How Can Future Demand Data Help in Hotel Revenue Management?

Revenue management has become commonplace in the hotel industry.

A hotel with the right set of revenue management strategies is in a much better place than the ones without.

But what makes revenue management so prominent?

Data, data, and data!

They said data is the new oil. Well said.

And today, in this blog, I am covering an interesting type of data that lately has become a fuel for revenue managers in improving their strategies.

Let’s look at what this data is and how it is transforming the hotel industry for the good.

What is Future Demand Data?

Future demand data gives you insights into your source market to see how demand develops. Simply put, it enables you to predict how many guests will stay in each room during a given period.

This future forecast can come from surveys, customer preferences, marketing research, or other sources.

Now, it might not seem that amazing yet just by thinking about how hotels can use future demand data.

But once you get to know more about it and learn about its use cases, you’ll understand how it is going to make a difference.

And this brings me to the next point. 

How is This Data Relevant to the Hotels?

Hotels need data to improve their services, any day. And future demand data can be an efficient fuel.

The goal of this type of data is to help hotel managers predict what guests will want from hotels in the future. And with the right set of data, they can develop goals and strategies that are tailored to meet those needs.

A hotel that leverages future demand data become better at strategic planning for years into the future, rather than just a few months out.

This is a big deal, especially in an industry that can be so reactive to what’s happening on the ground.

For example, recently there has been a shift towards more health-conscious and vegan guests who are looking for hotels with lower environmental impact, no animal cruelty, and less waste. 

So, hotel managers would benefit greatly from incorporating future demand data into their planning process to accommodate these changes while still providing top quality service to their guests.

The Bigger Deal

What makes future demand data more intriguing is how it turns revenue management into the most powerful weapon in the arsenal.

Revenue management is all about leveraging data and setting the right price for the rooms. Now, what if you could already predict your hotel’s demand (demand forecasting, for instance) and set prices accordingly? You’ll be leading the race.

And this brings us to the primary topic of the article.

How Future Demand Data Can Fuel a Hotel’s Revenue Management Efforts?

Future demand data is a goldmine for hotel businesses and their revenue management experts. After all, the benefits are so stunning.

1. Offer insights from the local market

Being a part of the hospitality industry for such a long time, I have seen hotels not betting big on the local market. Maybe they have their strategies in place, but I still believe that they must go out of their way to tap into the local market.

The opportunities and money are significant in this space. Moreover, it is one of those markets that can revive you when your business declines.

The covid pandemic must have proved this point already. 

Now, forward-looking demand data empowers your hotel with insights from the local market. And what are these insights?

You get to know what is trending and going to spike in your destination.

Maybe you have performed a compset analysis or an analysis specifically to look for future trends. And then, you found that workation is going to be the next big thing in your locality. Additionally, you also identified the price point people are willing to pay.

This is when revenue managers come into the picture and build a pricing strategy that is aligned with the preferences of your local market.

Brownie point for marketers: You can carry out geo-targeted ads and promotions for your local market to gain better traction and gather data.

2. Give a view of what your competitors are preparing for

Another ace up your sleeve is the information that you get about your competitors.

Be it revenue management or compset analysis; for a long time, future demand data wasn’t a crucial part. However, the scenario has changed in the last few years.

And why not? The right set of data, gathered from the right sources, enables you to understand what your competitors are preparing for.

But is this information useful?

For example, despite the boutique location and its high demand, one of your local competitors is turning actively towards reducing its pricing. 

But on the other hand, two more local competitors are betting a bit high on a new pricing strategy with a major change in the cancellation policy.

This part is crucial.

You have important insights from three of your local competitors now. But do you need to consider all three of them?

Absolutely, No!

Future demand data helps you with competitor information so that you can figure out what your competitors are doing right and where they are falling short.

This helps revenue managers identify white spaces where strategies can be built to maximise revenue.

3. Help you analyse your current strategies

Your hotel is operating with the best-in-class revenue management strategies in place. You also have pricing that attracts a lot of staycation enthusiasts.

But wait. What if the staycation trend fades in the coming months and some other trend takes over?

Is your hotel ready to deal with it?

Are your pricing strategies optimised enough to work in line with upcoming trends?

If the answer is a yes, then well and good. But if it’s a no, then you might need to leverage a different approach.

With the help of forward-looking data, you analyse your current tactics to determine whether they are hitting it out of the park. And later make changes accordingly if required.

4. Help you refine your revenue management tactics

Dynamic pricing is at the heart of revenue management. But it is not the only tactic.

When it comes to boosting a hotel’s overall revenue, experts use an arsenal of strategies. It could be around OTAs, direct bookings, overbooking, etc.

But what’s more important is to be sure of whatever the strategy is, it is worth all the tea in China.

When leveraging future demand data, you only get an idea of the future strategies but also how to refine your current strategies.

For example, they say overbooking is a necessary evil. But that doesn’t mean it has to be every hotel’s go-to strategy. And this is what crucial information helps you determine — whether overbooking is good for your hotel or something you can do away with.

All in All: Future Demand Data is the Need of the Hour

Humans are always looking for “what’s next?”. And this curiosity has led to gazillion business success stories.

Doesn’t matter to which industry you belong to, it is imperative to predict the future if you want to scale.

 And the same affair has occurred in the hospitality industry.

There was a time when data itself was overlooked for many years. But when hotels saw the efficacy of data in building business strategies, creating pricing models, etc. they started a rapid adoption.

Today, data has become commonplace in the world of hospitality.

A hotel without data is a bus without a driver.

Future demand data in recent years have gained tremendous traction. Hotels from all around the world are betting big on it.

The major reason is historical data, despite being crucial, is being overlooked by many hotels in the industry.

Firstly, it doesn’t offer the same that it used to in the past.

Secondly, the hospitality industry is ever-evolving; meaning, hotels need to know more about the current and the future market. And this is where forward-looking data is rocking the domain significantly.