The definitive guide to forecasting demand at your hotel with forward-looking search data
With so many factors influencing demand in today's market, it can be challenging to decide on the right course of action when forecasting demand.
A predictive market intelligence solution leverages forward-looking search data, so hoteliers like you can more effectively predict market demand at their hotel.
This article will give you a complete overview of predictive market intelligence and forward-looking search data for the hospitality industry.
So, what exactly is forward-looking search data in the context of the hotel industry?
Simply put, forward-looking search data describes top-of-funnel information that helps you better anticipate future market behaviour in your destination. This is essentially search data that is gathered during the earliest phase of the guest sales journey, when potential guests are still in the ‘dreaming’ or research phase.
By combining this top-of-funnel information, forward-looking data reveals booking intent and provides an accurate overview of unconstrained demand for future dates. A few examples of these higher-funnel data sets are hotel and flight search patterns.
Traditionally, local events, seasonality and even the day of the week have driven demand. As we are all too well aware, the hospitality industry has faced unforeseen events over the past two years, and previous assumptions are not always as certain as they may have been in the past.
Instead of using realised on-the-books (OTB) data and past data for forecasting and pricing strategies, hoteliers can now utilise these new future-facing data sets to make better commercial decisions.
Forward-looking search data can help you to forecast the hotel demand level of your market, even with a vast amount of variables. While all these searches don’t always convert into bookings, when aggregated on a large scale they can help you understand traveller intent.
Forward-looking search data can reveal the length of stays that guests may be interested in, as well as the intended travel dates, and the geographical location where the searches originate from to indicate which source markets possess the highest demand.
Forward-looking search data: an effective indicator of market demand?
Why should hotel commercial teams use forward-looking search data to forecast hotel demand?
Forward-looking search data is a new weapon in a hotelier’s arsenal and holds significant value when used correctly. It enables commercial teams to predict hotel demand more effectively (and further in advance), so hoteliers can plan efficiently and price more profitably.
You can perform above the market by quickly and easily grasping demand shifts, hotel availability and pricing in your market.
Imagine this scenario: while other hoteliers are spending valuable time trying to make sense of (outdated) historical data sets, you have already reacted to changes in hotel demand by targeting the right traveler, at the right time, with the right price.
Armed with insights on the stay pattern and demand origin, you can also create marketing campaigns that target precise dates, LOS, and source country, when guests are still in the inspiration phase of the customer journey.
Ultimately, forward-looking data enables you to identify and seize more revenue opportunities with hotel and flight search data, than your competitors.
But how do you know the forward-looking data you are using to try and capture more revenue is accurate and reliable? Let's dive into the details.
How reliable is forward-looking search data when predicting hotel demand?
Exclusive new research by Lighthouse indicates that there is a positive correlation between flight and hotel search data and hotel-level occupancy.
By evaluating daily, weekly and monthly hotel performance against flight and hotel search data, we observed that high flight and hotel search volumes translate into high levels of market demand. This then results in increased hotel occupancy in the specified market.
The chart below displays a high-demand stay date of 15/06/22, in New York City, where the final occupancy hit 94%.
As you can see from the graph above, market occupancy clearly follows the same pattern as flight searches (red) and hotel searches (yellow).
Searches for 15th June 2022 in New York started to be recorded as early as 365 days prior to arrival date. 170 days prior to arrival date, flight and hotel searches started to surge, whereas market actual occupancy was still pacing at 4%.
How early can forward-looking search data forecast hotel demand?
The lead time between a flight or hotel search and a completed booking varies by destination and season. Flight and hotel searches occur days, weeks, or even months before hotels begin to see any pick-up in reservations.
Access to forward-looking search data provides hoteliers an extended window to revise their commercial strategy early on in the traveler’s booking journey, unlocking previously unseen revenue opportunities and booking more room nights.
For example, research conducted by Lighthouse for stays in London in August 2022, Market Insight recorded:
Flight search window prior to departure at 200 days
Hotel search window prior to arrival month at 150 days
Hotels in London that saw bookings being made for the month of August 2022, in the same month, could see the original signs of demand for these bookings 70 days prior in the flight search data, and 60 days prior in the hotel search data in Market Insight.
From this data, you can also see that flight searches frequently occur before hotel searches, which enhances the visibility you have over consumer behavior much earlier in the booking process with this type of data to hand.
How can you harness the power of forward-looking data at your hotel?
