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Revenue Forecasting - Is it Relevant in a Pandemic?

Heidi Gempel

February 3, 2021

The global pandemic has created economic conditions in the market that we have never seen before. But is forecasting accurate or relevant today or are we starting with a blank sheet of paper? Heidi and Matthew explore the relevance a revenue forecasting through the pandemic, as well as looking at the new information revenue managers should source to assist with their forecast accuracy, new standards in the industry and advice for reopening hotels.

Read their conversation below or click on the link to hear the podcast:

Matthew: I am your host Matthew Stephens and today we will be talking about how to forecast through the Covid-19 period. My guest today is an expert in the field of forecasting, providing outsourced solutions to hotels for the past 10 years including distribution and revenue management solutions. As prior facilitator of the revenue management advisory board for HSMAI Asia Pacific and as VP Revenue Management and Distribution with Minor international, she is considered an expert and industry leader in hotel forecasting. From HGE International, welcome Heidi Gempel!

Heidi: Thank you Matthew it is a pleasure to be with you today.

Matthew: Heidi the global pandemic has created economic conditions in the market that we have never seen before. As you explained in your presentation in the HSMAI ROC at home session, forecasting continues to play a critical role in all areas of business from projecting occupancy for operational implications, projecting market segment performance for service delivery and also the financial implications for cashflow projections. Heidi is it possible, and should we still do a forecast in this current situation?

Heidi: I think we should. I think we should not stop forecasting; we should probably reconsider the way we have been doing our forecast previously before the pandemic and the way we are doing it now. The situation obviously has changed for every region, every city, every country, there may be different parameters that play into our forecast these days, but I think for sure we need to continue with our forecast for the same reasons you have just mentioned.

Matthew: So accurate forecasting relies on accurate information obviously. Is there any new information managers should source to assist with the accuracy of their forecast today?

Heidi: I think it would be very smart and very wise for us as revenue managers to consider some of the external data, the forward data that is available, and which is maybe generally available to mainly marketers. But from a revenue manager point of view, I think for us to understand demand and demand for our hotels and our restaurants, it is quite important to know what is happening in our local destinations. So I think some of that forward data which is available these days is quite important. The Intent – why people do certain things, why do they behave the way they do? This sort of data should impact our forecast these days.

So I think some of that forward data which is available these days is quite important. The Intent – why people do certain things, why do they behave the way they do? This sort of data should impact our forecast these days.

Matthew: Ok! Total revenue per available room or T-RevPar was a big growing trend prior to Covid-19. How do you think total revenue has changed and how does it impact forecasting today?

Heidi: I think this pandemic has really forced our hand to consider total revenue as a real contender in our revenue forecasting. Although we have spoken about it a lot in the industry and in the academia, there are very few hotels who have actually ever implemented total revenue management or total revenue measurement. Because of the pandemic the shift in revenue model is really forcing our hand in that regard. We have to start considering alternative distribution channels, we have to consider new revenue sources. In order to project accurate numbers for our businesses we have to start looking at those. If there is anything good coming out of this pandemic, it is really for us to help push this out into the industry and for the industry to embrace total revenue management. So, I think it is totally important.

Matthew: Total revenue as we have talked about covers food and beverage and spa and things like that which was traditionally residential type business. Can you talk about some of the new models that have come about with dark kitchens and converting areas of properties to drive new revenue channels?

Heidi: Yes, of course. I think the whole development of the pandemic has brought changes. I am based here in Singapore and we have seen that in the past it was always about seating capacity of the restaurant and how many guests and tables we can put into the restaurant. The kitchens were minimised in size and kept as small as possible. But now, with this pandemic and social distancing requirements, what is happening is that restaurants are expanding the size of their kitchen in order to handle multiple menus and handle multiple enquiries, as well as the in-restaurant dinners.

We are seeing a flip over – in the past it was always about seating capacities in restaurants and now it is about whether our kitchen is capable of doing deliveries as well as serving our customers in the restaurant. We talked before the podcast about the industrial kitchens which are being utilised to do delivery and to sell certain menu items and menus even for enquiries and for deliveries. The industry can look at how we utilise our banqueting kitchens. A lot of the large banqueting hotels have massive kitchens and right now they are not really being used. This is something we should look at as an industry – how can utilize this and how can we make the most of our facilities and rethink hospitality in the digital space, how can we serve customers not necessarily in our hotels and restaurants but in our community and at home.

This is something we should look at as an industry – how can utilize this and how can we make the most of our facilities and rethink hospitality in the digital space, how can we serve customers not necessarily in our hotels and restaurants but in our community and at home.

Matthew: Sure. So you have recently created a new module in the forecasting for accommodation providers course where you look at “Forecasting in the Age of the Crystal Ball.” It sounds like we are really stargazing now with new revenue models and new outlets. So how do we as an industry define the new standards and create new solutions through this evolving situation?

Heidi: That is a really good question and one that we have to really ask. I am here representing as well the HSMAI organisation, and this is one of our greatest desires and our greatest benefit. For one we provide education for industry partners so if you have staff who need to be trained, we have a lot of new entrants coming into the industry, we have courses for them to understand how things are done in the industry.

I think the second portion of it is as a body, as HSMAI and similar bodies and associations in general, the true value comes in having conversations. As we build conversation with industry leaders, with disrupters, with educators, the academia, we need to start conversations. The only way for us to get through this and come out of this pandemic is really for us to have these conversations – to think about how we embrace new business models, how do we create new metrics, how do we measure success in a completely changed environment.

The only way for us to get through this and come out of this pandemic is really for us to have these conversations – to think about how we embrace new business models, how do we create new metrics, how do we measure success in a completely changed environment.

I think this is the true value of these associations. Wherever you are in your local community, be part of those conversations because its only through those that we can bring change to us as an industry. It always stimulates great conversation, great thoughts and helps us to propel ourselves forward.

Matthew: Yes, they are really valuable those networking sessions, normally off the back of events but these days virtually we are having lots of events so pays to be part of an association and to network online. Heidi many hotels had to close over the past year, what advise would you give to hotels that are now re-opening?

Heidi: I better be careful now! You have to really think about this carefully. You have to go back to before you closed the hotel and understand what drove your business. What was the makeup of your business, what was the distribution of your business? If you were a predominately internationally driven destination or hotel you may want to consider, how will you replace that sort of business?

Also have a look at what you have internally– we talked earlier about the size of your kitchens, the restaurants, the internal capabilities - the spa, the bars, and see how you can pivot those and make the most of these new revenue streams and new distribution models, how can you make the most for your business with the facilities and the internal capabilities that you have. I would say to look at those two – the kind of business that will come to you, be it your hotel or your restaurant at the current moment? Is it enough for you to sustain your cashflow? Which is on everyone’s forefront and mind at the moment.

The second one is just utilizing your property - hotel, or restaurant to the best you can. As you go with those two things, I think you can make a solid and a sound decision.

I would also advocate obviously to work with people and talk to people – be it consultants, external parties, any association, have conversations and listen to what is happening out there as your form your decision and as you make your decision.

I would also advocate obviously to work with people and talk to people – be it consultants, external parties, any association, have conversations and listen to what is happening out there as your form your decision and as you make your decision.

Matthew: It has been a pleasure talking to you today Heidi and your certainly one of those people we want to network with at a session or online. Thank you very much for joining me today, we are grateful for your insights into forecasting during the pandemic.

Heidi: Thank you so much it was my pleasure. It was a good conversation, and we love conversations!

Matthew: We will certainly look forward to the next conversation, perhaps on marketing next time!


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