexpected lulls. One summer, you're caught off-guard when a major music festival is announced last minute in your city. While other hotels scramble to adjust, you're already steps ahead. Thanks to your robust demand forecasting system, you quickly modify your rates and staffing, ensuring not only full occupancy but also top-notch guest satisfaction.
This is the power of effective demand forecasting in the hotel industry, and it's a game-changer for those who master it.
The what and how of Demand Forecasting
Demand forecasting in the hotel industry is the art and science of predicting future guest arrivals. It's not just about knowing how many guests will book; it's about understanding when they will book, their reasons for travelling, and how external factors might influence their decisions.
This foresight is crucial. It empowers you to optimize pricing, manage inventory, plan staffing, and ultimately maximize revenue.
You are probably incorporating a few of the following data points already in your operating strategy — but the following section will help you streamline this into a mental model for building a stable, consistent practice.
1. Dive into Historical Data
Start by examining your past. What were your peak seasons last year? How did local events affect your bookings? Historical data is your roadmap to understanding future patterns.
- Detailed Analysis: Beyond just identifying peak seasons, delve into specifics like which room types were most popular, what rates were most effective, and how long guests stayed.
- Event Impact Assessment: Assess how local events (concerts, festivals, etc.) historically affected your bookings. Did they attract new guest segments? How did they change spending patterns within the hotel?
- Year-over-Year Comparison: Compare multiple years to identify consistent patterns and anomalies. This can reveal underlying trends that might not be apparent from a single year's data.
2. Understand Market Dynamics
Keep a finger on the pulse of the market. If the economy is booming, be ready for an uptick in both business and leisure travel. If a big concert is scheduled nearby, anticipate a surge in bookings.
- Economic Indicators: Keep track of economic indicators like employment rates and consumer spending habits, as these can signal shifts in travel behaviour.
- Cultural and Social Trends: Stay updated on cultural and social trends that could influence travel, such as the rise in eco-tourism or wellness retreats.
- Industry News and Reports: Regularly review industry news and reports for insights into broader hospitality trends.
3. Identify Seasonal Trends
Each season tells a different story. Recognize these patterns. Are summers always busy? Do winters bring a lull? Tailor your strategies accordingly.
- Beyond Basic Seasons: Look at how specific times of the year, like school holidays or local festivals, impact demand.
- Weather Patterns: Analyze how weather trends affect bookings. For example, a hotel in a ski resort should closely monitor winter weather forecasts.
- Yearly Calendar Planning: Use these insights to plan your yearly marketing and operational calendar, aligning promotions and staffing with anticipated busy and quiet periods.
4. Monitor Local Events
Be aware of events in your area. A major conference or sports event can mean a significant spike in demand. Stay informed and agile.
- Event Calendar Sync: Keep an updated calendar of all local events and regularly review it for new additions.
- Liaison with Local Authorities and Businesses: Build relationships with local event organizers and businesses for early insights into upcoming events.
- Impact Evaluation: After each event, evaluate its impact on your hotel’s performance to refine future forecasts.
5. Analyze Competitors
Keep an eye on your competitor. Are they hiking up rates? Perhaps they're sensing an increase in demand, and so should you.
- Benchmarking: Regularly compare your rates, services, and occupancy with competitors. Tools like STR reports can provide valuable benchmarking data.
- Market Positioning: Understand your hotel's positioning in the market relative to competitors. Are you a budget-friendly option or a luxury destination?
- Competitor Promotions: Monitor your competitors' promotions and marketing campaigns, as these can be indicators of their demand forecasting.
6. Track Booking Pace
How quickly are rooms being booked compared to last year? A faster pace might signal a busy period ahead.
- Real-Time Analysis: Utilize a system that provides real-time booking pace data.
- Pace Fluctuations: Pay attention to how booking pace changes in response to rate adjustments, marketing campaigns, and external factors.
- Predictive Adjustments: Use this data to make predictive adjustments to pricing and marketing strategies.
7. Watch for External Influences
Weather, political climates, and even airline schedules can impact demand. Stay alert to these factors.
- Global Events Monitoring: Keep an eye on global events like pandemics or economic downturns that can drastically affect travel habits.
- Transportation Trends: Monitor airline and transport trends, such as new flight routes or transport strikes, which can influence guest arrivals.
- Regulatory Changes: Stay informed about any regulatory changes in your region that could impact travel, such as visa policies or travel advisories.
8. Segment Your Guests
Different guests have different needs. Business travellers, families, and solo tourists all show unique booking patterns. Understand these segments to better predict demand.
- In-Depth Analysis of Guest Types: Analyze the booking patterns, preferences, and spending habits of different guest segments, including business travellers, leisure travellers, families, and solo travellers.
- Customized Marketing Strategies: Develop tailored marketing and service strategies for each segment. For instance, business travellers might value fast Wi-Fi and flexible check-in times, while families might appreciate child-friendly amenities.
- Feedback and Review Analysis: Regularly analyze guest feedback and reviews to understand their needs and expectations better, refining your segmentation strategy accordingly.
Building a data-driven culture at your hotel
Building a data-driven culture could significantly improve your operating efficiency and result in increased revenue.
Start by frequently using insights from your Revenue Management System (RMS), Property Management System (PMS) and Guest Engagement System to provide data on revenue, staff efficiency and guest engagement. Frequently keep a close eye on your hotel’s Key performance Indicators (KPIs).
Hold monthly strategy meetings to review these metrics. Compare current data with past trends and adjust your strategies accordingly. Keep your team informed about market changes and competitor strategies. These regular reviews are crucial for staying adaptable and ensuring your strategies are aligned with real-time market conditions.
Train your staff in data utilization. Each department should understand how their actions influence data and, in turn, hotel operations. Front desk staff should know how their data entries affect room availability and pricing. Sales teams should use data to inform their strategies. Create an environment where staff are encouraged to share insights and observations, which can provide additional data points for decision-making.
Finally, maintain flexibility in your operations. The hotel industry is dynamic, and your strategies should adapt to sudden market shifts. Prepare for different scenarios, like a drop in demand or a new competitor. Develop pricing and operational strategies that can be quickly adjusted. Encourage staff to report real-time information that might impact demand, such as local events or guest feedback.
incorporating these strategies will help embed a data-driven approach in your hotel's culture, leading to more informed decisions and better adaptability to the ever-changing hospitality environment.
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Haven is a guest engagement software to help you build a data-driven guest experience at your hotel. To realise this vision, we have built an easy way for hotels to release a QR-lead guest app that helps fulfil guest needs like accessing a digital directory for the property, raising real-time feedback, placing room requests and driving upsells. While driving guest engagement with this tech, haven collects key data points around your guest preferences, and upsell activities — providing an opportunity to build insights on how you could increase your revenue.
