General Settings of Live Forecast Module

Summary

This module is designed to help you forecast from a very basic form to a very advanced one. However, our experience is that very advanced settings increase the forecasting accuracy. An easy way to check if you are forecasting within the best practice target, which is 5% deviance between forecast and actual outcome, is to have a look at the Operational Report at the end of a month you have forecasted. If the forecast index is between 95% and 105%, it means you have a good forecasting accuracy. If the deviance is more than 5% you should try and identify reasons.

An example of a 10% positive deviation could be that the forecast is built on guest nights as a driver, and the deviance of guest nights forecast index is close to 10%. The average check has increased by 10%* The forecast is based on guest nights, and you had revenue from outside the hotel, generating 10% more revenue.

You are using On The Book from the source system, (OTB) as a revenue driver, and the pickup has been extraordinary high. Of course, it could be a mix of all these, as well as other activities, that impacts the actual outcome.

Intended Users

General Manager, Hotel Manager, Revenue Manager, Booking Manager, F&B and other Department Heads.

Instructions

First make sure that you are in the Live Forecast view and that you are viewing the correct department.

1. Click on the Tools icon located on the top right of the module, and choose Settings in the menu.

Tools config settings.jpg

2. In the Type field you need to decide how this department should be forecast. Revenue is the most basic one handling revenue only, Covers or Units stat data, which is multiplied by the average cover or spending, giving you the total revenue as the outcome.

2.1 Choose Covers if you want to forecast based on covers and average cover (rate). A typical example of this could be a restaurant where you have a clearly defined number of guests.

2.2 Units works the same way as Covers, but the header is different and the units will not be taken into account in stat reports (e.g. the Flash Report). A good example of this could be number of treatments in SPA, or number of rounds in golf.

2.3 Revenue is the most basic form of forecasting. In many profit centers, the number of units or covers is not relevant. A good example of this could be Minibar, Pay-TV and room rental in conferences (for some properties).

All in section 2 has been moved to Hierarchy only accessible by d2o.

3. You may allow PMI to have negative Live Forecast. This means that PMI may forecast even more than your capacity – this will help you to yield your inventory.

4. You may exclude the forecast from RevPOLU.

5. The department revenue contains Food Revenue, the live food revenue is created by multiplying a factor with the department revenue. You may choose from Last Year, days and percentage.

6. On The Books should only be on if PMI can import data from a source system for this department. This setup is normally done with a PMI Representative. It is possible to combine both OTB based forecast and Revenue Driver based forecast by ticking both boxes.

6.1 Tentative OTB may be enabled if you want to have an overview of tentative bookings (adds another column next to the OTB values in the report).

7. If you want to use a driver from another department (or from within the department you are currently forecasting), click on the Revenue Driver radio button. The actual drivers are defined in another view (another menu option called Revenue Driver is created).

7.1 Use Seasons to calculate Revenue Drivers; this means that you can create and define a Seasons calendar for this department. The Live Forecast will be automatically updated and saved when the room forecasting is edited, based on a median revenue per guest or room within the season.

7.2 Auto Save means that if you use e.g. guest nights as a driver, when the rooms forecasting is edited this will automatically update and save the Live Forecast of this department. This functionality is often used in departments that need little or no revising. E.g. telephone and Pay-TV.

7.3 Driver for History is used to create historical data for covers or units. E.g. if you use 80% of guest nights as a driver for this department, PMI will apply 80% of guest nights as historical covers.

8. Remember to save your data afterwards in order to apply the settings.

9. Average Pickup Rate Calculator: If this functionality is on, the rate you insert in the Live Forecast will be applied to the pickup rooms only (the rooms you are going to sell in addition to what is on the book). If it is off, the rate you insert in Live Forecast will be applied to all the rooms. (Example).

10. Segment: If you have segment in the settings you activate them here and can choose to have them activated but only forecast on day total.

Tools setting LF.jpg

Best Practice

Purpose

o To foresee the future demand with the lowest margin of error.

o To set a realistic sales target for the next 12 months.

o To communicate an expected level of activity to the organization in order to enable optimal level of resource consumption. This will contribute to a desired level of profitability.

Sources of information and analysis

Last year’s revenue, live forecast based on the revenue driver and current year’s rolling forecast, F&B & Other revenue live forecast.

The user can display the information as “Last year by weekday” or “Last year by date”. Based on the revenue driver (guest nights, last year (budget) or manual,

PMI makes a suggested live forecast for the current month. Live Forecast is the expected revenue of the different profit centers.

There are 3 ways of forecasting other departments in PMI:

1. Base the forecast on OTB (on the book) values and revise pickups (added/reduced cover and or average check or total revenue).

2. Base the forecast on another available forecasting data. Could be, for example, guest nights from rooms forecasting multiplied by average covers (which can be

retrieved historically), leaving us with very little forecasting work, yet with very accurate forecasts.

3. Base the forecast on historical data (trend). A target (usually budget) would be dispersed in the report based on historical fluctuations, ready for you to revise

based on the current period’s knowledge.

It is important to monitor your historical forecasting accuracy (deviance from the 100% index target, easiest found in the daily operational report). It might be an idea

to change the method of forecasting if the deviance is high.

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