How do you predict revenue?

1 Historical data

One of the simplest and most reliable ways to predict revenue is to use historical data from previous periods, such as months, seasons, or years. Historical data can show you the patterns and trends of customer demand, occupancy, average daily rate (ADR), and revenue per available room (RevPAR) for your business. You can use historical data to compare your current performance with past results, identify opportunities and challenges, and adjust your pricing and marketing strategies accordingly. However, historical data alone is not enough to predict revenue, as it does not account for external factors, such as competition, market conditions, or events, that may affect customer behavior and demand.

2 Forecasting models

Another way to predict revenue is to use forecasting models, which are mathematical formulas that use historical data and other variables to estimate future outcomes. Forecasting models can help you project your expected revenue, occupancy, and ADR for different time periods, such as days, weeks, or months. There are different types of forecasting models, such as moving average, exponential smoothing, regression, or time series, that vary in complexity and accuracy. You can use forecasting models to set your revenue goals, allocate your resources, and optimize your pricing and distribution strategies. However, forecasting models have some limitations, such as data quality, assumptions, and uncertainty, that may affect their accuracy and reliability.

3 Revenue management software

Another way to predict revenue is to use revenue management software, which are specialized tools that automate and optimize the revenue management process. Revenue management software can help you collect and analyze data from various sources, such as your property management system, online travel agencies, social media, or market reports, to generate accurate and timely revenue forecasts. Revenue management software can also help you segment your customers, monitor your competitors, and recommend the optimal pricing and distribution strategies for each market segment and channel. Revenue management software can save you time and resources, improve your decision making, and increase your revenue and profitability. However, revenue management software requires some investment, training, and maintenance, and it does not replace human judgment and intuition.

4 Customer feedback

Another way to predict revenue is to use customer feedback, which are the opinions and preferences of your current and potential customers. Customer feedback can help you understand your customers' needs, expectations, and satisfaction levels, as well as their perceptions of your value proposition, quality, and service. You can use customer feedback to improve your product and service offerings, enhance your customer loyalty and retention, and attract new customers. You can collect customer feedback from various sources, such as surveys, reviews, ratings, or social media, and use it to adjust your pricing and marketing strategies accordingly. However, customer feedback may be biased, incomplete, or inconsistent, and it may not reflect the actual behavior and demand of your customers.

5 Market intelligence

Another way to predict revenue is to use market intelligence, which is the information and insights about your competitors, customers, and industry trends. Market intelligence can help you monitor and benchmark your performance against your competitors, identify and anticipate customer needs and preferences, and adapt to the changing market conditions and opportunities. You can use market intelligence to evaluate your strengths and weaknesses, differentiate your value proposition, and create competitive advantages. You can obtain market intelligence from various sources, such as reports, newsletters, websites, or networks, and use it to refine your pricing and marketing strategies accordingly. However, market intelligence may be outdated, inaccurate, or irrelevant, and it may not capture the nuances and dynamics of your specific market segment and channel.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?