Forecasting Hotel Arrivals and Occupancy

Topics: Time series, Hotel, Time series analysis Pages: 9 (2300 words) Published: November 9, 2012

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 construction of hotel complexes, a high level of service has become widespread. The number of hotels in Azerbaijan is growing every year as the number of foreign tourists visiting the country. In 2002, the country had 70 hotels and hotel complexes, and visiting tourists were just over 800 thousand, now number over 500 hotels, and tourists - more than half a million. According to the Ministry of Culture and Tourism 40 new hotels is currently under construction in Azerbaijan. Today, the hotel fund of the republic consists of 31 thousand places against 9000 in 2002. As a result of the state program of tourism development up to 2016 capacity of hotels and recreation areas should be increased to 150 thousand. At the present time in Baku, mainly the business -and congress tourism is developed, which participants are only five-star hotels. Therefore in Baku there is a lack of hotels class "three or four" stars with reasonable prices and good service. Ministry of Culture and Tourism of Azerbaijan is preparing a special offer for construction in the city hotels of different categories. There are currently functioning in Azerbaijan 499 hotels and hotel-type facilities. 312 of them operate on the basis of licenses issued by the Ministry of Culture and Tourism, and 187 - is illegal. Overall, about 80 hotels and facilities for recreation in the country have received the category of "star". Today in Azerbaijan exist 17 five-star hotels, 13 of them - in Baku. 34 four-star hotels, 21 of which are located in Baku, the rest - in the regions. Of the 27 three-star hotel 18 is also located in Baku. In addition the republic has 6 two-star hotels. From five-star hotels the most popular are The Boutique Palace Hotel, Hilton Baku, Excelsior Hotel Baku, Grand Hotel Europe Baku, Palace Hotel Baku and others, among four-star hotels - The Ganjali Plaza Hotel, Riviera Hotel Baku, Austin Hotel Baku, Ramada Baku, Hyatt Regency Baku, etc., three-star hotels - Sea Port Hotel, Sun Rise Hotel Baku,...

References: 1. Brockwell, P.J. and Davis, R.A. (2002), Introduction To Time Series And
Forecasting, 2nd Edition, Springer-Verlag, New York.
2. Andrawis, R., Atiya, A. F., 2009. A new Bayesian formulation for Holt’s
exponential smoothing
3. Andrew, W., Cranage, D., Lee, C., 1990. Forecasting hotel occupancy rates
with time series models: an empirical analysis
4. Chow, W. S., Shyu, J.-C., Wang, K.-C., 1998. Developing a forecast sys-
tem for hotel occupancy rate using integrated ARIMA models
5. Franses, P. H., 1998. Time Series Models for Business and Economic Fore-
6. Gardner, E. S., 2006. Exponential smoothing: The state of the art Part II.
7. Hyndman, R. J., Koehler, A. B., Ord, J. K., 2008. Forecasting with Exponen-
tial Smoothing: The State Space Approach
8. Kimes, S. E., 1999. Group forecasting accuracy for hotels. Journal of the
Operational Research Society 50, 1104–1110.
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Forecasting Essay
  • Forecasting Essay
  • forecasting Essay
  • Forecasting Essay
  • forecasting Essay
  • Forecasting for Radisson Hotels Research Paper
  • Forecasting Essay
  • Qualitative Forecasting Essay

Become a StudyMode Member

Sign Up - It's Free