As a seasoned Revenue and Profit Optimization professional I would like to reitarate (which I have already expressed in my book Hospitality 2.0 and other publications): travel demand has always been uncertain, and history never repeats itself. Recent events just highlighted this fact for all of us (again), just like COVID did, and many events before that.

Now that the industry has come to this understanding, it's time to build a better "model of our reality" that can incorporate the uncertainty in a more optimal manner. It's time to rebuild our forecasting methods. Again, I describe this in detail in a separate chapter of my book.

The traditional revenue management discipline revolves around four pillars: Measure, Forecast, Optimize, and Collaborate (via actionable Insights). But here's the kicker: The primary goal of a revenue and profit manager, as well as any RMS, is performance through proper adjustments of your strategy, not through accurate forecasts.

I repeat: PERFORMANCE IS MORE IMPORTANT THAN ACCURATE FORECASTING. I'm ready to catch a few rotten tomatoes with this one. It's okay, I'm used to that.

The industry has been talking about forecasting accuracy for too long, and many strategies and tools are founded with that target in mind, so I anticipate it to take quite a bit of time for our industry to grasp that concept (many have already caught up but they are still a minority). 

Forecasting accuracy is not our primary target. You can have an occupancy forecast that is 100% accurate (of course, because you can hit whatever occupancy target you'd like, as we discussed earlier) and make less money at the end of the day, than having a less accurate original forecast with more money as a result, if your strategy is adaptive enough that it always readjusts with demand fluctuations. 

To summarize:

  1. Demand forecasts are always wrong. No one has a crystal ball or perfect vision.
  2. And that is why it's important to be able to readjust quickly and adaptively, and that is exactly what makes a difference in your revenue and profit strategy.
  3. The best way to improve performance is not by accurately forecasting occupancy but by properly measuring demand and being adaptive (#agile). That's how best modern RMSs are built.