Forecastingis a process, which express an outcome of the business in advance. Forecastingis one of the most important parts of planning strategy. All companiesoperation is based on forecasting but not all hotels have useful forecastingsystems.
Some of the important forecasting techniques, which are used in therevenue management system of the hospitality industry, are Average Approach,Drift Approach, and Time series methods. Forecasting can predict the number ofarrival guests in low or high season to help to set the price or promotion ineach season. Forecasting also can estimate the expenses such as food cost, howmany breakfast meals needed. Oneof benefits of forecasting is that business bases on what has happened in thepast and the company can predict what will happen in the future. By using valueinformation gathered from the past, hotel can change strategies at the righttime or make decisions for the hotel in the future. From that, the hotel willdevelop stronger, operate stably and more profitable.
By implementing regularforecasting activities, hotels will get more outlooks. It can help the hotel tohave a look ahead to change market trends, create a new trend or catch up withtheir competitors. Onthe other hand, Forecasting also has some disadvantages that affect on thebusiness operation. The problem that all businesses faced is wrong prediction.Although business analysts have rigorously gathered data but there are likelyto have a flaw in gathering information or unexpected changes in the marketsuch as sudden drop in consumer demand.
So no matter how carefully analyzed,there is always the risk of inaccurate forecasting. Therefore, hotels shouldnot be overused in the analytical results and forecasts of the future.Contingency plans should be planned to help businesses to be able to adapt tothe sudden change of the market.