Lectures obligatoires

COURS 1 – INTRODUCTION DU COURS

 The Basics of Yield Management – Kimes (1989)

Le Yield Management système n’est pas compatible avec n’importe quel environnement de travail.
Avant de l’introduire dans une entreprise, il est parfois nécessaire de faire quelques changements.

Le Yield Management Système accroît généralement les revenus cependant il peut créer des
problèmes dans l’entreprise si le management de cette dernière ne correspond pas.

What is Yield Management ?

= process of allocating the right type of capacity to the right kind of customer at the right price so as
to maximize revenue or yield.

The objectif is to define what these trade-offs should be : how many rooms should be allocated to
and protected for each market segment over time?

Les managers devraient plutôt s’intéresser à la maximisation de leur profit plutôt que leur taux
d’occupation ou leur average room rate.

Where does Yield Management Work ?

L’industrie aérienne est considérée comme la première industrie à avoir développé le Yield
Management.

L’industrie hôtelière et l’industrie aérienne ont plusieurs points communs et sont des candidats
parfaits pour le Yield Management. Les deux ont des capacités relativement fixes et l’idée est donc
d’utiliser ces capacités de manière la plus profitable possible.

Yield Management est approprié lorsque :

- les capacités sont relativement fixes

- la demande peut être segmentée de manière claire
- l’inventaire est périssable
- les produits sont vendus en avance
- la demande fluctue
- les coûts de vente marginaux sont bas
- les coûts de production marginaux sont élevés

Requirements of a Yield Management System :

Il existe différents type de Yield Management mais tous ont besoin de la même sorte d’informations.

 Booking patterns : besoin d’informations sur comment les réservations fonctionnent pour
pouvoir comparer ce qu’on fait et ce qu’on devrait faire
 Demand patterns by market segment : les prévisions de demande sont l’un des pilier du
Yield Management
 Overbooking policy : should be clearly stated
 Effect of price changes : le manager doit avoir une idée de comment la demande va fluctuer
en fonction des changements de prix (élasticité)
 Good information system : l’hôtel doit avoir un système d’information excellent
Specific Problems with Hotel Yield Management :

o Multiple-night stays
o Multiplier effect : en se concentrant uniquement sur le département hébergement d’un
hôtel, les managers peuvent passer à côté de revenus importants à maximiser également
tels que les revenus en scillaire.
o Booking lead time
o Lack distinct rates : of les hôtels devraient adopter davantage de tarifs différents
o Decentralized information

Managerial Concerns :

La mise en place d’un Yield Management peut donner à l’hôtel un aspect compétitif très intéressant
mais peut également « aliéner » les clients et dégrader le moral des employés.

A firm commitment from top management is essential.

- Alienating customers : si les clients n’apprécient pas le fait que certains hôtels pratiquent la
discrimination par les prix, ils préféreront aller chez les compétiteurs
- Employee-morale problems : si le Yield Management n’est pas correctement structuré
- Incentive and reward systems : Yield Management peut créer des problèmes pour les
« group-sales departments »
- Employee training : Yield Management Système nécessite une formation supplémentaire
pour les employés
- Organization of yield-management function
- Top management commitment : sans un intérêt particulier du top-management, un Yield
Management System n’a aucun intérêt
COURS 2 – APERCU DU MANAGEMENT DU REVENU (MR)

 The core concepts of Revenue Management (1997)

 Revenue Management 101

“It should really be called Profit Management”

L’implémentation du RM dans un hôtel peut accroître le revenu de 3 à 6 %, voire plus.

RM est une façon de faire du business qui nécessite que tous les départements se concentrent sur
leurs besoins pour ainsi augmenter le profit total de l’établissement.

“It’s the culture, not the computer”

How Did All This Start?

Revenue management as a formal discipline has its origins in the domestic American airline industry
of the 1970s.

Cruise lines, car rental agencies and hotel companies started to evaluate the benefits of adopting YM
as a business strategy. Early adopters in the hotel space included Marriott International, Holiday Inns
Worldwide (now InterContinental Hotels Group), Hilton Hotels Corporation and ITT Sheraton.

