Forecasting is a decision-making tool that helps businesses cope with the impact of the future’s uncertainty by examining historical data and trends. Businesses across every industry need to forecast components of their operations, and that is particularly important, and challenging, in times of uncertainty.
Actionable forecasts in the Travel and Hospitality industry bring particular value: how many guests will arrive and when, how to staff accordingly, adjust their inventory positions, model the impact of promotions/events on business performance, optimize pricing/revenue management, and project revenue/cash flow.
Forecast too high and the business will be inefficient with resources: likely buying too much product, facing potential spoilage or waste, while also missing opportunities to invest capital elsewhere. Forecast too low and the company will have missed sales opportunities while decreasing customer experiences and satisfaction levels.
Despite the unpredictability, accurate forecasting is critical for Travel and Hospitality companies. Working with companies around the world, in all segments of the industry, we observe three common traits of the most successful organizations. Those who excel at both the “Art and Science” of forecasting have:
1. resources, a mix of talent and experience aligned by a strong culture
2. procedures that support the continuous improvement of the forecasting process
3. technology that enables the capture of genuine patterns and relationships in data, while removing noise
This white paper explores these three areas with the goal of assisting Travel and Hospitality companies to improve their forecasting to better operate in the 21st century.