Hotel forecasting for independent hotels: start small

Many independent hotels do not forecast at all. They take last year's revenue, add a percentage and call it a plan, or they only react in the final weeks before arrival, when the gaps are already visible. Hotel forecasting sounds like a job for a revenue department with software and a team, but a first version can be built by an owner or general manager, and it gets better every time you check it against reality.

That is the view of Rogier Ensel, owner of RevGen and former group director of revenue at Cycas, where he was responsible for around 45 hotels across Western Europe. He now works with unbranded properties of roughly 10 to 80 rooms, which in his view benefit the most from revenue management. His advice on forecasting is simple: stop treating it as a big rock you have to get over, and just start.

Why hotel forecasting matters for small hotels

In Rogier's experience, forecasting follows structure. Hotel groups, even groups of small hotels, usually forecast because someone asks for it: finance wants to know whether the costs and the rent can be paid, and a CEO wants a consolidated view across the properties. In a family-owned hotel where everyone does everything, nobody asks that question, so the business goes with the flow. A related article looks at revenue management in hotel teams.

He argues those hotels should forecast anyway. A forecast tells you what the coming months will bring and how your costs will be spread. It makes it easier to plan and schedule cleaning and to know how much of it you need. The strongest reason is timing: a forecast for the next two months still lets you steer the end result, while looking back at last month only shows you something you can no longer change.

Start with the market, not with last year plus 10 percent

A common shortcut is the crystal ball forecast: take this year's revenue, add 10 percent for next year and call it a forecast. For Rogier, a budget or forecast process starts with market analysis and market expectations. What will change around your hotel next year that affects what guests are willing to pay?

He gives examples of the questions to ask. Will VAT on hotel stays go up or down? Is a conflict elsewhere making groups cancel more, so that you should expect less group demand? For groups, he says you roughly know per market which rates are realistic, for example around Schiphol versus the centre of Amsterdam, and that knowledge helps you decide whether to accept or decline a request. The same question of what to charge comes up in a related article on vacation rental pricing strategy.

How far ahead you look changes the method. Forecasting the next three months is a different exercise from forecasting next year. A year ahead, other trends are not visible yet, so the big events are your anchor.

“There's a big difference because looking into next year, you only have your events that you can rely on.”

Rogier Ensel, 35:29

Hotel forecasting in three layers

For bigger properties with several segments, Rogier always used to forecast in three layers. The order matters, because what you already hold in the hotel shapes everything you expect on top of it.

• Fixed blocks: contracted allocations, such as crew blocks, that you know will be there.
• Group expectations: how many requests you have, and whether you expect each one to convert.
• Transient: the individual bookings that fill the rest, mostly through channels such as Booking.com and Expedia.

The layers influence each other. If you hold a large number of groups on a certain Saturday in September, your transient ADR expectation for that day should go up as well. In the conversation it is compared to filling a jar: the big balls go in first, then the smaller ones, and transient business is the sand that fills the gaps.

For a 30-room hotel that relies almost entirely on Booking.com and Expedia, hotel forecasting is simpler. It is essentially transient business, the same layer a bigger hotel forecasts on top of its blocks and groups, and it leans more on market trends than on segments.

How to start your first forecast in small steps

Rogier's practical advice for independents is to keep the first step small. Look at individual days and fill in your expectation for each one. If you truly have no idea, look at the rates you are selling for right now and work out what ADR they would produce.

• Fill in the occupancy and ADR you expect for a set of days.
• A month later, compare what you filled in with what actually happened.
• Ask where it went wrong: were you too optimistic on rate, or on occupancy?
• Adjust and do it again, and keep repeating until the gaps shrink.

Experience does not remove that learning curve. Rogier says he has done countless forecasts, yet every new property starts as a new forecast for his team.

“We have the experience of doing it, but not the experience of the actual property.”

Rogier Ensel, 46:53

That is why the review step matters as much as the forecast itself. He recommends a fixed moment, thirty minutes or an hour rather than a full day, to look at the results and plan what to improve next time.

“Regardless if we speak about hospitality or your own behavior, everyone should look back and learn from what happened.”

Rogier Ensel, 39:43

Do not expect perfection either. The idea that a forecast should land within one percent of the final result three or six months before arrival is not realistic, certainly not in a market where nobody really knows what comes next. A good forecast is one that gets closer with every round, because you learn from the gaps.

Budget versus forecast: what is the difference

Many hotels treat the budget and the forecast as separate exercises. Rogier sees little difference between them: in his words, the budget is just a very long-term forecast. Many hotels already forecast 18 months ahead, which means half of next year's budget is in essence already there.

A budget may be ambitious, but in his view it should be ambitious within reach. The frustration starts when a realistic budget is presented and someone asks for 10 percent more without a reason. If your forecast already says the market will not deliver that, you know at the start of the year that you will miss the budget. A related article explains how to turn that budget into hotel KPIs for your team.

Finally, connect the forecast to pricing. Rogier sees revenue management as risk management: the less urgency you have to sell rooms, the less you are forced to drop prices. A forecast gives you that visibility early. You can watch the full conversation for his views on occupancy, ADR and OTA promotions, and find more episodes in The Revenue Playbook series.

Frequently asked questions

What is hotel forecasting?

Hotel forecasting means estimating occupancy, ADR and revenue for future dates, so you can steer prices, staffing and costs before those dates arrive. For a small independent hotel it can start very simply: fill in your expectation for individual days, then compare it with the actual result a month later and adjust.

How do I start a forecast for a small independent hotel?

Start with individual days rather than a full year. Fill in the occupancy and ADR you expect, using your current selling rates if you have no other reference. After a month, compare your numbers with reality, check whether you were too optimistic on rate or on occupancy, and repeat the exercise until the gaps get smaller.

What is the difference between a budget and a forecast?

In the view shared here, a budget is simply a very long-term forecast. It may be ambitious, but it should stay within reach. Adding 10 percent to a realistic budget without a reason only means you know at the start of the year that you will probably miss it, because your forecast already told you so.

How accurate does a hotel forecast need to be?

Expecting a forecast to land within one percent of the final result months before arrival is not realistic, especially when markets are shifting. A useful forecast is one you review regularly, so every round teaches you where you were too optimistic or too careful, and the gap with reality gets smaller over time.