What Does RM Mean?

RM = Revenue management is the practice of selling the right product (room, seat and banana) for
the right price (rate and fare) at the right time to the right customer

Different channels demand different prices and yielding strategies, and guests have come to expect
different prices by channel because the product itself is subtly different on each

The Revenue Management Cycle :

Revenue Management 101 :

 Rate vs Occupancy vs RevPAR : A hotel company looking at its business from a revenue
management perspective is more interested in RevPAR, or revenue per available room.
RevPAR elegantly expresses both variables in a single number.
  Unconstrained vs Constrained Demand : Unconstrained demand is the RM term for the
total demand for rooms on a given arrival date if you could in fact provide rooms for all of
that demand. Constrained demand means the total demand you can serve, subject to the
number of available rooms.
 Displacement Cost : refers to the revenue potential lost, or displaced, to the enterprise
incurred by accepting one piece of business over a competing opportunity.
 Spoilage : inventory that goes unsold when there is unsatisfied, constrained demand in the
market.
 Booking pace : the number of rooms reserved for an arrival date (day 0) as of each
preceding booking date (day minus 30, day minus 60)
 Data Extract : A key point in selecting an RMS is the stability and reliability of the data
extract process
 Controls : Revenue management uses controls to fit forecasted, unconstrained demand into
available rooms to optimize total revenue
 Rate Tiers : RM-enabled hotels are more likely to have multiple tiers of rates that are applied
to any given arrival date according to forecasted, unconstrained demand and how far out
the booking date is.
 Minimum Length of Stay (MLOS) : MLOS represents one of the key controls available to the
hotel revenue manager
 No Arrivals/No Departures : The result is to minimize a peak or valley during the period and
spread more revenue over more days
 Stay-Throughs Allowed : allow any reservation of more than “X” nights to be booked despite
the other controls that are in force, including a stop sale.

Where is RM going ?

“Thousands of hotels representing millions of rooms stand to increase revenues and profits by
embracing revenue management as a way of life.”

“ASP-based systems open up the rest of the market for automated revenue management solutions.”

Application service provider (ASP) systems allow the hotel to skip buying hardware and software and
instead rent the right to use it on a monthly subscription basis. Moving from property-based systems
to ASPbased systems is one of the major trends in the RM industry today. ASP-products reduce the
cost of entry to the point that virtually any hotel can afford the start-up fees and monthly
subscription fees

Another trend driving larger and faster deployments is the ability for some systems to provide a
multiple-property view of a market. This allows an area manager to control rates and controls for
the entire market, not only a single hotel

Everyone is aware of the proliferation of new distribution channels. In addition to baseline

PMS/CRS/GDS channels, we now have the hotel Web site, the brand Web site and countless third-
party online channels. This proliferation impacts the RM process in two key ways:

1. Optimization routines must consider the cost of each distribution channel in calculating what
controls will yield the most revenue
2. Implementation of recommendations across more channels takes more time and effort

What Are the Challenges ?

- Reliability of PMS data extracts

- Cultural and organizational
Benefits of RM :
FOR PEOPLE
 Reduced turnover among revenue
managers
 Improved presentation and persuasion
skills among revenue managers
 Elevated sense of teamwork among
management team
FOR PROCESS
 Forecasting improves significantly, but
takes much less time to do
 Overbooking performances improves
 See changes in the marketplace much
faster
 Use it as an ad hoc executive
information system
COURS 3 – MESURES DE PERFORMANCE ET INDICATEURS CLES (KPIs)

 Younes Kett – GOPPAR, a derivative of RevPAR

RevPAR = mesure et analyse de base pour la performance d’une hôtel

Typically, full-service three- to five-star hotels derive about 50-65% of their revenues from rooms.

Budget and extended stay hotels with limited additional facilities make up to 90% of their revenues
from rooms.

