How Forecasting Needs To Change For 2022
By Sarah McCay Tams
Wednesday, 29th September 2021

Our Pulse Live webinar, which aired recently, saw Duetto’s Lloyd Biddle, Director of Enterprise Solutions, and Hannah Weller Barrise, Director of Hospitality Solutions, take the audience through the data from our latest Pulse Report and look at key trends in forecasting and budgeting for 2022.

They were joined by Robert Mandelbaum, Director of Research Information Services at CBRE, and Paul Bennie, Vice President Sales and Marketing at ProfitSword, who provided their expert input on how forecasting and budgeting have changed for 2022, as well as offering advice and guidance on what hotel revenue teams need to consider as they plan for next year.

Robert Mandelbaum talked through what is a good starting point for revenue managers to develop their forecasts and budgets. He explained how 80% of the performance of hotels is influenced by local economic and market factors and the importance of using a market-wide forecast and relating it to your specific hotel.

But 20% of a hotel’s performance is based on activities at a property level.

“I know that at my hotel I may change my marketing tactics, I may be changing my facilities and services. What's that going to do to my occupancy? What's that going to do ADR? I may now have a service or facility change that will increase my occupancy but at the expense of ADR penetration,” Mandelbaum explained.

The CBRE tool MyShare helps hoteliers to estimate the “share” of market performance that their subject hotel will capture in future years. Like most models, the estimates of future performance are based on historical relationships. The assumption is that a hotel will most likely track market-wide performance trends as they have in the past unless the subject property institutes facility, service, or other operational changes that would impact their market position.

Hannah Weller Barrise, Director of Hospitality Solutions, then tackled what other inputs are important in top-line forecasting.

According to Weller Barrise, today’s revenue managers need to be finding data points that are forward-looking as opposed to what they have done in years past, which has seen more emphasis on historical data.

She took the audience through the importance of web traffic data such as regrets and denials, touching on how hotels can take the more recent trends and apply them to 2022.

“This year, perhaps more important than it's been in years past, is search trends and understanding web traffic as an indication of demand that will come in the future,” Weller Barrise explained.

“Historically, we've been able to say certain months of the calendar year always perform in the same way, we understand the day of week performance and we know the first part of the month will behave differently than the second half of the month. That may be the case, but it's really important for us to tie that back to the data sources that we have; that web traffic, search data is an important piece of that.”

Paul Bennie, Vice President Sales and Marketing at ProfitSword, addressed issues of aligning below-the-line expenses with top-line revenue forecasts. He talked through some of the trends ProfitSword is seeing, including increases in labor costs and consumable costs, and how that is eroding profit margins. And he also touched on increased costs for sales and marketing, tech spend, and insurance and how these are affecting the budgeting process going forward from an expense perspective.

“We're seeing a 25% increase [in insurance costs] from when we look back to 2019. It's a pretty high spike in insurance costs going up. So that's the number to watch out for,” Bennie warned the audience.

Budgeting Trends For 2022

Moderator, Lloyd Biddle asked the panelists for their top budgeting trends for 2022.

Duetto’s Hannah Weller Barrise talked about how not all room revenue is created equal, that there's going to be an emphasis on distribution costs, and channel management that's going to be critical when building and executing budgets.

CBRE’s Robert Mandelbaum explained how the previous budgeting approach of looking at the expenses from the preceding year and just inflating that by 2-3% is no longer going to work. The hotel industry has changed, and so have the terms of services and amenities being offered, and this means there are a lot more unknowns.

The Importance Of Technology

Paul Bennie of ProfitSword talked through the time savings and efficiencies that come from

automatically collecting data and normalizing data.

Bennie highlighted the challenges around data accuracy in a down cycle, that the data are volatile, that it can be hard to collect the data in the first place, and that it can change quickly.

Using technology such as the integration between Duetto and ProfitSword can help revenue teams gain confidence in how they react.

Crystal Ball Data

Robert Mandelbaum talked the audience through the latest data from CBRE, and then Duetto’s Hannah Weller Barrise outlined the latest Pulse Report data for North America.

In North America, the booking pace for stay dates in September was up 119% with moderate growth from October through December. However, except for October, cancellation activity is seeing double-digit increases in the remaining months of 2021 including a +25% jump in December. On-the-books in North America is well ahead of the prior year in every month for the balance of 2021.

“We see an expectation that the next few months will remain relatively flat but moving into the end of this year, and certainly kicking off the beginning of next year, we expect a drop in demand,” she explained.

“We see a continuation of shorter-term booking windows, shorter lead times, that is something that we expect to continue at least through the middle of next year.”

Missed the webinar? You can register to watch On Demand: here

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