Budgeting season is an arduous period in which hotel companies assess the upcoming year’s goals, threats and opportunities for each hotel in their portfolio, calculating a final prediction of revenues and expenses for each operational department.
With more data available today than ever before, executives must collate and weigh the right datasets that will impact business while avoiding “analysis paralysis.”
For example, the volatile travel landscape over the past couple years has led to a shift in the way travelers book their lodging today, and these new booking patterns should have a direct impact on your 2023 forecast.
Below, we’ll uncover emerging guest booking patterns that should influence your 2023 forecast. As this series unfolds, we’ll look at emerging segments of travelers that will affect your forecast, shifting your forecast to focus on the bottom line, determining the most accurate data for your forecast, and aligning operational departments with uniform data.
Finally, longer booking windows
First, booking windows – or the amount of time between the booking and the stay date – are lengthening in most markets. At Remington Hotels, manager of 121 hotels across 26 brands, Chief Commercial Officer Raul Moronta says that as the pandemic has waned and regulations have been lifted, fewer bookings are coming inside of three days. “Throughout 2022, we have seen the zero-to-three-day booking window segment shrink significantly every single month,” he says.
Some of that lengthening booking window can be attributed to the second dynamic factor, which is that group business has returned to near 2019 levels in many markets. Moronta says the booking window segment growing the fastest for Remington is outside of 30 days, which is a signal that business travel and group business are returning.
The key to understanding how these trends will affect your specific hotel forecasts in 2023 is to be able to apply them to the situations at your unique hotels and their unique markets. For example, to predict which way booking windows will trend at your properties, it’s important to factor in your business mix, such as whether you anticipate more groups in 2023. Also, like Moronta at Remington, it’s important to bucket different segments of the booking window – look at the 0-3 day window, the 3-15 day window, the 15-30 day window, and the beyond-30 window, as an example.
Coupled with the fact that cancellation rates continue to fall, this trend should help hoteliers be even more confident in holding rate and not discounting as day-of-arrival approaches, says Nicole Tomasso, Director of Revenue Strategy at Dragonfly Strategists. “People are booking and staying – that pattern has changed dramatically and should impact your forecast,” she says.
In addition, average Length of Stay (LOS) continues to grow. In New York, Tomasso says average LOS has jumped as much as from 1.5 nights in 2019 to 4 nights in Q4 2022.
Build these trends into your companywide forecast
With these emerging booking patterns in mind, it’s time to share those baseline forecasts across the organization.
Centralizing data from each of your properties to help make smarter business decisions at the corporate level has become a priority for all owners and operators across the globe. As your forecast changes on weekly and even daily basis, you’ll want to provide leadership with easily accessible and digestible reports in real time.
“At a property level, the ability to look really granularly quickly is helpful. At an enterprise level, the ability to quickly look at macro level trends by aggregating all that data quickly is probably the most beneficial,” says Cecil Hopper, Associate VP of Revenue Optimization and Feasibility for Hyatt’s resorts portfolio.
“A lot of my senior executives want to make sure we’re trending well in comparison to years past, that we’re going to achieve our forecasted and budgeted goals,” says James Wilson, director of Business Intelligence for Outrigger Resorts and KSL Resorts. “Versus my property teams, they want to go down to the geo level, the zip-code level, the room-type level. Having a tool to assist with leveraging that data is very beneficial.”
In addition to the high-level forecasts, many commercial leaders will want to dive deeper into the data, create custom reports to share, and look to uncover anomalies in the data that might spur a change in strategy.
In general, hoteliers are looking at 2023 with confidence but also wariness. One thing is certain: leaders must include comprehensive data points to create well-informed budgeting decisions, and then monitor the data on a daily and weekly basis to adjust their forecast in real time.