RevPAR = Rooms Revenue / Number of Rooms / Number of Days per year

RevPAR = Average Rate * Rooms Occupancy

Pitfalls of RevPAR:

 Revenue mix : Parfois, le revenu hébergement ne représente que 50-55% du revenu total.
Ainsi, dans ce cas, le RevPAR ne montrerait qu’une seule et unique portion du revenu de
l’établissement en laissant de côté toutes les autres sources de revenu. Ces résultats
pourrait fausser les comparaisons entre les établissements.

 Size : RevPAR tend à pénaliser les plus grands hôtels que les petits. Il est en effet plus facile
d’avoir un Occupancy élevé dans un établissement avec 100 chambres que dans un
établissement avec 200. Ainsi le RevPAR d’un grand hôtel tendra à être plus bas que celui
d’un petit hôtel.

 Value Implications : Hotel values are typically based on net free cash flows rather than total
revenues. While RevPAR is somewhat related to a hotel’s value, it is not necessarily
adequately correlated to the income capitalisation value of a hotel property. However, it can
be said that changes in hotel values are often highly correlated to changes in RevPAR
(reflecting an elastic relationship).

GOPPAR (Gross Operating Profit Per Available Room) :

Le GOPPAR n’indique pas le revenue mix d’un hôtel et donc ne permet pas une évaluation du revenu
hébergement. Cependant, il permet une indication claire sur le profit potentiel d’un hôtel.

GOPPAR peut facilement refléter la profitabilité, l’efficience d’un point de vu managérial et souligner
la valeur d’un hôtel dans son ensemble

Advantages of GOPPAR :

o Revenue mix : Since GOPPAR reflects the underlying operating profit of a hotel; it provides a
clearer indication of the overall performance or cash flow potentials of a hotel property.

o Size : GOPPAR accounts for all operating expenses, most of which include both fixed and
variable portions. The fixed portion is mainly associated with the size and requirements of a
hotel, while the variable portion relates to the volume of business attributed to the hotel.
While a larger hotel will undoubtedly incur higher operating expenses than a smaller hotel,
given similar market conditions, a smaller hotel is likely to have higher expenses on a per
available room basis (due to the economies of scale of a larger hotel).

o Value Implications : GOPPAR has a greater and more reliable correlation with a hotel’s value
than RevPAR
The Trick! :

GOPPAR is highly sensitive to any fluctuation in RevPAR.

A slight fluctuation in RevPAR can have a significant effect on GOPPAR and, consequently, the
underlying value of a hotel

Conclusion :

RevPAR

- indicates the performance of a hotel in terms of rooms inventory management and

provides some general market trends
- but provides no cost indication of a hotel property and therefore how much money it is
actually – or could be – making.

GOPPAR

- provides a deeper indication of a hotel’s profitability by taking into consideration

management control and efficiency, and eliminating, to a certain extent, the potential
advantage of a smaller hotel
- offers an overall more robust performance measure, especially when comparing the
financial performances of hotels with different sizes or in different markets.
- has a significant correlation with a hotel’s bottom line and thus its underlying value.

 RevPAR: the good, the bad and the ugly

COURS 4 – TARIFICATION & PERCEPTION DU RM

 Best Available Rate Pricing

La discrimination par les prix n’est bien souvent pas comprise par tous les clients. Best Available Rate
Pricing (BAR) is an attemps to reduce that confusion and to guarantee that the guest is quoted the
lowest available rate for each night of a multiple-night stay.

 Au lieu de payer le même prix pour chaque room-night, le client payerait différents prix
chaque nuit

Comprendre la perception des clients vis-à-vis d’un BAR policy peut aider les managers d’hôtels à
appliquer les outils du revenu management qui maximise leur revenu sans compromettre la
satisfaction des clients.

L’application d’une tarification BAR permet de trouver le juste milieu entre la maximisation du
revenu et la satisfaction des clients.

