Weekly forecasting of sales is one of the most valuable management tools and can help to boost sales and manage payroll costs – though it’s important to remember that forecasting has to be actioned by appropriate members of the management team on a regular basis throughout the week.
Weekly sales forecasting
To review food or accommodation sales after the event is akin to shutting the stable door after the horse has bolted – it’s of historic interest only. True, you can compare these results with those of the previous week, and even with the same week of the previous year, and this will show trends and will highlight any deviation – valuable information in its own right. But you cannot take any action to alter the figures. Combined with a weekly sales forecasting programme, however, you have a valuable tool that can help drive the business forward, enabling you to compare expected revenues with the budgeted revenues for the week in question.
Forecasting revenues is pro-active rather than reactive
Forecasting enables the management team to focus on key sales issues and to take appropriate action. For example, should the forecast show below budget room revenue for a specific day in the following week, action can be taken to fill the expected gap. If a forecast is not made, you will only discover the gap a week later – too late. A night’s empty bedroom cannot be sold the following day.
For weekly sales forecasting to work effectively, all department personnel need to:
- Know the budgeted sales figures
- Have been trained to be objective and to work in a positive team environment
- Have performance linked to incentives (not essential but can be helpful.)
Forecasting also (and most importantly) enables a business to calculate staff rosters which is a critical management decision that can have a huge impact on payroll costs. By accurately forecasting sales, the businesess can staff up to the correct level, thus avoiding excessive payroll costs through over-staffing. Conversely, it can avoid staff shortages if busy periods can be correctly assessed.
Staffing for hotel breakfasts and dinners is dependent on knowing the number of overnight guests in the hotel and calculating how many will actually take breakfast or dinner. Knowing the sleeper ratio is critical to this process.
As an example, let’s say that the hotel has 60 rooms – 50 double/twins and ten singles. The number of sleepers can thus vary from 60 to 110 guests. This is too wide a gap to be useful for staffing purposes so the exact number of people needs to be known before the rosters can be prepared. If all the guests came down at the same time, the restaurant would need the maximum number of staff to cope; in a conference hotel, with various groups, this is quite likely. However, if the groups can be managed by encouraging them to eat at staggered times, the workload can be spread so that fewer staff need be employed to cope for a more even workload. In a large hotel, such a move could save two or three members of staff, with a hugely beneficial impact on breakfast payroll costs over the year.
Some may think this example is a simple task using common sense, but all too frequently common sense is not that common!
Forecasting staff rosters for dinner follows the same principle but chance diners may make this more complicated. Still, some forecast of the number of guests who will have dinner in the hotel has to be made. Experience will be a guide here, but taking dinner reservations on arrival can help significantly in calculating demand. In general, it’s better to have rather too few people scheduled on (being busy will keep them on their toes) rather than too many (idle hands make light work).
But here’s a final thought.
Remember (using a UK expample where wage rates are rising), one hour over-rostered costs the business £7.20 plus holiday allowance and NI – say £8.50. Calculating the cost of one hour per shift wasted in a department, two shifts per day, in a year (£8.50 x 2 x 365) means the business is wasting £6,205 a year in over-payment. If two hours are lost – that’s over £12,000.
What business can honestly put its hand on its heart and say that it never over-rosters? And has it any idea of the cost of this?
About the author
Peter Nannestad, managing director of Hospitality Business Improvement Management (HBIM), is co-author with Miles Quest of How to Buy and Manage Your Own Hotel which gives much further detail on the importance of forecasting. (It is available through the eHotelier – digital and hardcopy). The book is aimed at hoteliers and investors, and it provides a no-hold barred toolkit for all those considering entering the challenging world of hotel ownership.