UNIT 2 :- FORECASTING

CONTENT

Forecasting Techniques

Forecasting Room Availability

Useful forecasting data

Percentage of
Walk-in
Overstay
Understay
No show
Cancellation

Forecast Formula
Forecasting Room Availability :-

Forecasting room availability is forecasting the number of rooms available for sale
on any future date. This type of forecasting helps manage the reservation
process,guides the front office staff for an effective room management, and can be
used as an occupancy forecast, which is further,useful in attempting to schedule
the necessary number of employees for an expected volume of business.

In short Forecasting is the prediction of future happenings,based on the

precise analysis of the data available.To say what will happen in future.

Purpose of forecasting:-

1. It sets a standard for the reservation agent booking or taking in the

reservation.
2. It determines the role of sales and marketing team to supplement gaps in
desired occupancy.
3. It protects the hotel from overbooking.
4. It helps the housekeeping to gear its workforce.
5. It gives an accurate idea of rooms that are not available for sale,especially
that are OOO.
6. It helps all departments to plan their staffing, their leave schedule,because
employees will not be issued with leave during the peak period.
7. It determines the pricing strategies whether quote maximum or minimum
rates.
 8. Minimum inventory of items -(perishable,costly items)

Influence of forecasting

Two important factors that influence the room revenue

Internal Factors:- Internal External

Factors
1) Pattern of No-Show Factors
2) Realization of long term booking
3) Special promotions launched by the sales and marketing team to stimulate
the promotion.
4) Patterns of occupancy.
5) Percentage of rooms committed to volume business.
6) Percentage of guaranteed booking against non guaranteed bookings.

External Factors:-
1) Special events
2) Special promotions by travel agents and tour groups .
3) History of occupancy patterns during a particular period.

Experienced front office managers have found that several types of information
can be helpful in room availability forecasting:
 • A thorough knowledge of the hotel and its surrounding area
• Market profiles of the constituencies the hotel serves
• Occupancy data for the past several months & same period of the previous
year
• Reservation trends and a history of reservation lead times (how far in advance
reservations are made)
• A listing of special events scheduled in the surrounding geographic area
• Business and historical profiles of specific groups booked for the forecast
dates
• The number of non-guaranteed and guaranteed reservations and an estimate
of the number of expected no-shows
• The percentage of rooms already reserved and the cut-off date for group
room blocks held for the forecast dates
• The room availability of the most important competing hotels for the
forecast dates (as discovered through blind calls)
• The impact of citywide or multi-hotel groups and their potential influence
on the forecast dates
• Plans for remodeling or renovating the hotel that would change the number
of available rooms
• Construction or renovation plans for competitive hotels in the area

Useful Forecasting Data

• Following are required for forecasting:
– Thorough product knowledge.
– A good judgment about what could happen in the future.
– Thorough knowledge about their area of operation in the hotel.
– The profile of the target market to which the hotel is catering.
 – The events that are scheduled in the area during the forecasted period.
– Percentage of no-shows.
– Overstay percentage.
– Under-stay percentage.
– Turn-down statistics.
– Future plans for renovation or addition of more rooms in the property.
– Future plans regarding the opening of any new property in the vicinity
(surrounding) of the hotel.
– A precise knowledge about the room status in competitor’s property.
– Knowledge about competitor’s plans with respect to activities (like
renovations), which will reduce the supply of rooms in their property.
– Cancellation statistics.
– Wash out percentage – last minute cancellation made by travel agents.

In order to forecast room availability, the following data are needed:

Number of expected room arrivals
Number of expected room walk-ins
Number of expected room stayovers(rooms occupied on previous nights that will
continues to be occupied for the night in question)
Number of expected room no-shows
Number of expected room understays(check-outs occurring before expected
departure date)
Number of expected room check-outs
Number of expected room overstays (check-outs occurring after the expected
departure) .
Over- all, the above data are important to room availability forecasting since they
are used in calculating various daily operating ratios that help determine the
number of rooms available for sale.

