Room Live Forecast

Summary

Room Live Forecast is the core in managing revenue in PMI. It is recommended to have a Live Forecast for a minimum of 12 months. When a month has ended, update the same month for next year.

This ensures the hotel has an updated sales forecast and target for the coming year that covers annual seasonality. With 12-18 months forecast you are better prepared for the upcoming budget period.

Secure profits require that the hotel is pricing the products correctly in relation to demand, and that cost is in proportion to the level of revenue at all times. This requires thorough short and long term planning.

PMI allows you to add two Room Live Forecasts. This can be useful if you for example have a hotel with departments you want to forecast separately.

Intended Users

General Managers, Hotel Managers, Revenue Managers and Booking Managers.

Instructions

Within the Room Live Forecast View we will look at how to:

  • foresee the future demand with the lowest margin of error;
  • optimize RevPAR by attracting the ”right” segments at the right time;
  • communicate an expected level of activity towards the organization in order to optimize resource consumption;
  • place a realistic sales target for the next 12 months.

PMI remembers the last report you viewed and your personal settings. If you left PMI with the Live Forecast module from room forecasting in April 2015, it will open in the rooms forecasting for April 2015 the next time you open up the Live Forecast module.

The only fields you should normally maintain on a daily basis in PMI are the Room Nights live pickup and the Average Room Revenue live pickup. All other figures are either automatically imported or a product of these. That is, both the budget and the forecast should be based on a Live Forecast.

PMI algorithms are built with the scope of calculating normal development of occupancy and rates. This means that you, as the owner of the rooms forecasting module, need to insert and maintain irregular and extreme impacts of the rooms rolling forecast. An example of this could be a huge event like a major concert, various sport events, or inclement weather which impacts, airport hotels, etc. All forecasting should be maintained based on calculations from the system and finally filtered by the owner of the forecasting report.

We recommend using the Seasons setting and function to increase the accuracy in your room forecasting.

When PMI updates automatically, you will see a calculator icon on the left side of the dates. If you see a hand sign, then you have to update it manually. If you prefer that PMI should calculate via the revenue driver again, you click on the hand sign and the calculator appears. Remember to save. If all dates have a hand sign, use the Calculate Live Forecast function to let PMI handle the Live Forecast, and save.

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How to update the OTB Based Forecast

Tools

Tools Room Forecast.JPG

Tools – Live Forecast contains a lot of options, however some are related to user rights.

Here you find the option to Edit and Revise your Guest Night factor, Revise your total Budget and Forecast numbers for the month you are updating.

The Guest Night factor is calculated from the same month last year. For the months beyond 12 months it is the Live Forecasted guest nights for the same month the year before that is calculated.

You can find the option to Extract Data to Excel, or Print to File.

Please read more about all Tools here.

View Options

You have View Options in Room Live Forecast. Some properties do not use segments, and do not have this option, or have different segments.

You choose your options by ticking off the boxes of the different options.

When choosing Last Year a choice needs to be done, comparing to Last Year by date or By Weekday. This allows comparison of a Thursday to a Thursday and Easter to Easter.

Additional Information – PMI Forecast will display another column that shows PMI´s recommended Room Live Forecast per day based on OTB figures and Pick Up Statistics.

Additional Information – Forecasting Accuracy will display a column with the daily accuracy from last saved Live Forecast to actual outcome.

View Option Accuracu Live.jpg

Revise Guest Factor on a specific day

You will have the ability to adjust the Guest factor for a specific day on Live Forecast page by double-clicking the Live Forecast cell.

Ensure that you are displaying the Guest Nights view in Room Live forecast.

Double-click on the segment you want to revise the guest factor for in the specific date, revise and OK, remember to save the page.

If you work on total level, double-click on the Live Forecast cell on the specific date; revise and OK, remember to save the page.

Guest Nights.png

Recommendations & Best Practice

We recommend using Seasons in your room forecasting.

When updating your Room Live Forecast for the next months, it is important to use your Sources of information analysis and the Pickup Statistics

Best Practice How To

– Choose the month you want to forecast from the calendar located on the top menu. If you want to navigate one month forward or back, use

the arrows. If you want to navigate more than one month, use the main calendar located between the two arrows.

– Before you start the actual forecasting, get a status of current OTB status compared to, for example, last year (matching period). You can get a quick

overview of the next 12 months from the management perspective. If you want to analyze further and more in-depth, choose Pickup Statistics by clicking on the icon situated between the Calendar and the Tool icon.

– A graphical view is usually better for understanding changes in booking pace. All views can also be displayed by grouped segments (market codes or rate categories grouped into similar booking pace and price elasticity).

– Before you start calculating pickups and making the actual Live Forecast, make sure that you know what available data you already have. If you have been using PMI for more than a year, you definitely have enough data to use; e.g. to calculate pickups based on booking pace. The lead time (no. of days prior to arrival that the booking is made) varies from hotel to hotel and within the different segments. If you do not have enough history in PMI to use booking pace, choose the most updated data (Last year > Budget > Forecast).

a. If you choose Last Year, Budget or Forecast, PMI will insert the deviance between OTB and your choice in the field Pickups. OTB + pickups constitute your Live Forecast.

b. If you have enough historical data to use booking pace, choose this functionality. In brief, PMI will calculate pickups within matching lead time into the matching month of last year. Further, PMI will calculate the market development and finally adjust for real changes of the booking pace. Click on Calculate and then OK if you want to use the data from the grid. The median number is found by sorting a series of numbers by size and using the middle value. This method is often used in order to avoid extreme values being taken into consideration in the calculation. The average is found by summarizing all the numbers in a series, then dividing the total by the number of entries. The average is used to tell us what a typical number in this series is.

