I would immediately move to the largest, most comfortable room and enjoy cosmos by the poolside all day long. That's why I am not one - and never should be. I am however good at predicting future trends (blame it on my generational cohort), especially when it comes to financial forecasting (blame it on my insatiable appreciation for money). So I would like to tell you a bit about the backbone of hotel finance: forecasting.
When I was part of a large revenue management family, I couldn't help but notice that forecasting felt like the most agonising time for many of my friends in the industry. I even knew of revenue directors, who would put up signs on their closed doors that read:
"Forecasting. Don't Even!"
I never understood why. For me it was the most fun part of the job. However, it was never to be taken lightly, especially when one is expected to guesstimate as to how much revenue the hotel would make for the current month, the next month and so on and so forth. "Current + 30-60-90” being a typical forecasting format.
Imagine you're sitting in your stuffy office under the white fluorescent lights with January winds freezing people's souls outside and you have to work out how many people will be enjoying the sweet, Spring sunshine on the last weekend of April. The necessity to work out where they will come from, how long they will want to stay for and exactly how much they will be willing to spend for their stay.
Pretty tricky job for some. I say nonsense! Firstly, let's set the record straight once and for all: forecasting is not a science, it's really an under-appreciated art form. Secondly, not all artists can forecast, especially if they haven't mastered Excel. So what tools are out there to help increase forecasting accuracy? Well, good music for starters. IT departments that allow for occasional sneaking in of Spotify have no idea how much they're contributing to the bottom line.
Once the optimal environment for maximising concentration is created, it's time to maximise revenues. Your most valuable weapon in this game can only come from the past and no Dr. Emmett Brown knows whether you will or will not sell out in the future, but your historical data does. Since hospitality is a highly cyclical business, hoteliers can tell a lot about how their hotels will perform in the future - both near and far - simply by looking back at what happened in the past. "History repeats itself" has never been truer for any other industry. Combine your past performance with current events in your area, and the world economy in general, and voila you will have a pretty accurate representation of what is about to happen. Try to visualise how empowered and authoritative fortune tellers are portrayed in movies despite their crazy looks:
"You will mother two babies! One of them will be a deaf pianist."
"I am sixty years old and a man..."
"Shut up! You will because I said so!"
Well, revenue managers are similar in the way they project empowerment and authority in their own field provided they forecast well - except they use real data in place of a crystal ball and they don't often look so wacky; most of them anyway.
But what if you're a new Hotel on the block?
If your hotel happens to be recently opened with no historical data available, do not fret, it is then time for you to keep your friends close and your enemies closer. Your competitive set and their historical performance, which would be available to you in the form of a handy, numerical and graphic-packed report will help you understand what has been happening in your area, who your customers are and how much they're willing to spend on each day of the week. Market and competitive set analysis reports are more essential than the air you breathe when you forecast. Don't be a baby, all revenue managers can learn to hold their breath for a few hours.
Finally, an infectious charisma and charming personality will help at the negotiation table when you’re sat with the owners. - Chuckles softly - Just kidding, nothing helps with the owners, but money.
Hitting your forecasted numbers is an impressive and awe-inspiring skill for everyone involved in the process. I wish you could watch me glow at an owner’s meeting once my forecast - evaluated a ridiculous three months prior to that very moment - proves to have been realistic all along with a 97%+/- accuracy rate. The bliss of righteousness...
Forecasting in a certain way and delivering real results on that forecast will have a magical touch on the way you manage your hotel. Every word that comes out of your mouth will sound more fair and every decision will be deemed more weighted. Keep in mind though that the most valuable aspect of any forecast is accuracy, not positivity. It is accuracy that allows you to both keep your hotel from going bankrupt when not a single soul seems interested in staying and maximises opportunities when demand is unstoppable. When it rains, it pours.
Acing a difficult forecast is your best way to establish a strong, steady and happy relationship with your hotel owner. It's your first step is to convince panicking owners that they don't really need online travel agents to be successful in the internet game. This involves opening their eyes to the reality that online direct business is not a fantasy, but is in fact a huge area of opportunity for their hotels. And of course, to convince them that the best way to reinvest expenses saved on OTA commissions would be to give you a considerable raise. Otherwise, why forecast at all, right?
Stay tuned for part two of this fictional series, where I, a former revenue management girl, play the hotel owner. I will be delving even deeper into the prospect of increasing direct business.