Occupancy History of the ABC

Room Room Room Room

Day Date Guests Arrivals walkins Reser. Noshow
Mon 1/3 118 70 13 63 6
Tues 2/3 145 55 15 48 8
Wed 3/3 176 68 16 56 4
Thurs 4/3 117 53 22 48 17
Fri 5/3 75 35 8 35 8
Sat 6/3 86 28 6 26 4
Sun 7/3 49 17 10 12 5
Total 766 326 90 288 52

Occupied Overstay Understay Room

Rooms Rooms Rooms Check-outs
90 6 0 30
115 10 3 30
120 12 6 63
95 3 18 78
50 7 0 80
58 6 3 20
30 3 3 45
558 47 33 346

1. Percentage of No-shows.
The percentage of no-shows indicates the proportion of reserved rooms that the
expected guests did not arrive to occupy on the expected arrival data .This ratio
helps the front office manager to decide when and how many rooms can be sold
to guests who come as walkins. The percentage of no-shows is calculated by
dividing the number of room no-shows for a specific period of time(day, week,
month, or year) by the total number of room reservations for that period.

Percentage of No-shows = Number of Room No-shows

Number of Room Reservation
=52/288x 100=18.06%
Some hotels track no-show statics in relation to guaranteed and non guaranteed
reservations. Properly forecasting no-show rooms also depend on the hotels mix
of business, eg corporate group generally have a much lower no-show %age than
other types of groups or individual business .A hotel with a large corporate market
will most likely have a very low no-show %age as compared to a hotel having little
group business. The %age of no-shows can be controlled through a number of
policies and procedures such as requesting deposit in advance from guests, call the
guests before date of arrival to confirm arrangements, check the reputation of
travel agents, tour operators ,duplicate reservations etc before confirming the
reservations.
2. Percentage of walk-ins
The percentage of walk-ins is calculated by dividing the number of rooms
occupied by walk-ins for a specific period by the total number of room arrivals for
same period .The %age of hotel ABC can be calculated as follows.

Percentage of walk-ins= Number of walk-in rooms x100

Total number of room Arrival
= 90/326x100
= 27.61 %
Walk-in guests occupy available rooms that are not held for guests with
reservations. Often, hotels can sell rooms to walk-in guests at higher rates since
these guests may have less time & opportunity to consider alternate properties.
Front desk agents are asked to show a guest room to a walk-in guest----which is
much more effective than trying to sell rooms over phone. Walk-in guest sales
help to improve both occupancy and revenue. Walk-ins also give a chance to find
new guests who can prove CIPs in future. However, from a planning perspective ,
it is always considered better to have reservations in advance than to count on
walk-in traffic.

3.Percentage of Overstays.

It represents rooms occupied by guests who stay beyond their originally

scheduled departure dates. Overstay guests may have arrived with
guaranteed or non-guaranteed reservations or as a walk-in.
Number of overstay rooms for a period by the total number of
expected room check-outs for the same period. The %age of overstay
for hotel ABC is calculated as under

Percentage of Overstays = Number of Overstay Rooms

Number of Expected checkouts
= 47 x100
346-33+47
= 13.06 of exp. Checkouts
(exp.checkouts= Actual check-outs-understay+under stay

To help regulate room overstays , front-office agents are trained to verify an

arriving guests departure date at the time of check-in. Such verifications can be
critical ,especially when the hotel is at or near full occupancy and there are no
provisions for overstay guests. Overstays may also prove problematic when
specific rooms have been blocked for arriving guests. This is especially important
for suits or other rooms that may have special importance to an incoming guest.

