What are the best practices for forecasting travel expenses for a highly seasonal business?

1 Understand your seasonality patterns

The first step in forecasting travel expenses is to identify and analyze your seasonality patterns. You need to know when your demand and supply are highest and lowest, and how they affect your costs and revenues. For example, if you run a ski resort, you may have higher demand and higher expenses in winter than in summer. You can use historical data, market research, and industry trends to understand your seasonality patterns and how they vary by location, segment, and product.

2 Use multiple methods and scenarios

The second step in forecasting travel expenses is to use multiple methods and scenarios to estimate your future costs and revenues. You can use different techniques, such as trend analysis, regression analysis, or moving averages, to project your travel expenses based on your historical data and seasonality patterns. You can also use different scenarios, such as best-case, worst-case, and expected-case, to account for the uncertainty and volatility of the travel and tourism industry. By using multiple methods and scenarios, you can improve the accuracy and reliability of your forecasts and prepare for different outcomes.

3 Adjust your forecasts regularly

The third step in forecasting travel expenses is to adjust your forecasts regularly based on the changing conditions and new information. You need to monitor your actual performance and compare it with your forecasts, and identify any gaps or deviations. You also need to update your forecasts with the latest data, trends, and events that may affect your demand and supply. For example, if there is a pandemic, a natural disaster, or a political crisis that impacts the travel and tourism industry, you need to revise your forecasts accordingly. By adjusting your forecasts regularly, you can keep them relevant and realistic and avoid any surprises or shocks.

4 Align your forecasts with your goals and strategies

The fourth step in forecasting travel expenses is to align your forecasts with your goals and strategies. You need to ensure that your forecasts support your business objectives and reflect your strategic decisions. For example, if you want to expand your market share, launch a new product, or enter a new segment, you need to factor in the additional costs and revenues that these actions will generate. You also need to communicate your forecasts clearly and consistently with your stakeholders, such as your employees, customers, suppliers, and investors, and get their feedback and input. By aligning your forecasts with your goals and strategies, you can use them as a tool for planning and decision-making.

5 Evaluate your forecasting performance

The fifth step in forecasting travel expenses is to evaluate your forecasting performance and identify areas for improvement. You need to measure how accurate, reliable, and useful your forecasts are, and how they affect your business performance. You can use metrics, such as mean absolute percentage error, forecast bias, or forecast value added, to assess your forecasting performance and compare it with your benchmarks or industry standards. You can also use feedback, surveys, or interviews to gather qualitative information and insights from your stakeholders. By evaluating your forecasting performance, you can learn from your mistakes and successes and improve your forecasting skills and processes.

6 Use forecasting software and tools

The sixth step in forecasting travel expenses is to use forecasting software and tools that can help you automate, simplify, and enhance your forecasting process. You can use software and tools that can collect, analyze, and visualize your data, apply different methods and scenarios, adjust your forecasts automatically, align your forecasts with your goals and strategies, and evaluate your forecasting performance. You can also use software and tools that can integrate with your other systems, such as your accounting, booking, or inventory systems, and provide you with real-time and accurate information. By using forecasting software and tools, you can save time and resources , reduce errors and risks, and increase efficiency and effectiveness.

7 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?