Pearson New International Edition International pcl tp indd 1

MANAGING FORECAST DATA
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result in impractical and overly aggressive determinations of room rates (rates
are set too high).
Alternatively, demand forecasts that are consistently and unrealistically too low can
•
lead managers to believe they are performing at levels that are higher than
actual performance levels,
•
undermine the credibility of the forecaster because of the suspicion that actual
variations in forecasts are due to lowballing of forecasts, and
•
result in impractical and underaggressive determinations of room rates (rates
are set too low).
FRONT OFFICE SEMANTICS
Lowballing (forecasts):
Developing forecasts that are unrealistically conservative (low) for the express
purpose of more easily achieving or exceeding them. The practice is most prevalent in hotels that
emphasize achieving or exceeding previously budgeted forecasts.
Experienced FOMs can produce room demand forecasts that will be within 1 per-
cent to 5 percent of actual sales of hotel rooms achieved by the property. To increase
accuracy, many hotels produce an extended forecast of one year (or more), but then alter
those forecasts monthly as new data become available. Although forecasts that are
many months away may be modified only slightly each month, the hotel’s 30-, 60-, and
even 90-day forecasts will become increasingly accurate. Experienced FOMs use the
latest historical data, the most recent current PMS data, and the most up-to-date
future data to fine-tune near-term forecasts. Accurate demand forecasts enable FOMs
to better establish room rates.