The budget is indeed your first forecast. But how do we make an accurate forecast for a hotel? To do so we will be discussing the following elements; unconstrained demand, stay patterns, booking pace.

Your Budget should be realistic but it is also the time to set new targets. What if you invest in sales resources, what if you invest in online marketing, what if you increase your online visibility?

The budget should be developed day by day, to answer the following question:

At which rate and how many rooms can you sell for every future day (booking pace)?

The budget can therefore be developed by market segments in room nights and revenue. The budget can also be widened with a monthly forecasting per country of origin and top accounts (corporate, tour operators). How do you anticipate the business demand, the leisure demand per country? At which rate can you sell on the upcoming months? How will your main corporate accounts behave?

The forecast will reflect the expected situation in the short term (1 to 3 months). Forecasts will be compared to the budget. New rate and selling strategies will be applied depending on the new Revenue expectations to maximize Revenue.

Besides of the frequency of the budget review you can implement a Rolling Budget. That means keeping open constantly 12 or 13 month strategy. It will help you be more accurate as the data you will use to budget or forecast for the same month next year is fresh in your mind.

Next step would be to identify the level of unconstrained demand. The unconstrained demand is your total demand for a particular date irrespective of your capacity. The unconstrained demand will help you calculate your Last Room Value for certain dates, and possible length of stay restrictions that may apply.

Once peak periods are detected, you can start regretting low paying business. Historical data capture will help to calculate potential unconstrained demand. It is possible to develop manual tools which would help to identify those periods, such as with excel
 
The unconstrained demand shall help you to evaluate the Last Room Value and displaced revenue.

Record your denials for individuals but also for group bookings: by length of stay, by market segments, with total value for groups.

What is your group unconstrained demand?

Develop your denial and regrets reasons:

You may also record on your demand calendar when you main competitors are fully booked or sell high rates as this affects the demand to your hotel.

Phase 3 in our revenue management implementation plan consist of the following steps:

1. Develop and update your demand calendar for any recognized exceptions.
2. Implement day by day budget, by segment with room nights and average selling rate.
3. Put into action a rolling forecast to keep 12 or 13 months day by day rate strategies open on all your public distribution channels.

For more information on hotel revenue management go to www.xotels.com/en/hotel-revenue-management or contact;

Patrick Landman
Email: patrick@xotels.com
Phone: + 34 931 824 537
Skype: plandman
Web: www.xotels.com