Forecasting Accuracy

Forecasting: The ultimate resource for anticipating the future performance of rooms, space, revenues and profits based on the analysis of available pertinent data.

Why is forecasting so critical? Forecasting leads to efficient planning and decision making for all departments, and most importantly it is one of the drivers of pricing.

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Prism Hotels and Resorts Forecast Accuracy for October, 2015: August’s Forecast for October = +0.4% (equates to +$69,003) September’s Forecast for October = +2.7% (equates to +$412,353) October 1 Forecast = +4.6% (equates to +$687,636)

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Your Hotel’s Forecast Accuracy Why is accuracy so important? How is it calculated? Where do I find the accuracy %?

The accuracy of the forecast is essential because the forecast is the main driver of the pricing/room allocation decisions, checkbooks, cash requests… Inaccurate forecasts or predictions will diminish the hotel's revenues and profit margin.

Calculating Forecast Accuracy Total Revenue Variance Percentage = (Actual Revenue – Forecast Revenue) Forecasted Revenue

Finding Forecast Accuracy In ProfitSword, Follow this path… Site Reports, under Monthly Reports, FC Accuracy Prism Hotel Prism Hotel

Prism Hotel

Layering of Rooms Forecast Rooms Forecasting Fundamentals: Contract business Group Transient Rebates Other Revenue TOTAL HOTEL FORECAST ROOMS CATERING OTHER Contract Local Retail Group Spa Transient AV Food and Beverage   Golf Now that we understand how important the forecast accuracy is, and how to calculate and where to find…how do we build an accurate forecast? Start with what we know.

Forecasting Contract/Crew Layer in manifest, rooming list received from the contract/crew rooms contact

Forecasting Group Step #1: Step #2: Layer in WASHED definite room nights by segmentation and rate Step #2: Layer in to-be’s – segmentation and rate How do you forecast “to-be’s”? Want to spend some time on group forecasting. As a company, our group forecasting for December in Oct was -16.9%, in November for December improved to -12.2%, and 30 days out for December we were off 7.9%. How do we improve on these numbers

Let’s Talk Slippage…

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Let’s Talk Slippage… Why is this accuracy so important when forecasting group slippage? How do you predict group slippage at your hotel?

Calculating Group Slippage Forecasted Slippage = Contracted Rooms – Forecasted Rooms Example: Group X is arriving in 9 months. They have contracted 50 total rooms with the hotel. We are forecasting 40 based on historical pickup. 50 – 40 = 10 room forecasted slippage Forecasted Slippage Percentage = (Forecast Slippage/Contract) x 100 (10 / 50) x 100 = 20% forecasted slippage percent Actual Slippage = Contract – Actuals = Actual Slippage Example: Group Y stayed last month. They contracted 100 rooms, but only picked up 82. 100 – 82 = 18 rooms actual slippage Actual Slippage Percentage = (Actual Slippage/Contract) x 100 Actual Slippage Percentage (18 / 100) x 100=18%

Best Practices: Forecasting Group Wash Group Definites Group Pace Important to note that rooms usually pick up on a bell curve. The top of that bell curve is called the peak – that includes dates with the most room nights. The ends of the curve are called the shoulders – least amount of rooms.

Forecasting Transient “The most reliable way to forecast the future is to understand the present” John Naisbitt, Author of Megatrends PAST NOW Room Nights Pace Mix Booking Window ADR/Revenue Seasonality Rebates Demand by Segment Other Revenue Special Events Events Impacting Results Market Compression   Economic Climate Unconstrained Demand Arrivals by day of week/LOS and Rate Cancellations and No Shows

This all leads to the future…

Forecasting Rebates Rebates: Part of the room rate that is returned directly to the guest or applied to the master account. Group rebate / group rooms sold = group rebates per room night Best Practices for Tracking Group Rebates

Forecasting Other Revenue GNS, part day revenues, service failures Other revenue / total rooms sold (excluding comps) = other revenue per room night

Rooms Forecast is just the first portion to the Total Hotel Forecast: ROOMS CATERING OTHER Group Local Retail Contract Spa Transient AV Food and Beverage   Golf

Life of a Forecast Revenues updated daily in PS drive inventory/pricing decisions; update month end forecasts, labor cost analysis, profit and NOI

Forecasting Pitfalls to Avoid Over-Forecasting High rooms forecast, low remaining supply = too restrictive inventory and pricing, higher rates and limited discounts. Potential for turning away needed business Over-staffing Under-Forecasting Low rooms forecast, high remaining supply = open inventory and pricing Lower rates and discounts remain open, potential for leaving $ on the table. Under-staffing

Forecasting is a Team Effort

Now….How Do I Forecast Expenses? Is it possible to generate a real-time P&L during the month? YES!!!! (with a little bit of effort on your part) 1) View the P&L Report in PS 2) Set columns to Forecast, Budget, Last Year or customize to your specific needs 3) Updating forecasted expenses a) Set up drivers where applicable b) Revised fixed expenses as needed c) Update non-recurring items or one time expenses

2016 Forecasting Accuracy Expectations 90 Days Out = 7% 60 Days Out = 5% 30 Days Out = 3%