Rolling Forecasts: How to manage future performance, not just predict it

Two Key Factors Shaping Today’s Hotel Performance – Consumer Technology and Revenue Management

Technology has transformed how consumers book and how hotels operate. At the same time, revenue management shifted pricing from margin-based to market-driven. However, this change often leaves hoteliers with less control over profitability. To regain balance, operators must embrace the rolling forecast as a management tool.

One critical area is resource management. Hotels must adjust staffing and costs daily to match occupancy and revenue. For example, overstaffing on a quiet day cannot easily be corrected the next, due to fixed structures and minimum service levels.

A 2011 Expedia survey showed that same-day bookings increased by 28%. Moreover, 65% of mobile bookings were made the same day as check-in. As guests book later, hoteliers face faster market changes and greater uncertainty. Therefore, traditional budgets—or even monthly forecasts—no longer provide enough accuracy.

Accurate daily occupancy and revenue forecasts are essential. They measure monthly performance by comparing actual bookings against forecasts. However, if daily forecasts are off, results look better than they are because negative deviations are hidden by positive ones. This creates a misleading picture of performance.

Daily accuracy impacts both pricing strategy and resource planning. For example, if occupancy is higher than forecast, the hotel may be underpriced and understaffed, losing upselling opportunities. Conversely, if occupancy is lower, the hotel may be overpriced with too much staff scheduled. Only by comparing performance against competitors daily can hotels find the right balance. Consolidated monthly figures, by contrast, hide lost revenue and wasted resources.

Motivation is strongest when targets are realistic and achievable. Budgets, however, quickly become outdated. Therefore, hoteliers need a dynamic and continuous management tool, not a static annual budget.

A New Management Model

To improve performance, managers must consistently answer three key questions:

1. What are this month’s performance targets?
2. Where do we stand against those targets today?
3. What results are expected at month’s end?

Answering these is impossible with outdated budgets. Daily pricing, food purchases, and staffing decisions all impact results. Therefore, hotels need a rolling forecast model to keep up with constant changes.

Embracing the Rolling Forecast

A rolling forecast is a standardized, ongoing process. Each time a month closes, a new month is added. As a result, the company always has an updated 12–13 month outlook. Unlike annual budgets, rolling forecasts respond quickly to changing market conditions.

More hotels, large and small, are adopting this model. It does not mean abandoning annual budgets entirely. However, it does eliminate the costly and time-consuming yearly budget cycle, which often produces unrealistic numbers with little ownership.

Hotels operate in highly uncertain markets. Events constantly affect demand, occupancy, and revenue. Rolling forecasts allow managers to adapt quickly, using operational drivers like sold rooms and revenue to inform decisions.

In addition, rolling forecasts provide a communication platform across the organization. They align managers around facts and priorities, ensuring time is spent on opportunities—not outdated assumptions. As a result, hotels reduce risk and improve control of profitability.

Executing the Roll-Out

Branch managers must take part in rolling forecasts to build ownership and collaboration. The process typically starts with daily occupancy forecasts, including rate, RevPAR, and lodging revenue. Over time, it expands to include conferences, F&B, and other revenue streams.

Forecasts should be updated daily, especially for those practicing systematic revenue management. Focus on the next 30 days and the same period 13 months ahead. This allows managers to anticipate recurring events and plan improvements.

Finally, while spreadsheets can work, modern online solutions are faster, more accurate, and more collaborative. Choose a system that connects food, labor, housekeeping, events, and integrates with property and revenue management systems. Clean data flow ensures precision and maximizes profitability.

Young N. Nguyen is the CEO and Founder of d2o. The company develops performance management methods and software for hotels, cruise lines, and catering businesses. Today, d2o serves more than 400 hotel clients in 15 countries. Learn more at www.d2o.com.

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