Elements of Bar Pricing :

- Variable Pricing

L’utilisation de stratégie de variable-pricing est possible lorsque les clients sont d’accord avec le
fait de payer différents prix pour le même service/produit (et aussi lorsque l’hôtel est capable de
mesurer cette volonté de payer)

“ Based on their reactions to pricing scenarios, hotel customers find best-available-rate pricing to
be acceptable, fair, reasonable, and honest “

Des recherches récentes ont montré que les clients perçoivent l’industrie hôtelière et aérienne
de la même manière pour la pratique de variable-pricing.

- Fairness and Acceptability

Les clients soutiennent les entreprises qui pratique des tarifications équitables et justes.

A fair pricing policy is one that is generally accepted by customers and perceived as justified for
social or economic reasons.

Des exemples de unacceptable practices sont : overcharging customers, providing inadequate

information, not stocking advertised or discounted items

- Reasonableness

Les clients jugent une tarification raisonnable lorsque les prix divergent raisonnablement des
standards.

Les entreprises qui utilisent des prix non-raisonnables ont une faible réputation à propos des
clients potentiels.

- Honesty

Lorsque les entreprises are not taking advantage of consumers.

  Discounting in the hotel industry

The hotel industry’s discounting philosophy has uncharitably been described in various industry
trade publications as being similar to negotiations in a flea market or on a used-car lot

Why Discount?

No one wants to discount, but hotels are discounting. Moreover hotels need to discount to satisfy
as many guests as possible and maximize revenues from existing demand.

Desperate to increase rooms revenue, hotel general managers make discounted rooms available. By
selling rooms at a discount, the hotel attempts to bring in incremental revenue from price-sensitive
guests.

Yield-management Pricing:

The following are the ideal conditions for implementing yield management:

- Low variable costs

- High fixed costs
- Perishable inventory
- Variable demand patterns
- Ability to forecast future demand
- Ability to segment customers on their varying needs, behavior, and willingness to pay

To maximize revenues, most hotels need to separate customers and charge them different rates
based on their differing needs and behavior

Price segmentation: The key to the concept is to have a meaningful segmentation strategy in place
(e.g., telephone companies’ business rates versus weekend discounts) that differentiates customers
who are willing and able to pay higher prices from those who are willing to change their behavior
in exchange for a lower price point

Any guest’s purchase decision will be based on the particular circumstances of time, place, and
purpose of trip.

A Strategic Approach to Rate Setting:

“Hotels need to modify their pricing structure in a strategic fashion to maximize revenue and
differentiate customers”

A single rate = That rate can change according to the season or the day of the week. Easy to
administer and easy to explain to customers. however, fails to respond to peaks and valleys of
demand and does not respond to customers’ ability or willingness to pay.

Rates by room type = to set rates according to differing room characteristics (e.g., size, view, floor
level). Currently used by many hotels. Easy to explain to customers. It improves on the one-rate
approach by allowing the hotel to offer different rates on the same day, thereby realizing more
revenue. Several disadvantage: wouldn’t work for a hotel that comprises just one type of room,
won’t work in markets where customers are unwilling to pay for upgraded rooms, operationally
difficult for the front-desk clerks and reservations sales agents to manage

Good Fences Make Good Profits:

To erect “fences” = The important aspect of fences is that they allow a hotel to sell discount rooms
to one segment of customers without allowing higher-rate customers to trade down. Easy to explain
to customers. Disadvantage: more difficult to manage than other approaches are, require
sophisticated reservation and yield-management systems.

Fencing Issues:

- Ethics

Many hoteliers are uncomfortable with the thought of charging different guests different prices
based on those factors.

Such restrictions as nonrefundable rates clearly represent a shifting of risk

- Business vs leisure

In reality, leisure and business guests “cross-subsidize” each other.

- Administration

Advance-purchase rates may also require additional staff members to process and keep track of
deposits.

- Customer complaints

Customer service is clearly an issue with fenced rates, especially when customers cannot meet
restrictions or change their plans after purchasing a room.

Most hotels now use what can best be described as a “haggling” approach to attempt to segment
customers.