Percentage of Understays
It represents rooms occupied by guests who check-out before their scheduled
departure dates. Understay guests may have arrived at the hotel with guaranteed
or non-guaranteed reservations or walkins. The percentage of understays is
calculated by dividing the number of understay rooms for a period by the total
number of expected room check-outs for the same period. Using the data given ,
the percentage of understays is calculated as under
Percentage of understay= Number of Understay Room
=Number of Expec.Check-outs
= 33 x100
346 -33 +47
= 9.17 % of expec.check-outs
Guests leaving before their stated departure date creates empty rooms that
typically are difficult to fill. Thus , understay rooms tend to represent
permanently lost room revenue. Overstays ,on the other hand, are guests staying
beyond their stated departure date and may not harm room revenue .when the
hotel is not operating at full capacity, overstay results in additional, unexpected
room revenues.
To regulate understay and over stay rooms ,front office staff should

1. Confirm or reconfirm each guests departure date at registration. Some guests

may already know of a change in plans, or a mistake has been made in the original
processing of the reservation.
2. Present an alternate guestroom reservation card to a registered guest explaining
that an arriving guest holds a reservation for his or her room. Guests may be
informed in advance about their scheduled check-out date.
3. Review group history. Many groups ,especially associations ,holds large closing
events for the entire group on the last day of meeting.
4. Contact potential overstay guests about their departure date to confirm their
intention to checkout.
5. Room occupancy data should be examined each day, rooms with guests
expected to check out should be flagged
6. Guests who have not left by check-out time should be contacted
and asked about their departure intention.

The above mentioned data help the front office in conduct various daily
operational ratios such as:-

No-shows percentage =(number of no-show rooms)

(number of rooms reserved)

Walk-ins percentage = (number of walk-in rooms)

(total number of rooms arrivals)

Eg :- 90/326 = .2761 or 27.61% of room arrivals.

Overstays percentage = (number of overstay rooms)

(number of expected check-
outs)
Eg:-47/346-33+47 =.1306 or 13.06% of expected check-
outs.

Understays percentage = (number of understay rooms)

The forecasted number of rooms available for sale(number
for any future date cancheck-
of expected be
tracked using theouts)
following formula :-

Forecast Formula

Once relevant occupancy statistics have been gathered, the number of rooms
available for any given date can be determined by the following formula;
Total number of Guestroom
- Number of out-of-order Rooms
- Number of Room stayovers
- Number of Room Reservations
- Number of Room Overstays
+ Number of Room reservations x %age of No-shows
+ Number of Room Understays
= Number of Rooms Available for sale

Note the above formula does not include walk-ins. They are not included because
the number of walk-ins a hotel can accept is determined by the number of rooms
available for sale and it various on daily basis.

Following data is available about Hotel ABC, calculate number of rooms available
for saleTotal number of rooms 120, on April 1st there are three out-of-order
rooms, 55 stayovers, 42 scheduled arrivals (reservations) percentage of no-shows
18% .Based on the historical data ,six understays and fifteen over stays are also
expected. The number of rooms projected to be available for sale on 1st April can
be determined as follows.

Total number of Guestroom =120

- Number of out-of-order Rooms = -3
- Number of Room stayovers = -55
- Number of Room Reservations= -42
- Number of Room Overstays = -15
+ Number of Room reser. x %age of no-shows=+8
(42 x 18 % = 8 rooms)
+ Number of Room Understays = +6
= Number of Rooms Available for sale = 19

Therefore ABC hotel is having 19 rooms for sale on 1st April once this
figure determined ,front office management can decide
1. Whether or not to accept more reservations
2. Helps to determine its level of staffing.
3. Helps to determine the number of rooms that can be sold to walk-ins.
Front-office planning decisions must remain flexible ,as they are subjected to
changes and room availability forecasts are based on assumptions whose validity
may vary on any given day.

Sample forecast forms

The front-office may prepare several different forecasts depending on its need.
occupancy forecasts are typically developed on a monthly basis and reviewed by
food & beverage and rooms division management to forecast revenue, project
expenses, and develop labour schedules. These forecasts help hotel departments
maintain appropriate staff levels for expected business volumes and thereby
help contain costs.