Applying futurecasting to hotel distribution

futurecastingFuturecasting is a practice used by many businesses to plan strategically for their future. The practice evaluates underlying industry dynamics, predictive analysis and a variety of business strategies to help organisations develop an insightful vision of the future. Importantly, for hoteliers, the advancements in revenue management have opened new strategic forecasting opportunities, including methods for capitalising on new industry data to drive more profitable results.

Traditionally, hotel forecasting practices have generally focused on data such as historical results and economic factors to anticipate market demand. Hoteliers rely heavily on these types of traditional data sources to influence, shape and evaluate what embodies a profitable business strategy. However, with the emergence of forward-looking demand-intelligence data, hoteliers have new opportunities to extract and analyse behaviour-based statistics of industry data for a holistic view of their future performance.

The practice of strategic futurecasting encourages hotels to analyse how and why a particular outcome occurred plus the likelihood of recurrence. It amalgamates revenue management data with demand intelligence to help hotels understand what drives potential guests to book, as well as the ideal price in every channel that will bring in the highest profits. This gives hoteliers an informed view of the future that can be used to plan intelligently and make profitable decisions for their organisation.

Applying futurecasting to the distribution space

Given the continued growth of online travel agencies (OTAs) and the increased popularity and consolidation of industry channels like Expedia and, many hoteliers are reevaluating how to proactively and selectively drive profitability through controls within the online distribution channels. Futurecasting can be applied to the distribution space through available industry data, which helps hoteliers better identify their short- and long-term distribution strategies and evaluate which channel partners are the right fit for the overall strategic direction of their brand. With better insights into what drives their best guests and target markets to book through search data, hotels can identify and properly balance their different distribution partners to better position themselves within their most profitable channels—and to their most profitable guests.

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The role of distribution within revenue management has evolved significantly with an influx of new data sources, technology and channels over the past few years. Given its significant role in generating hotel bookings today, it’s extremely important for hotels to understand, evaluate and consider their real distribution costs, which include the basics of percentages, tracking direct costs and monitoring revenue results. These distribution details have a heavy impact on overall revenue management strategies, and accounting for acquisition costs is critical for hotels to fully realise the expected results of all their promotions or offers.

Intelligent and insightful distribution decisions should always be driven by truthful data. Identifying the true cost of each reservation is another revenue management opportunity for evaluating and implementing effective distribution and channel performance strategies through the analysis of NetRevPAR. While some OTA reservations may include fairly straightforward fixed charges, reservation-related charges can be more complex. Hoteliers should ensure consideration is taken for all the multi-faceted costs associated with a reservation, which may include details like variable commissions, labour costs, sales spend and loyalty program charges. Understanding, organising and accurately tracking these types of details helps hotels make strategic and profitable revenue management decisions in the distribution space. The first step in a distribution strategy focused on profitability is monitoring and accurately reporting on costs, which leads to the ability to price and optimise channels based on their associated costs.

The right information matters

To operate effectively, the key areas of hotel distribution, revenue management and marketing all rely on accurate, detailed data. Integrated technology, and its capabilities to organise, decipher and present disparate types of data, plays a critical role in bringing these practices together. Where hotels once needed access to a variety of property systems to deploy revenue management, distribution and marketing strategies, they now have options for incorporating all functions within one technology solution for shared data sets, industry insights and an efficient execution of interdepartmental strategies.

Today, hotels and hotel groups can undertake strategic planning to effectively handle distribution data and its attributes, maximising profitability in the long term. This strategic plan should encompass and align the people, processes and technology toward a common goal of data-driven decision-making in the distribution channel and guest acquisition space. The convergence of revenue management, marketing, sales and distribution is a growing trend in this area, and consideration should be made as to how a centralised data-analysis team can help support this effort.

Understand your data; plan for the future

The evolution in how guests book with hotels and the growing reliance of many hotels on OTAs to secure bookings has transformed the distribution space forever. It has never been more critical for hoteliers to understand the true cost of doing business in the distribution space including the more traditional static channels; however, with the overwhelming amounts of data available today, it has also never been more complex. Hoteliers should embrace futurecasting practices in their operations to develop short- and long-term revenue strategies which capitalise on the new industry data and insights available today.


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