If you work in revenue management, chances are you’ve heard of terminology like price elasticity, unconstrained demand and personalization. These terms play an integral part in building the ideal revenue strategy that drives the most valuable business by helping hotels price, manage inventory and optimize their business mix. At the end of the day, however, these terms – and the data that drives them – still revolve around numbers.
And while numbers are very important for getting to the end revenue goal, how can hoteliers better maximize their profits while also curating guest experiences that drive loyalty? While a powerful forecast is important for developing revenue strategy, progressive hoteliers are rapidly looking to strengthen their ability to “futurecast.”
Going beyond the traditional forecast
Hotels traditionally forecast using a variety of numerically-based data sources, such as historical results and economic factors. These are all derived from numbers: the number of reservations booked over the same time last year, how well the market performed and where ADR finished each day. And while translating those numbers into a more profitable business strategy is certainly de rigueur, futurecasting is what can quickly turn your revenue strategy into the piece de resistance!
Futurecasting looks beyond the numerical side of big data to humanize the data so you can understand how and why you arrived at an outcome. It is the “why” that is paramount in marketing to guests better, building a powerful loyalty program, and steering consumers to book direct. Futurecasting builds upon forecasting by adding a layer of prescriptive analytics that looks into the future–to not just forecast a probable result–but to futurecast the optimal outcome.
The bridge between marketing & revenue management
It’s time for revenue management and marketing to stop working in isolation. By working together, the dynamic duo can build a cohesive and powerful marketing and revenue strategy that maximizes profit for hotels…and futurecasting is the practice that gets them there.
Futurecasting helps you understand the behavior of not only your guests, but also millions of travel consumers shopping on the internet. You learn what’s driving potential guests, what entices them to book directly, and more importantly, the ideal price that will capture the maximum amount of revenue at the lowest costs. Knowing the guest that stays with you is great, but knowing the millions of guests shopping online is even better.
Imagine your marketing department knowing exactly which value-added offer to extend to guests searching for specific days, knowing exactly how the revenue manager wants to price it. Sounds great, but seems impossible? It isn’t – and more and more hoteliers are leveraging this type of data and business practice to drive more guests to book hotels directly.
Futurecasting in practice
Let’s take a look at an example: Anne Smith is 25-35 years old and recently married. Anne and her husband have decided to take a summer holiday to celebrate both of their promotions at work. Your hotel is one of many in a city center tourist destination. Anne shops your destination, as well as three others. You have no idea Anne exists, but through meta-searches, OTAs and evaluating reviews, she arrives at your hotel website. She’s intrigued by the unique photos, history of the property and detailed amenities your website provides. She starts looking at prices for her desired date range, but unfortunately has to switch gears to make dinner. She tells herself she’ll look again tomorrow, however, she doesn’t find the time until the following week and forgets where she looked.
If a hotel has access to basic technologies, they’d be able to track her movement on the brand.com website, the dates she shopped for, how much time she spent on certain pages, and perhaps even what room type and package/rate plan she was interested in. Those numbers may help create a better forecast, but it really stops there unless Anne had logged into some type of an account. Not much more would be known about Anne, and you wouldn’t be able to target her directly in the future.
What you didn’t learn from her visit to the brand.com site is why Anne is looking to purchase: Anne enjoys sharing her family’s adventures on social media. They frequent museums, they’re avid hikers and she buys quite a bit of hiking gear online. After all, Anne is considered an “Adventure Seeker.” It’s data like this that humanizes Anne so you can begin to market to Anne (and the millions of other potential guests just like her) with more specific ad placements, experience packages and personalized offers. With analytics driven by forward-looking market intelligence, you can begin to futurecast and achieve that optimal outcome, which is providing Anne, and others like her, with a unique offer that meets their needs and drives them to book direct for dates when the hotel needs the business.
Futurecasting allows you to anticipate what drives Anne (and others shoppers) so you can intelligently craft promotional offers, advertisements and marketing campaigns to your potential guests. Through powerful market intelligence, hotels can begin to futurecast what dates people like Anne are shopping for, where they are coming from and what they are looking for. This helps align marketing and revenue management strategies to drive more direct bookings and profit to hotels.
Think of the competitive advantage if you can better understand all potential guests in your market. Let the competition focus on forecasting while you focus on futurecasting.