The Hidden Costs of Inaccurate Reporting in Hotels

Think about the last time when the revenue and occupancy forecast for the hotel was incorrect.

Have you faced times when you've lost potential room revenue to a competitor? Did improper management of perishable inventory cause high food waste? How did you explain the inaccurate forecast to your management team or owners?

There were probably many negative implications and hidden costs caused by inaccurate reporting.

In my conversations with hotel managers and owners, I've found that reporting accuracy at all levels of management is one of the main challenges faced by hoteliers. Below are key areas where accurate reporting can enhance hotel performance beyond profit margins:

Forecasting for revenue management purposes

Forecasting is not just about the prediction of hotel performance. It involves skilled operation and revenue managers who analyze a combination of data sets to interpret and make informed decisions. Therefore, it is the key driver for price and inventory management decisions. An inaccurate forecast may lead to poor management decisions and potentially reduced profit margins. An accurate forecast of hotel occupancy and room revenue, however, empowers the hotel/revenue manager to adjust price strategies based on demand (yield) with the aim to maximize revenue and minimize costs.

Resource utilization and allocation

An incorrect prediction of future demand may lead to ineffective uses of labor resources and high food waste. In contrast, an accurate forecast allows managers to allocate sufficient staff and adequate resources to labor-intensive departments (such as housekeeping) to ensure smooth operations during busy periods. In addition, an up-to-date forecast allows chefs and restaurant managers to track perishable inventory effectively and minimize food wastage.

Decision making

Inaccurate reporting from the management team can trigger a domino effect to all hotel departments. One incorrect data or formula can impact the entire report, creating a false portrayal of the business that could lead to poor decisions and negatively affect performance.

Technology advancements have transitioned many hotels from tedious, manual reporting processes on excel sheets to comprehensive reporting functionality in property management systems (PMS), allowing hoteliers to generate reports with a few clicks.

While working at a hotel, I found that most hoteliers are often overwhelmed with information they are unable to process and analyze, making it difficult, if not impossible, to execute decisions effectively. In addition, most users are not aware of the full reporting capability that property management systems can offer in providing an accurate forecast.

Christine Allen
PR Director
Oracle Hospitality