Pearson New International Edition International pcl tp indd 1

SECTION REVIEW AND DISCUSSION QUESTIONS
Section Objective:
To introduce the relationship between room demand forecasts
and pricing and note the need to evaluate the effectiveness of the demand fore-
casting process.
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The FOM in Action: A Solution
MANAGING FORECAST DATA
Section Summary:
A current topic of discussion in the hotel industry is whether
hotel pricing should maximize revenue per available room (RevPar) or gross oper-
ating profit per available room (GoPar). Both have useful attributes, but RevPar
addresses issues that are more within the control of the FOM. Today, as never
before, an FOM can make pricing decisions and make them known almost instant-
ly by use of the Web and e-mail. Accurate forecasts of room demand provide the
information necessary to make decisions that can be adjusted on an as-needed
basis to achieve positive impacts on RevPar.
There are several disadvantages to room demand forecasts that are implausi-
bly too high or unrealistically too low. FOMs should use PMS data along with their
own experience to produce demand forecasts that are as accurate as possible.
They can do so by using the latest historical data, the most recent current PMS
data, and the most up-to-date future data to fine-tune near-term forecasts.