PITTSBURGH—The expansion of the hospitality industry, from new-builds to renovations and rebrands, is dependent on investor capital, and those investors expect a return—which is where forecasting comes in.
“Forecasts provide extended vision to anticipate financial results on both top and bottom line, enabling hotels to make operational adjustments,” said Brian Cornell, chief information officer for Concord Hospitality. “Owners have a heightened expectation that technologically sophisticated, high-performing operators have the awareness, tools and resources to aggressively target additional top-line revenue opportunities if a shortfall is anticipated. They also expect operators to proactively manage operational expenses and labor costs to protect profit flow-through.”
Concord Hospitality uses Aptech Computer Systems’ Targetvue hotel forecasting and budgeting solution to do this for the 90-plus properties it manages for multiple entities.
“Creating forecasts for multiple properties is a complex process,” said Mark T. Pate Sr., assistant controller/IT director of Highpointe Hotel Corporation. “In the past, Highpointe used Excel to manually build forecasts, but we were not satisfied with the process.”
When one of its ownership groups required line-item hotel forecasting, the company automated its hotel forecasting and budget processes, also using Targetvue. “We felt it was impossible with Excel spreadsheets,” he said. “They also wanted to know where the hotel would finish its year at any point in time on a line-by-line basis. This is nearly impossible to keep current with a spreadsheet. We do this today with an automated hotel forecasting system that lets us manage by the numbers to optimize profitability. It also delivers the reporting our owners want.”
Concord Hospitality uses its forecasting system to generate business drivers as an operations roadmap. “A driver is a specific measurement we create in Targetvue, such as percentage of revenue from a market segment or the number of housekeeping hours per room,” said Cornell. “For example, we use the cost of per-occupied-room expenses as a driver. Our system automatically applies the updated top-line forecast against the driver’s actual expenses. The system self-maintains the strategy we establish and reports daily. This enables us to manage a property effectively.”
Accurate forecasting also demonstrates value with its impact on revenue generation for hotels. “When a property has a continuous performance-based forecast for the coming period it can adjust rates and marketing to meet revenue requirements,” said Jill Wilder, Aptech’s VP. “By refining rates and offering promotions, an operator can increase occupancy and overall revenue for a better finish to the fiscal year.”
Forecasting’s value is in more than accuracy. An automated forecast that gets daily updated performance data from a property is like a continuous pulse meter that compares actuals against plan, Wilder said. This living forecast projects today’s numbers into the future, giving operators the ability to plan day by day for the greatest profitability.
Many operators also use Targetvue to compare the current period and forecast to the same period last year. “This is valuable because operators can easily see trends that created last year’s performance,” she said. “Imagine if your forecast dictates a certain ADR is required to meet plan, but this time last year occupancy trended downward. An experienced manager might meet with the revenue manager and sales team to adjust rates, create short-term promotions, or call group prospects to generate business. A comprehensive forecasting system will include last year’s line item metrics for specific market segment performance. This also gives the sales team guidance on which markets have the highest revenue potential.”
Pate sees the operational value of automated forecasting. “Our team was not able to efficiently create solid forecasts for all properties. With Targetvue, property budgets reside on our server and are accessed by property managers online,” he said. “We have greater confidence in our numbers because the formulas cannot be overwritten.”
Now each Highpointe property works on its own forecast and is easily reviewed by the corporate executives. “Besides being more efficient and more accurate, there is one version of the truth. Our managers have current, more accurate forecasts on which to base their business strategy,” he said.
In addition to profitability, owners also want timely accurate forecasts on which to base their investment plans and cash flow. “Forecast accuracy is key for Concord to manage owner expectations,” said Cornell. “Targetvue’s reports are flexible and let us customize information for each customer. Automated budgeting combined with our business intelligence system gives us the ability to provide daily hotel forecasting that helps property ownership see further ahead and plan more accurately for the future.” HB