8March-April 2017Forecasting Landscape in the Hospitality IndustryBy Dennis DuBois, Senior Director of Finance, Carlson Rezidor Hotel GroupIn My OpinionForecasts and budgets are a normal part of any business and companies in the hospitality industry are no different to others in the U.S. The challenges the hospitality industry face, like other industries, is identifying sources of business and the related dependencies. In addition, the always present impacts from both a macro and micro level--national unemployment rates, general health of the economy, inflation, labor laws and interest rates as well as local regulatory impacts (e.g., taxes), local unemployment rates, special events taking place in the market (e.g., Super Bowl, National Political Conventions, etc.), competitors entering the market and whether the hotel is unionized need to be considered.At the forefront of the process is identifying any capital needs a hotel may require. It could include expenses that address guest safety issues, revenue enhancement opportunities (e.g. restaurant refurbishment) or cost avoidance (e.g. energy saving initiatives) and if any of these projects may disrupt the normal course of business, such as a guest room renovation. A critical component of this review is a calculation of a return on any investment and the source of the capital funds.The revenue component of the hotel operation's forecast and budget is the starting point of the revenue and expense process once the capital plan has been determined. There are numerous factors and sources that come into consideration when determining the data inputs for volume projections (occupied rooms, guests) as well as the rates and pricing for rooms and meals.In the rooms division of a hotel, projections need to factor sources of business from group contracts, contracts with airline crews, online travel agency portals like Expedia and offers on brand web-sites. Many hotels use sophisticated revenue management software (similar to the airline industry) that looks at the pricing of its competitors in their market for a particular day or time period. It also takes into consideration special events (city wide conventions) in the area in addition to previous year's actuals to try and determine the supply and demand on any given day. A hotel manager has the ability
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