– Respect Daily Capacity is a functionality that limits the daily rolling pickups of rooms so as not to exceed the physical capacity of the hotel. After the algorithm has calculated rolling pickups and wash (reduction of groups), including excess demand, PMI will remove pickups from the lower paying market codes. For example, if the capacity of the hotel is 300 rooms, PMI will limit the rolling forecast to 300 rooms.

– Run Calculate Pickups based on booking pace both with and without respecting the daily capacity in order to understand the value of excess demand. If you choose to accept without Respect Daily Capacity, PMI will mark days with demand exceeding 100% as red in the report. By doing this, you will also get an overview of potential shoulder days or where you might want to insert restrictions in your booking systems. Please note that the pickup value from this calculation is not a defined target, but a calculated

pickup based on what you currently have as OTB, normal pickups, market situation and development, and booking pace. In other words, what you normally should be able to pick up.

– In order to start calculating pickups of rate (average revenue), you need to evaluate the data you have available, similar to rooms.

a. If you choose Last Year, Budget, Forecast or OTB, PMI will simply copy the rates, respectively, into the Pickups column. Please note that you will need rates for reductions (e.g. groups) as well. The rate would be applied to the rooms reduced from OTB.

PS! Remember that in order to use OTB as calculated rolling pickups you should have most of the rooms OTB (not as pickups) already; otherwise the data source would not be representative.

b. If you have enough historical data to use booking pace, use this functionality. In short, PMI will calculate rates based on a normal rate development from similar lead time for

matching month last year revised for market development of last 12 months.

– If you expect an increase or decrease of rates of current period, you may change the query outcome in % (102% = 2% increase of rates). Click on calculate, tick the radio boxes for the segments you want to be copied into the report and finally OK.

Please note that estimated rates are not a target itself, but calculated based on what you have on the book today and changes in the market situation.

– Define or revise realistic daily targets and expectations in rolling pickups for both Room Nights and Average Room Revenue based on your current knowledge of the market and the hotel’s strategies and actions.

Questions you might want to ask within this process are:

• What is the future demand in my competitive set?

• What is my fair share of the market?

• How to ensure my fair share?

• How to get more of competitors’ share?

When revising the Live Forecast, the following questions should be answered:

• Are we still on the right course and are actual on the books according to our expectations?

• Are the current strategies fair as a goal?

• What have we learned, or can we learn, from the process so far?

It is important that you comment/describe the market situation for later studies. Comments of deviance from normal volumes and rates should be posted in the comment field. These comments will be retrieved next year from matching weekdays.

a. Click on the small sheet icon for the day/segment you want to post a comment.

b. Enter comment in the pop-up window and click on OK.

c. Commented days/segments are marked with scrabbled sheet icons.

By following all the above steps, you have prepared and made the module ready for a new month. The startup steps and validity is very important. By checking the daily deviance between rolling forecast and actual outcome you ensure that you are on the right track because if you are doing this correctly, the only deviance should be due to unforseen circumstances and extraordinary bookings that are difficult to forecast.

Daily routine: maintaining the forecast

1. The daily routine of maintaining a Live Forecast varies from property to property, depending on e.g. booking pace, location, segment mix, etc. As a general rule, you should monitor the daily forecast for at least the next 30 days on a daily basis (working days).

2. The main reason for changing a Live Forecast is if you picked up more or less rooms than expected. Therefore, a great way of getting an overview of what has happened since you last worked in PMI rooms forecast is to use the Pickup Statistics. Click on the tab for pickup statistics. Today is the actual OTB data for the current month. On the columns located to the right, you will find the number of days back in time (pace days). 1 equals yesterday, 7 days equals same weekday as today last week.

Now you know if you picked up more or less than anticipated. If there is a deviance, you probably want to view the days of major increase or decrease. This might suggest that you should revise the Live Forecast of these days. Please also remember that the rooms forecasting data is generally used as a source for both forecasting within F&B & Other revenue as well as cost drivers for labor cost within different departments.

Monthly routine: submit the forecast

Every month, usually with a deadline of the 20th, you need to submit the forecast for the coming months. This may vary from company to company, but PMI best practice recommends having 12 months’ forecast available. That means, by the 20th of the current month you need to take a thorough look at the live forecast and choose Submit Live Forecast for the next 12 months (NOT including the current month).

Use the speed calendar to navigate between months and click on Submit Live Forecast to Forecast.

This functionality will copy the data from Live Forecast over to the forecast columns. Once the data is saved, the initial forecast is available to reports and

modules in PMI that use this data.

Important! The live forecast for next month should not be submitted after the 20th of the current month.

Sales forecast calendar;

Time perspective Frequency of update Moment of submit to forecast

0-30 days Daily N/A

1-3 months Weekly 20th of every month

3-6 months Every 14 day 20th of every month

6-12 months Monthly 20th of every month

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