Step 4: Project Future Demand and Supply

Step 4: Project Future Demand and Supply

To effectively structure your Length of Stay (LOS) tiers and adjust your benchmark rates, it's essential to project future demand and supply trends within your market/cluster, your property, and your competitors. Follow these steps:

1) Analyze Market Demand

a) Gather and evaluate data that could affect future demand for each LOS tier within your market/cluster, including:

• Sleeping Room Demand: Analyze demand data for the past and future 18 months.
• Historical Transient Demand and Group Production: This data can be reviewed by accommodation length in the Tier Evaluation Report and by LOS tier in the LOA Demand Eye Chart (Detail and Summary reports).
• Comp Set Occupancy Trends: Review your comp set's occupancy trends in the Smith Travel Research Weekday/Weekend STAR and daySTAR reports, if available.

b) Future Demand and Forecast:

• If your property uses the One Yield system, use the following reports:
1. Realized Demand vs.  Last Year: Transient realized demand and forecast, and group bookings for the next 90 days.
2. Forecast Report: Transient bookings, arrivals by LOS, occupancy percentage, group forecast, and constrained forecast for 90 days.
3. Demand Tracking Report (Transient): 90-day transient demand and price turndown data.
4. Sell Strategy Report: Group bookings and forecast, transient demand, price turndowns, and demand factor by room pool for 90 days.
• If you do not use One Yield, refer to:
1. Channel Manager Forecast Detail Report (KR/D report): Tracks booked rooms, estimated revenue, and ADR by LOS tier for 98 days.
2. Channel Manager Forecast Summary Report (KR/S report): Tracks booked rooms, occupancy percentage, revenue, and ADR for 98 days.

c) Review Online Turndowns:

• Use the online turndown system to identify if transient bookings appear unexpectedly low. Analyze whether the issue is due to high rates (price turndowns) or tight restrictions (non-price turndowns).

d) Convention and Event Calendars:

• Assess past 18 months to 3 years and future event calendars for citywide events or special activities.
• Determine their impact on demand and length of stay.

e) Economic Forecasts:

• Analyze market and cluster forecasts, taking into account various demand factors like business growth, consumer confidence, inflation, office occupancy, and changes in airline service or local attractions.

2) Analyze Market Supply

a) Identify competitors entering or exiting the market.
b) Check if any competitors (or your property) are planning or requiring renovations.

3) Compare Demand and Supply Trends

a) Evaluate whether market demand is growing faster than supply or vice versa:

• Growing Demand > Supply: Potential opportunity to raise rates.
• Growing Supply > Demand: Indicates competitive risks, requiring rate adjustments.

b) Consider factors influencing seasonal demand shifts such as special events, travel patterns, and holidays.

4) Project Market/Cluster Demand and Supply

a) Use your analysis to forecast demand and supply growth for your market/cluster over the next six months (or longer).

5) Analyze Property Demand and Supply Trends

a) Review property-specific demand data, such as the SEG8 Report, comparing transient and group room nights on the books versus last year.

• Analyze whether you’re ahead or behind previous year’s bookings.

b) Review your property's three-period forecast, focusing on transient and group pace, contracts, and overall performance against forecasted goals. Adjust your benchmark rates accordingly.

c) Examine group block information to anticipate future group compression that could impact room supply.

d) Validate your forecast against historical production to ensure its accuracy.

6) Analyze Competitors' Demand and Supply

a) Use data from your competitive shop calls to evaluate competitors’ rates, LOS tier changes, and any shifts in demand and supply at their properties.

• Compare this information with your own demand/supply projections.

Final Note:

Do not make immediate rate adjustments after projecting demand and supply. Summarize insights from all four steps before finalizing any changes to your benchmark rates.