Pre-COVID, when hotels typically referred to forecasting for the next year, they were referring to a process that was undertaken yearly by their revenue management team. This team would go through the last year’s data to reveal pricing, length of stay, and typical booking window trends which it would then use to inform the following year’s pricing and marketing strategies. However, in a post-COVID world, relying on year-old data is a rather archaic process.
“Technology and data sharing today has made it possible for forecasting to happen in real-time, and hoteliers should be forecasting on a weekly basis, if not daily,” notes Jason Freed, Hospitality Data Evangelist, MyDigital Office.
But to do it efficiently and correctly, hoteliers need to add another level of data-minded staff members to their team.
“It’s really opened up a whole new career department in hotels,” Freed adds. “Now hoteliers need a BI-minded person on staff, or even a data analytics team, to pull in that data, identify trends and anomalies, and then empower the revenue management team with the data. Really, no business should be making any decisions without first analyzing the data.”
With this in mind, Freed has spent his time recently reviewing current booking trends to determine what will be most likely to impact hotel forecasts in 2023. Here is what he found:
1. Booking patterns are changing. Now that individuals can work from anywhere, they’re choosing to work during the day and vacation during the night and on the weekends. This is likely contributing to longer Lengths of Stay (LOS). In some markets, average LOS has jumped from a day and half up to four days, Freed says.
2. During COVID, the booking window compressed significantly, down to less than 24 hours in some markets. This required hoteliers to lean in on using detailed booking data to better forecast room availability and pricing. Now, hoteliers are segmenting their reservations by booking window, looking at zero to three days out, three to 10 days out, 10 to 30 days out, and more than 30 days out. Throughout 2022, hoteliers reported seeing the zero-to-three-day booking window segment shrink significantly while the outside of 30 days segment has grown the fastest, which could be a signal that business travel and group business are returning.
3. Group business is another area that will greatly impact hotel forecasting, Freed says. With so many working remotely, a rise in team meetings or retreats will replace some of the large convention demand, which isn’t coming back as quickly. Companies used to have a retreat once a year, but now they’re starting to happen quarterly or even up to six times a year. For example, depending on the size of the company, it might host a sales retreat one weekend, a marketing retreat another, and an editorial retreat on a third weekend. Thus, convention center hotels might benefit by finding alternative use cases for their space.