Hotel Revenue Forecasting Methods

It is a strategic management tool.

Hotel revenue forecasting methods. Revenue management is a key tool for hotel managers decision making process. Instead the accuracy of hotel revenue forecast results benefits from taking multiple outcomes across forecasting methods to reach a more comprehensive robust analysis. They looked at exponential smoothing linear regression holt s method pickup methods moving average multiplicative methods and log linear methods. Operational financial and revenue management.

And the winner is in a study by cornell school of hotel administration 7 different revenue forecasting methods were tested for choice hotels and marriott. Forecasting hotel arrivals and occupancy is an important component in hotel revenue management systems. Hotels often overlook the differences between these forecasts but it is important to distinguish their differences because they are used for different functions. Similarly to airlines hotels ultimately must decide whether to accept or decline a booking request depending on the customer s length of stay arrival rate and room rate vinod 2004.

In the hotel industry hotels can increase their revenue by matching demand to the rooms available by forecasting from historical data. Abstract the arrivals forecast is one of the key inputs for a successful hotel revenue management system but no research on the best forecasting method has been conducted. In this research we used data from choice hotels and marriott hotels to test a variety of forecasting methods and to determine the most accurate method. Weatherford and kimes 13 applied different forecasting methods on hotel revenue management and recommended that exponential smoothing pickup and moving average models were the most suitable.

Here some examples of hotel forecasting tools in exel. You may also consider computerized revenue management system. Forecasts are not perfect. We have compiled nine key forecasting tips which can help you to improve the quality and accuracy of your forecast and revenue management strategy.

A basic forecast is better than none. According to your yield opportunities you may decide of a more or a less developed forecasting tool. In this article we propose a new monte carlo simulation approach for the arrivals and. The revenue manager s responsibility is to consider the multiple outcomes produced by a forecast and efficiently deal with the implications and possible deviations from the.