Forecasting is a procedure of foreseeing or assessing the future focused around over a significant time span information. It gives data about the potential future occasions and their results for the organization. It may not decrease the inconveniences and instability without bounds. In any case, it expands the trust of the organization to settle on imperative choices or decisions. Estimating is the premise of commencing. Determining utilization numerous factual methods. In this way, it is likewise called as Statistical Analysis.

Forecasting is very essential in any business. Since, it  provides a platform where managers can work efficiently and make important decisions. Every business organization has certain goals or objectives, to achieve those goals and objective forecasting plays a vital role. It a method or technique to identify the future path of any organization by studying the past and present condition of the business. It is the basis for  making planning premises which are determined through the utilization of numerous factual methods or statistical methods. Forecasting may be of any segment of the business by which it keeps tight control over the business.

Forecasting is a fundamental to all the business, whatever the size.  In the case of Hotel Rooms forecasting for the hotel future performance, its very important to know or anticipate future of the hotel by its Occupancy, Average Daily Rate and Revenue per Available Rooms. Forecasting is a dynamic part of the business strategy so it leads to the efficient planning for and decision making to all the departments and most importantly it is one of the driver of pricing. Hotel rooms are the major portion of the earning. So It includes the future events , holidays, weekends and weekends trends, unconstrained demand and current trends. An accurate forecast will help to define short term as well as long term strategies related to pricing, yielding, discounting and service to the customers.

So, Accurate forecasting is one of the way to find out the future use hotel rooms, durability or the length of the stay for different category of the people staying in the hotel. This also includes forecasting of the hotel’s revenues and the profit margin. This helps to determine the improvement and generation of the income or revenue from the systematic management of the rooms which creates a larger impact in the hotel industry to achieve the goals and objectives.

Most of the hotels they use automated system to forecast the Hotels revenue called Revenue Management Systems and some of the hotels uses manual excel based approach. Due to the advancement in technology as well as service matters a lot so hotels invest a lot in automated forecasting system to know the exact revenue and profit margin in the future.


Forecasting in hotels can be divided in to three types
  • 1.      Occupancy Forecast
  • 2.      Demand Forecast
  • 3.      Revenue Forecast

It is not possible to accurately forecast the future. Because of the qualitative nature of forecasting, a hotels can come up with different scenarios depending upon the interpretation of the data. For this reason, organizations should never rely 100 percent on any forecasting method. However, an hotels can effectively use forecasting with other tools of analysis to give the organization the best possible information about the future. Making a decision on a bad forecast can result in financial ruin for the hotels, so an hotels should never base decisions solely on a forecast.
So ,Forecasting to have its drawbacks. Some of the drawbacks of the forecasting are :
  • 1.      Forecasting is time consuming since the collection and analysis part related to past, present and future involves lots of time and money. So, Many hotels don’t do forecasting because of the high cost and time.
  • 2.      Forecasting related to prediction of future events but it cannot guarantee that the events will be true or its going to take place in the future. It’s only the determination and while comparing the long term and short term forecasting, long term forecasting are less accurate than short term forecasting.
  • 3.      Forecasting is based on the past events, if the data are not accurate it many lead to the wrong path.
  • 4.      It requires proper guidance, skills or judgement as a researcher or a as a part of manager. It may go other way due to the wrong assumptions or skills.
  • 5.      Hotels sometime faces continuity in services, no-show in rooms, extended stay- over rooms or walk –ins guest creates problem as per forecasted.



Therefore, Correct data of the past , best use of the statistical tools to forecast, skill and judgemental manpower are need to determine the future path of the business or any organization.

References:
http://www.revenueyourhotel.com/

http://thehospitalityblog.ecornell.com/revenue-management-demand-control/

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