Forecasting Hotel Arrivals and Occupancy
Abstract
Forecasting hotel arrivals and occupancy is an important component in hotel revenue management systems. In this paper we propose time series approach for the arrivals and occupancy forecasting problem. In this approach we simulate the hotel reservations process forward in time. A key step for the faithful emulation of the reservations process is the accurate estimation of its parameters. We propose an approach for the estimation of these parameters from the historical data. We considered as a case study the problem of forecasting room demand for the Ganjali Plaza Hotel, Baku, Azerbaijan. The proposed model gives satisfactory result.
1. Introduction
Forecasting in the hotel industry is very useful for estimating or calculating a variety of factors that can assist management in strategic decision making. Given the perishable nature of tourism services, there exists an important need to obtain accurate forecasts of future business activity (Archer, 1987; Athiyaman & Robertson, 1992).
Certainly, forecasting plays a crucial role in tourism planning both in the short and the long run.
However, from a merely practical point of view, tourism industry is much more interested in getting good predictions in the short-term. Needs in the hospitality, transport and accommodation sectors have become more short-term in focus, and they can change rapidly with changing market demand. Therefore, increasing the accuracy of short-term forecasts is an essential requirement to improve the managerial, operational, and tactical decision-making process especially in the private sector. Because of the large number of existing hotels, any possible improvement in the methodology will amount to potentially very large overall savings.
In recent years there has been rapid growth in the inflow of tourists to Azerbaijan. Declaring 2011 the Year of Tourism in the country has opened up new opportunities for further development in this field. In a modernizing Azerbaijan
Forecasting hotel arrivals and occupancy is an important component in hotel revenue management systems. In this paper we propose time series approach for the arrivals and occupancy forecasting problem. In this approach we simulate the hotel reservations process forward in time. A key step for the faithful emulation of the reservations process is the accurate estimation of its parameters. We propose an approach for the estimation of these parameters from the historical data. We considered as a case study the problem of forecasting room demand for the Ganjali Plaza Hotel, Baku, Azerbaijan. The proposed model gives satisfactory result.
1. Introduction
Forecasting in the hotel industry is very useful for estimating or calculating a variety of factors that can assist management in strategic decision making. Given the perishable nature of tourism services, there exists an important need to obtain accurate forecasts of future business activity (Archer, 1987; Athiyaman & Robertson, 1992).
Certainly, forecasting plays a crucial role in tourism planning both in the short and the long run.
However, from a merely practical point of view, tourism industry is much more interested in getting good predictions in the short-term. Needs in the hospitality, transport and accommodation sectors have become more short-term in focus, and they can change rapidly with changing market demand. Therefore, increasing the accuracy of short-term forecasts is an essential requirement to improve the managerial, operational, and tactical decision-making process especially in the private sector. Because of the large number of existing hotels, any possible improvement in the methodology will amount to potentially very large overall savings.
In recent years there has been rapid growth in the inflow of tourists to Azerbaijan. Declaring 2011 the Year of Tourism in the country has opened up new opportunities for further development in this field. In a modernizing Azerbaijan
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