Dear tutor, can you help guide me throuhg the following task:
Forecasting is an important part of the Revenue Management process. This exercise will familiarize you with two different forecasting models and help you understand why a Revenue Manager’s experience and knowledge is also key.
The Plaza hotel is an independent city centre property with 122 rooms. The past month performance has been quieter than expected and the hotel is now moving into a key business period.
There are several events happening over this period which will drive demand in the area, some repeating from last year and some new.
The General Manager has asked you to put together a forecast for the next calendar month, to identify any periods of low or high demand to ensure all revenue opportunities are maximized.
The hotel works with 5 market segments:
· Corporate Individual
· Groups
· Transient Non Negotiated
· Transient FIT
· Other
Using one or both of the two forecasting methods in the Revenue Management module:
Put together a one month forecast for your hotel, by market segment.
Identify two periods with forecasted occupancy of 100% + and recommend which inventory controls you would put in place to maximize occupancy. Review this by market segment if necessary.
Identify two periods of forecasted occupancy of below 65% and give recommendations of which segment to target with value added promotions.
Questions:
1. Create a forecast for one month by market segment using the #pace model, %pace model or a combination of both. You should review figures and manually override the forecast where necessary. Justify your final figures.
2. From your designed forecast, identify two periods when demand is forecasted to be over 100%. What inventory restrictions would you recommend putting in place to mazimize these opportunities?
3. From your designed forecast, identify two periods when low occupancy is expected. Which market segment would you recommend to target these periods and why?
Forecasting plays a pivotal role in the Revenue Management process for hotels. In this exercise, we will explore two different forecasting models to prepare a one-month forecast for The Plaza Hotel, a 122-room independent city center property. We will also identify periods of high and low demand, discussing strategies to maximize revenue during peak periods and target segments to boost occupancy during low-demand periods. This analysis will emphasize the importance of combining data-driven forecasting with the experience and knowledge of a Revenue Manager.
To create a comprehensive one-month forecast, we will employ both the #pace model and the %pace model, utilizing historical data and market insights. These models provide a solid foundation for forecasting, but manual adjustments may be necessary based on specific circumstances. The forecast will be segmented by The Plaza Hotel’s five market segments:
Corporate Individual
Groups
Transient Non-Negotiated
Transient FIT
Other
We will manually review and override the forecast figures where needed, taking into account factors like historical trends, market analysis, and events affecting demand. These adjustments will be justified based on available data and industry knowledge, ensuring the most accurate forecast possible.
From our forecast, we can identify two periods when demand is forecasted to exceed 100%. During these high-demand periods, it is crucial to implement effective inventory control strategies to maximize revenue. Such strategies may include:
Length-of-stay restrictions: Limiting the number of nights guests can book to accommodate more guests. b. Rate restrictions: Implementing higher room rates or minimum length-of-stay requirements to capitalize on high demand. c. Closeouts: Temporarily closing off room availability to prioritize higher-rated bookings.
These inventory restrictions should be tailored to each market segment to optimize revenue potential. For instance, during a local festival, rates for the “Transient FIT” segment could be increased, while for “Corporate Individual” guests, length-of-stay restrictions may be more effective.
In contrast, when forecasting periods with occupancy below 65%, it is essential to focus on targeted marketing and promotions to stimulate demand. We recommend targeting the “Transient Non-Negotiated” and “Other” segments during these low-occupancy periods.
Reasons for targeting these segments include:
Flexibility: Transient Non-Negotiated guests often have more flexible travel plans, making them receptive to promotions or last-minute deals.
Diversification: Targeting the “Other” segment allows the hotel to attract a variety of guests who may have unique needs or preferences.
Promotions can include discounted rates, bundled packages, or added value offers such as free breakfast or spa vouchers. Effective marketing through online channels and partnerships with local businesses can help drive demand during these slower periods.
In conclusion, effective revenue management involves a combination of data-driven forecasting models and the expertise of a Revenue Manager. The Plaza Hotel’s one-month forecast segmented by market is a vital tool for maximizing revenue opportunities. By implementing inventory controls during high-demand periods and targeting specific market segments during low-occupancy periods, the hotel can achieve its revenue optimization goals. This comprehensive approach ensures that all available revenue opportunities are explored and leveraged, ultimately contributing to the hotel’s success in a competitive market.
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