Robert Cross, the de facto Godfather of Revenue Management, stated "…everything starts with a day by day, segment by segment forecast", yet many hoteliers no longer produce one as part of their strategic process. Most of today's advanced revenue management systems do not generate one, instead of leaving the user to rely on a total hotel forecast and to trust the "black box" for the details.

Should hotels be producing a detailed long-term forecast, and if so, what are the benefits of doing so? How far out should they forecast and how often should they do it? The automated systems (only 15% of hotels have one!) can be very accurate at projecting the optimized results of an existing strategy, but are they effective when contemplating a change in strategy, as an increase in group rooms, eliminating an airline crew, or even a renovation? How do hotels that don't do it satisfy other stakeholders like senior leadership and owners, who may have an interest in understanding the detail behind the hotel's forecast, especially when recent performance has not met expectations?

Aymeric  Erulin
Aymeric Erulin
Multi-Property Revenue Manager

The forecast used to be a great and realist KPI. However, its use has been more and more distorted to serve communication purposes and often does not reflect reality anymore. For Revenue Managers it is of course still key to have one, but not a formalized one anymore. Before taking any actions you would try to calculate what would be the revenue impact (the forecast improvement). This, however, does not mean that you need to have a daily, per segment, per channel forecast written down in an Excel spreadsheet and forwarded to the entire organization.

So an RM forecast is still needed to conduct a strategy and if it is not distorted by any other stakeholders, yes a formal one can be useful. Otherwise, time and energy will only be wasted.

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