RM Chapter 3 Theory

Goal of Demand Forecasting

• maximize daily occupancy to minimize revenue loss

• ensure the best possible mix of customers on the days that demand exceeds capacity

Demand Forecasting

establishes selling guidelines and to establish demand criteria for the revenue forecast

Occupancy Forecasting

Tells operating departments how busy the hotel is expected to be

Revenue Forecasting

informs senior management and ownership of occupancy, rate, and revenue estimates

Constrained Demand

demand that is restricted or confined by rules, restrictions, and availability

Unconstrained Demand

number of rooms that could have been sold w/o taking into account the hotel’s capacity

Unconstrained Demand Formula

Constrained Demand + Denials + Regrets

Denials

The hotel cannot/will not accept the request for a room

Regrets

the customer does not book when the rate is quoted

Hard Data

historical quantative data

Soft Data

historical qualatative data

RM Manager Daily Tasks

• monitor booking pace and occupancy growth

• monitor market place

• update teh forecast accordingly

• adjust stradegies

• record all changes

Booking Curve

graphical representation that illustrates how reservations accumulate over time

Pick-up

the number of reservations received between “today” and the arrival date “DBA -1”

Pick-up Forecast

a forecast based on the current ROH + the project pick-up, based on booking curve trends

Pick-up Forecast Formula

ROH + Pick-up

DBA

Day Before Arrival

ROH

Rooms on Hand

DBA 0

Day of Arrival

DBA -1

Actual rooms sold

Demand Control Chart (DCC)

helps decide when to change your rate based on expected demand

Controls Objective

apply restrictions to ensure that bookings are not taken over a sell-out date unless they contribute sufficiently to the surrounding shoulder dates

Stay Controls

• Min Length of stay

• Max length of stay

• Closed to arrival

Rate Restrictions

• changing a specific price point

• closing a promotion or rate plan

MAD meaning

Mean Absolute Deviation

MAPE meaning

Mean Absolute Percentage Error

MAD calculation

absolute deviations between forecast and actual values

MAPE calculation

do MAD then calculate error as % of actual sales