Strategic RM
Long-term actions to maximize revenue
Examples:
Identifying target markets and creating factors for differentiation from competitors.
Tactical RM
Short term actions to maximize revenue now,
Doing things today to make the most money tomorrow
Examples:
Changing rates or restricctions to react to demand
Demand
The number of potential buyers with the interest and ability to purchase the products sold by a business at the specific price offered.
Types of demand
Unconstrained
Constrained
Constrained demand
Level of requested reservations rise above the capacity of the hotel. Only a certain portion of the demand can be accommodated.
Uncontrained demand
The hotel can fully meet total demand.
Forecast
It is an anticipation of units sold and revenue generated in the sale
Forecasts are important for:
Scheduling workers
Purchasing supplies
Managing cash flow → negative cash flow if I don’t forecast
Better decision about pricing
Components of effective demand forecast
Insight
Historical data
Current data
Future data
Historical data
data describing events that have already occurred
Current data
data describing what is currently happening, up-to-date data
Future data
data describing events that might be happening in the future
Forecast types
Occupancy
Demand
Revenue
Misuse of forecast
Forecasts that are unrealistically low
Forecasts that are unrealistically high
Levels of forecast: granular levels
Day of the week
Length of stay
Rate class
Inventory type
Occupancy forecast
Predicting how many rooms will be filled during a specific time period.
How full will we be?
Forecasts at least 1, 2, 7, 14, 21, and 30 days out
Helps improve employee scheduling
Demand forecast
Predicting how many people want your product or service, regardless of capacity
How many people want it?
Identifies periods of very low demand
Revenue forecast
Predicting how much money you will make in a given period
How much will we earn?
Forecasts 30 days out or more
Estimates RevPAR
Forecasted room revenue formula
Rooms available x Occ % x Forecasted ADR
Booking curve
Number of reservations on hand (ROH)
for different days before of arrival (DBA) analysis.
Lead time
The time in advance that bookings are made.
What is pick up?
New reservations received over a certain time period.
Why do we use pick up?
To understand booking trends and make smart decisions about pricing, availability, and forecasting.
To measure how bookings grow, so we can
💡 forecast demand,
💰 adjust prices, and
🧾 make smarter operational and revenue decisions.
Forecast formula
ROH + EXPECTED PICKUP
