What are the best practices for forecasting occupancy rates?

2 Consider external factors

Another factor that can influence your occupancy rates is the external environment, such as the economy, the demographics, the regulations, and the events. For example, if there is a recession, a pandemic, or a natural disaster, your occupancy rates may decline due to lower demand, travel restrictions, or safety concerns. On the other hand, if there is a boom, a festival, or a sports event, your occupancy rates may increase due to higher demand, tourism, or publicity. You should monitor these factors and adjust your forecasts accordingly.

3 Use forecasting methods

When forecasting occupancy rates, there are various methods to choose from, depending on the level of complexity and accuracy required. For example, the simple average method calculates the average occupancy rate of a previous period and uses it as the forecast for the next period, though it does not account for variations or trends. Another option is moving average, which calculates the average occupancy rate of a number of previous periods and uses it as the forecast for the next period. This is more responsive to changes, but it still ignores trends and seasonality. Exponential smoothing is a more sophisticated and flexible approach, assigning different weights to the previous occupancy rates and using them to calculate the forecast for the next period. Lastly, regression uses a mathematical equation to relate the occupancy rate to one or more variables such as time, price, or demand; though this is more accurate and predictive, it requires more data and assumptions.

4 Evaluate and update your forecasts

The last step to forecast your occupancy rates is to evaluate and update your forecasts regularly. You should compare your actual occupancy rates with your forecasted ones and measure the accuracy and error of your forecasts. You should also review your assumptions and methods and make adjustments if needed. You should update your forecasts as new data and information become available and communicate your forecasts to your stakeholders and team members.

Forecasting occupancy rates is not an exact science, but it is a valuable skill that can help you optimize your property management. By following these best practices, you can improve your forecasting performance and make better decisions for your property.