A rational way to segment prices is to use “fences,” or logical rules and restrictions that segment
customers on their needs, behavior, and willingness to pay.
  What is Strategic Pricing

The impetus to change a company’s approach to pricing often starts with customer push-back about
prices.

Ne pas réussir à diagnostiquer le réelle cause/raison of the pricing problem and treatinf only the
symptom peut, sur le LT, causer des damages sur la profitabilité de l’entreprise.

Une profonde compréhension que comment les produits et services créent de la valeur pour le client
est le clé pour développer des stratégies de prix.

The Strategic Pricing Pyramid :

- Value Creation

Très peu d’entreprises comprenne à quel point leur service a de la valeur aux yeux des clients.

WTP peut être un point très important dans le processus de tarification mais uniquement à
condition que les clients comprennent quelle est la valeur relative associée aux produits/services
proposés

Comment estimer la valeur ? Cela demande une profonde compréhension des besoins de la
clientèle. By understanding how customer value varies across segments, companies can develop
strategies to align price and value and thereby improve profits.

- Price Structure

Une fois que nous avons compris comment la valeur est créée dans les différents segments de
marchés cibles, la prochaine étape est que crée une structure de prix qui aligne les prix avec la
valeur délivrée et qui minimise les cost-to-serve.

Une erreur fréquente est que les entreprises alignent leur prix par rapport à leur produit plutôt
que par rapport à leur segment de marché cible.

La même produit/service peut délivrer différentes valeurs en fonction du segment !

Beaucoup d’enterprises set prices for the « average » customer  this approach also FAILS

La solution à ce dilemme est de crée une structure de prix alignée avec la valeur reçue plustôt
que le produit délivré.
2 techniques pour créer une structure de prix alignée avec la valeur délivrée :

1. Price Metrics
= the unit by which price is applied to the product or service. (ex: chez le coiffeur, les
personnes avec des plus longs cheveux paient plus car la coupe prendra plus de temps)

Le prix est ainsi aligné avec le cost-to-price et non plus la valeur.

Les prix peuvent éventuellement modifier le comportement des clients.

« per unit », « delivery time »

Advantage : assure de recevoir le prix adéquat pour la valeur livrée

Désavantage : crates an incentive for customers that would prefer quick delivery but are not
willing to pay for it to reduce their usage of a high cost service

2. Fences

- Price and Value Communication

Les clients peuvent ne pas comprendre la valeur de notre produit parce qu’ils ne sont pas assez
bien informés sur les atouts de ce dernier. C’est la responsabilité des martkeurs de s’assurer
qu’ils communiquent bien ces informations.

Ex iPod : The lack of knowledge about the value created by the iPod lowered WTP and slowed
initial sales.

Value communication are equally important in business markets.

Value communication for products delivering primarily economic benefits will be delivered
using tools ranging from basic selling sheets to web-based applications capable of customizing
value estimates, designing offerings, and supporting negotiations depending on the complexity
of the product.

Value communication for products delivering primarily social psychological benefits such as
status, security, or pleasure will rely on other types of tools such as testimonials and pictorial
illustrations.

- Pricing Policy

The financial impact of poor pricing policies can be tremendous.

Strategic pricing recognizes the link between formal and informal price policies and the
expectations and behaviours they encourage with customers and employees.

- Price Level

Il n’y a qu’un seul objectif for setting prices -> to maximize profitability

Le problème est que chaque département dans une entreprise a un point de vue différent sur
quel prix sera la meilleur pour la maximisation du profit.

Sales -> believes that lower prices will be rewarded bi higher close rate and more volume
resulting in higher profits
 Finance -> believes that rigorous enforcement of minimum contribution margins ensures price
integrity leading to more profit

Martketing -> believes that price should be used selectively to sustain market share leading to
higher LT profits in exchange for CT discounts

La question est QUI A RAISON ?

 PriceBeam (2017) Optimizing Prices In the Hospitality Industry

Dans l’industrie hôtelière, la tarification est cruciale.

