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Here is how!
When it comes to the hospitality, travel and tourism industries, the importance of demand forecasting and optimized inventory distribution for effective RevPar management cannot be overstated. It is the holy grail of the hotel.
If you’re in any of those industries, you need to measure and forecast demand at various levels and for different market segments to develop profitable strategies, gather relevant market insights, and integrate the efforts of different departments, including distribution, to improve business performance.
How do you go about making such a complex and intensive measurement? You are probably following the approach of getting data, analyzing customer sentiment on the web, and monitoring the competitive rate.
Here are some ways accurate demand forecasting and effective room allocation can be a tool to maximize revenue for your hotel:
1. Best strategy for marketing decisions:
Marketing decisions and demand forecasts share an invaluable relationship. While you’ve already worked hard on data analysis and research to gauge overall room demand, you need to consider how various macroeconomic and seasonal factors affect demand. This helps you to market your different products to your target segments and generate more revenue from the most profitable segment at any given time.
For example, at the time of any event in your city, the demand will increase. Consequently, at the beginning of the holiday season, you can start marketing your group booking plans and offer benefits such as discounts and bonuses in the form of non-room services during that limited period.
2. Effective Pricing Strategy:
Pricing is a critical area in your hotel’s marketing arsenal. In many cases, price is the most important determinant of a buyer’s reservation decision. Such a scenario creates a pressing need for dynamic pricing to take advantage of the most profitable opportunities. For example, in times of low occupancy, you can offer lower prices and yet achieve your desired bottom line due to high prices during high occupancy. Similarly, an increase in corporate bookings may cause you to focus on profitable room bookings rather than large bookings because corporate guests are likely to prioritize your services over their budget.
3. Optimization of Distribution Channels:
An experienced revenue manager is not just focused on revenue maximization, but also seeks meticulous cost reduction to achieve a healthy bottom line. Since distribution channels offer various opportunities to optimize distribution, tracking their performance in the context of geographic demand can be immensely beneficial for your hotel.
For example, your forecasts may tell you that the coming month will see occupancy dominance at a particular location. Later, you can invest more in distributing inventory in those channels. Do not miss that you need an advanced channel manager for this.
4. Better acquisition decisions:
As a common practice, you continue to purchase various goods and services to keep your business running and in good standing. However, you can do more. One way is to optimize your investments in purchasing operations with an adequate demand forecast.
For example, if your demand forecast implies an increase in reservations, for example, due to holidays or some special event that will take place in your city, consequently, you will invest more money in the Food and Beverage department. Doing so will not only help with better planning and execution when the time comes, but it will also save you costs in such a perishable materials department.
5. Timed Staffing Forecasts:
Staffing requirements generally increase with the growth of your business. Investments in people are not limited to just hiring staff, but also extend to their training to manage critical operations, such as complaint resolution. Accurate demand forecasting will give you a clear picture of the weather and help you plan your hiring and training processes properly.
For example, an increase in demand will require the availability of a well-groomed 24-hour customer service staff, ready to meet the challenges posed by increased occupancy. In such cases, you can carry out the corresponding processes before the footfall stream arrives.
6. Scheduled maintenance operations:
Maintenance and renovation are the kind of processes that you need to carry out from time to time. Scheduled maintenance will help you be prepared to manage your operations at times of peak guest occupancy. For example, by accurately forecasting demand for hotel rooms, you can complete processes such as repairs, remodels, and replacements before occupancy increases.
With so many predictions and contingencies to plan for, you need to plan well. Plus, with the kind of benefits that forecasting tools provide, it’s clear that you need to focus more on forecasting demand at the city level in order for your hotel business to continue to thrive.
However, accurate forecasting can only be achieved through careful analysis of the right type of data. To get realistic data and its automated analysis, you can also use Travel Technology Tools, which will make your work much easier.
The result is to get better RevPAR and stay ahead of your competitors; You must measure the demand for rooms from a geographical point of view. Happy forecasting and sharing!