Rooms (Market Segment) Forecasting

The purpose of 

's rooms forecasting process is to organize information available in the Reservations and Sales Departments for use when forecasting occupied rooms, guests in-house, arrivals and departures. It is designed to accurately project short-term future business volumes (one to four weeks out).  It provides results in numerical form so that the operations managers can utilize the information to plan their weekly use of resources.

Based upon the actual data (historical events) and reservations data (future events) you enter for rooms, guests, arrivals, and departures for each market segment,

can forecast for other areas of your property. For example, can forecast Front Desk Arrivals for a given day by analyzing what happened on that day last week, last month or last year (actual data), and what should happen on that day (reservations).  calculates the amount of person hours needed, based on a labor standard to meet the demand anticipated at the Front Desk. As a general rule, the more data you make available the more accurate  will be.

As you begin working with 

you will be generating forecasts that are primarily based on reservation information. This information can be manually entered into , or automatically entered through an interface with your reservation system.  needs about 8-10 weeks of both actual and reservation data to begin to accurately forecast future events.

All systems require a consistent approach.  Rooms forecasting relies upon regularity.  The various types of information required for forecasting are interdependent, each being updated according to a specific schedule, sometimes at specific hours of the day.  

Without consistent and timely upkeep of the needed information, the histories maintained will not be valid for use in forecasting.

How the System Organizes Information

The reservations on hand at a particular time on a given day, are compared to the actual rooms subsequently occupied.  These relationships form one of the key statistical bases used to project volumes for coming weeks.

In an effort to simplify data entry while increasing accuracy, history in 

is recorded by market segment.  Keeping separate records for each segment recognizes the different behavior patterns of the various sources of business.  Three primary market segments account for business:

• Group rooms are sold through the Sales Department.  Because they are negotiated and arranged for in advance, group rooms are generally blocked before transient reservations come in. The blocks are filled (or consumed) by group members through calls, letters, or by a rooming list.  In either case, the Reservations Department changes a room from blocked to booked, entering the definite reservation, while the Sales Department is kept abreast of the progress.
• Contract rooms are also negotiated and sold in advance by the Sales Department.  These rooms are specifically booked for companies or agencies which have contractually guaranteed to use (occupy, pay for) a minimum number of rooms each day, week or month.  Rooming lists or manifests are usually the only source of names for people occupying contract rooms.  Airline, government and railroad contracts are common examples of contract rooms.
• Transient (or Social) rooms are reserved by individuals unaffiliated with groups or contracts.  Usually made up of individual business or vacation travelers, it is rare that blocks are ever established for transient rooms.

 organizes rooms-related information according to these three segments, and requires, during configuration, that any segment be designated as Group, Contract or Transient as well as Casino and other Non-Revenue segments.

Because group and contract rooms are generally blocked in advance, the number of rooms available to the transient market segment varies.  As the number of rooms allocated to groups and contracts increases, the transient "net availability" shrinks.  While the property actually retains the same physical number of rooms, the "size" of the hotel changes for the transient market. This net availability creates one of the key factors for the historical information. 

constantly re-analyzes availability so that the history can be segmented within these ranges.

By counting and recording the book counts (definite reservations) on a specific day each week and comparing them to the corresponding actual counts of rooms taken, 

establishes a fixed time frame.  It is this fixed time frame that enables the program to form a consistent relationship from which to project expected business volumes.  This difference of book to actual is defined as pick-up and is the focus of the rooms forecast process.

Just as segmenting by market recognizes dissimilarity of behavior patterns, the counts are recorded by day of the week or day of stay, acknowledging that business levels vary on different days.  Mondays are more like other Mondays than Saturdays; Groups act differently on the third day of their stay than on the first.
To this point, historical information has been organized relative to occupied rooms according to the following:

Market Segment:

• Group
• Contract
• Transient

Once the data is segmented by market, efforts must be concentrated on the transient market, leaving the remaining two primarily with the sales office where information is more comprehensive.  

Regarding the transient, 

does the following:

• Analyzes by day of the week
• Analyzes pick up
• Analyzes by availability range

By setting data ranges and then recording similar counts into them, analysis of trends, ratios, averages and percents can more effectively be completed by the program.  The result is that the rooms forecast system, when properly used, demonstrates the numerical relationships between book, pick-up and actual counts.

There are two remaining indicators for which the system records data to facilitate forecasting.  They are guests and arrivals (check-ins).  Departures are left to a simple addition and subtraction process once arrivals and occupied rooms have been forecast.

When forecasting guests, 

again projects by segment.  In the group and contract segments, the sales department is asked to forecast guests.  The transient segment, on the other hand, is forecasted statistically by  using historical data broken down by day of the week.  A guest per room ratio is typically established based on past volumes.  This ratio is then multiplied by the transient rooms forecast to project guest count.  An accurate guest count is vital to the outlets if they are to forecast their key indicators of outlet covers and lounge or shop dollars.

The last indicator forecast for which

collects historical data is arrivals.  For group and contract rooms, the Sales Department is responsible for producing a forecast.  This is generally accomplished by referring to the group or contract agreements.  For the transient segment,  can be set up to relate arrivals to occupancy or booked reservations by day of the week.  

Departures are calculated by taking last nights occupied rooms, adding today's arrivals and subtracting today's occupied rooms.  (today's occupied room + tomorrow's arrivals - tomorrow's occupied rooms = tomorrow's departures).  Note that there should never be a negative departure count.

Finally, all the recorded data is analyzed and interpreted to yield an objective statistical projection.  Tracking and assessing the accuracy of the formula projections within the system assures its objectivity.  Management knowledge and experience is then called upon to modify or approve the formula projections of occupied rooms, guests in house, arrivals and departures before the forecast is published.  Management makes these final adjustments in the option for final rooms forecast.

Consistent levels of service can be assured only by the accurate forecasting of future business volumes.  As all resource scheduling and use decisions are made in the short term (one to two weeks out), the focus is on short-term projections.  Knowing when resources need to be available is the key to quality service at cost-effective levels.