Premièrement, les managers d’hôtels ont tout intérêt d’offrir des prix justes : the demand in the
industry is highly inelastic, and consequently, many hotel chains are leaving a substantial amount of
money on the table by neglecting their price setting

Deuxièmement, le profit marginal pour chaque chambre vendue est énorme et les coûts variables de
cette industrie sont faibles, les coûts fixes très hauts et le salvage cost est de zero.

Ultimately, pricing is one of the most important tools at hotel managers’ disposal; for optimizing the
bottom-line, for managing and distributing demand, for managing customer satisfaction, and for
branding and positioning.

Segmentation:

En 2 étapes:

- Définir les différents segments sur notre base de clients

- Identifier ces segments

Définir les segments  :

You got the businessperson, the family, the backpacker, the young couple, the old couple, the
foodies, the adventurists, and the beachgoers. And plenty more  important de connaître la WTP
de chacun de ces segments

Measuring willingness to pay is best done through pricing research, where the willingness to pay of
each segment is tested and calculated based on customer data

Identifier les segments:

Important d’identifier les segments avant même qu’ils arrivent dans notre établissement.

They will reveal this information through their behavior, preferences, and characteristics.

Facteurs communs utilisés par les hôtels pour identifier les segments :

- Lead Time
= how long before his arrival does the customer book the room

Ex Mariott International: customers booking around 30 days in advance will get rooms 25-
50% cheaper than those booking their room at an earlier date

Ex Hotel ICON: surges prices by around 20% for guests booking their room less than 14 days
prior to their arrival
 - Room Types
Business Traveler VS Backpacker -> similar lead time but very different preferences

- Duration of Stay
Les clients qui séjournent sur de longue périodes dans notre hôtel sont fairly price sensitive
for a few reasons :
o Diminishing marginal utility -> the value they get from staying an additional day at
your establishment is declining for each day
o Incentive to Substitute -> they pay a lot of money to you, even a slight decrease in
the room rate will save them a lot of money
o Segment Type -> typically, people staying for a relatively long period are not there
on business, nor will they have urgent errands such as funerals, hospital visits or job
interviews, where their hotel bill is the least of their worries.

- Time of Week
Probablement le facteur le moins significatif mais peut toujours être utile pour distinguer les
clients qui restent sur une petite période

Business travelers -> likely to book room on weekdays

Leisure travelers -> likely to book rooms over the weekends when they’re not working

You can use this information to adjust prices slightly for ‘low lead time, short-stay, premium
room’ travelers

- Using Add-Ons to Fine-Tune Your Value Pricing

Make sure that prices of add-on purchases are value-based, too

- Exercise Common Sense

Your price will have a long term applications

With the prominence and importance of reviews in the hospitality industry, the effect of
price on quality perceptions (and thus on customer satisfaction) should be taken into
account.

Functions of Pricing in Hospitality:

Pricing in the hospitality industry has more functions than just managing room occupancy and
revenue per room.

1. Indicator of Sacrifice
This is the one that most revenue managers focus almost entirely on.

Tells the customer how much he must give up to obtain the good or service

Consumers are not that rational after all, and they don’t have the necessary insight and
information to make a complete cost/benefit analysis of your offering vs your competitors’
 le mieux qu’ils puissant faire est d’assumer que le prix match la valeur du produit/service
qu’ils vont recevoir

2. Indicator of Quality
 A high price signals that the quality is equally high. Even if it’s not, the customer will
perceive the room to be of higher quality if the price is higher, thus making the price a
crucial tool in building and managing your brand.
As such, the price is both a tool to have potential guests perceive your establishment as
highquality before deciding which hotel to book; but also, it’s a tool to positively influence
their experience once they’re actually at the hotel.

3. Room Availability Uncertainty

If you don’t use price discrimination and dynamic pricing, it may have a negative impact on
customer satisfaction.
2 raisons:
o The factors used in differential pricing in the hospitality industry are very well
aligned with customer’s fairness perception (ex: lead time)
o Customers expect that they can always get a room, as long as they’re willing to pay
the price

The point here is that even though maxing out your occupancy rate may maximize RevPAR,
it will also create ‘room availability uncertainty’ which is very, very bad for your brand and
customer loyalty.

Price Positioning in Hospitality:

Your brand is your promise to your guests.

Fail to take price positioning into consideration!

Look at hotel room rates, how they affect your price positioning, and what empirical data tells us
about different price positions and revenue per Available Room (RevPAR):

- Skim/Premium Price Position

= you’re most expensive than the rest

Low quality/high price is not a desirable position; even if you can pull it off short-term, you’ll
soon gain a terrible reputation with customers and in the industry.

You provide great value, and make your customer perceive the value they get to be even
greater than it is, by setting a very high price.

- Price Matching
= you match you prices with the competitors

You’re confident in your own value, but at the same time, you don’t feel that you can pull off
a premium pricing strategy

Disadvantages: you don’t position yourself at all as you don’t differentiate yourself, t the fact
that two or more product are similar can lead to customers postponing their purchase or not
buying at all

- Undercutting
A NE PAS FAIRE

It’s a race to the bottom, and in the long-run there’s only one winner (or loser), and that is
the cost-leader
 - Penetration Pricing
= low prices is the strategy right from the beginning
Peut marcher pour les nouveaux entrants mais n’est pas efficace sur le LT

How They Worked in Reality:

- hotels that employed a premium pricing strategy, or a price matching strategy, with the
majority of their rooms priced above the competition, reported the highest RevPAR.
- This conclusion is consistent during booms and recessions

COURS 5 – MANAGEMENT DE LA DEMANDE EN MR

 8 steps to improving hotel demand forecasts

“An Accurate Forecast Is the First Step to Better Pricing and More Profitability”

1. Use the right data

Three years of historical data provides a great look at business and helps project a more
accurate forecast, but even a year or two’s worth of data is helpful.

The most important data to include is booking date, rate code, arrival date, departure date and
revenue by day.

2. Segment your forecasts

“Identify group business on the books first because that tends to be booked earlier, takes up
large chunks of rooms and is often times more dependable”

In forecasting both group and transient business, looking at prior-year booking pace can give you
a good idea of what to expect and how much anticipated demand will actually materialize.

If you can further segment your business into clearly defined groups that share booking
behaviors, your forecasts will be more accurate and actionable

3. Monitor you hotel website

“Tracking web-shopping behavior can get highly complex, but it can provide valuable insight on
current and even future demand.”

If you can track how many people are visiting the site versus how many are booking for future
dates, you can see a much clearer picture of true demand. If you can see at what prices those
customers are booking, and more importantly, when they are abandoning the site, you can gain
incredible insight into the price sensitivity of those customers.

Getting an idea of how many potential guests are looking at your website is another dataset that
can be worked into the forecast.

4. Monitor upcoming events calendar

The key here is to best understand how these events will affect your market and assign a
number value to them.

This will give you a more accurate picture of when to expect a surge in demand.

5. Get to know you competitors

“Build a competitive set by identifying hotels nearby that are of similar size, operate in an
equivalent segment and are priced comparably.”
It can give you a better picture of what kind of demand the competition is expecting.

6. Partner with sales and marketing

“When sales and marketing departments work in tandem with those pricing the hotel, the two
departments can share data and other insights into future demand that can lead to a more
accurate forecast.”

7. Understand the Impact of Discounting

“One thing that might alter your forecast is a discount strategy, either by you or your
competitors.”

8. Check your Forecast After the Fact

“Testing is the only way to know the accuracy of your forecast and consistent errors must be
addressed and can often be corrected.”

Conclusion:

Revenue management is evolving into a critical tool that no hotel can ignore. With the addition
of multiple OTAs with various pricing and commission models, as well as a shrinking booking
window, having an accurate demand forecast is the first step to better pricing and more profits

 Wishful Thinking and Rocket Science