These new data points are easy to understand, but nearly impossible for a hotelier to manually find, collate and analyze. This is why a predictive market intelligence solution, like Market Insight, is needed to do the heavy lifting for you, turning forward-looking search data into actionable insights.
Market Insight is the industry's first predictive market intelligence tool that captures hotel booking intent in real time, to uncover new revenue opportunities with forward looking data.
If you would like to see a predictive market intelligence solution in action, try our FREE interactive demand heatmap, Global Market Insight, which is powered by Market Insight.
Through the aggregation of pre-booking and top-of-funnel data points recovery trends, Global Market Insight combines recovery trends from the past months and a demand outlook for the next 90 days.
How exactly does a predictive market intelligence solution work?
Market Insight features a combination of forward-looking data sources that aggregate the most frequently updated and accurate search data from OTAs, meta searches, global distribution system (GDS) searches, online reviews, ranking, flight search data, events, holidays and alternative lodging inventory data.
The solution is powered by unique AI demand segmentation technology, which turns billions of these forward-looking data points per destination into real-time demand levels, all broken down by sub-location, stay pattern, and hotel types.
Lighting fast, real-time streaming data sources generate immediate alerts on demand changes before anyone else can pick it up.
This speeds up the forecasting process and enables hoteliers to quickly grasp pre-booking market demand at their hotel and take advantage of potential revenue opportunities as demand shifts, with the right pricing and marketing strategies.
What is the value of using a predictive market intelligence solution?
Travel demand has now returned to some semblance of normality for the vast majority of destinations around the world. But competition for bookings has also returned, and in many regions intensified.
Being able to forecast hotel demand effectively in this environment is essential. Having future market demand signals available to you with the click of a button can give you the edge over your compset.
Some hoteliers continue to rely solely on historical data sets to guide their forecasting models, but traditional high and low seasons simply may not be what they used to be. Booking windows have shifted, domestic travel has risen, corporate travel has changed, and the short-term rental market has grown.
This is of particular significance when looking at events. From festivals and conferences to city marathons and the FIFA World Cup, events are once again flourishing. Capitalising on events is a key revenue driver for hoteliers but you are up against fierce competition when bookings start rolling in.
All of your compset are looking to maximise revenue on these dates. Market Insight improves your forecasting accuracy and keeps your finger on the pulse with early demand signals up to 365 days in advance.
By identifying demand patterns across flights and hotel searches on certain dates, before their competitors, they have time to implement a commercial strategy that maximizes hotel revenue, lifts occupancy rates, and sells their hotel rooms at the best possible price. In fact, we carried out an ROI study for Market Insight and found out exactly how much you stand to gain by implementing the solution. Take a look below.
Predictive market intelligence solutions identify forward-looking demand indicators for future dates with real-time, market sensitive data points that better inform hotelier decision making while eliminating risk and ultimately revealing new revenue opportunities.
How can predictive market intelligence be used to improve business performance?
Let's face it: forecasting demand at your hotel has become increasingly complex. This is why predictive market intelligence is becoming an essential part of hotel commercial strategies.
When it comes to deciding whether your hotel needs predictive demand intelligence software, ask yourself this question: are you able to achieve the outcomes below at your hotel, all in just a few clicks?
Hotel forecasting strategy during high demand periods
By recognizing high demand periods ahead of time, you can proactively focus on demand-generating activities that boost their market position and their RevPar.
Only by spotting high demand days early on in the booking cycle can hotels yield favorable rates. In the graph below, produced using Market Insight data, we can see that in the buildup to Valentine’s Day in 2022, Dubai began to see elevated demand a year in advance.
The graph shows how far in advance demand evolved in Dubai, before any pick up in bookings. A full 287 days prior to the date of travel, Market Insight adjusted its prediction to very high demand, but it was only 146 days prior to travel that the market occupancy began to pick up.
Here is how you can optimize your revenue using Market Insight on days with high demand:
Ensure your individual pricing is right, exactly when travelers are looking to stay
Ensure your group pricing is reflective of the demand trends identified in Market Insight
Apply the right LOS restrictions using Market Insight
Ensure your LOS promotions are in line with what travelers are currently searching for
Restrict low rates - e.g. FIT rates, corporate, friends and family
Restrict promotions - e.g. Mobile, point of sale, channel-specific discounts
Restrict low-priced room categories to drive increased revenue in higher-priced room categories
Ensure your website is on parity or offer special offers to drive more direct revenue
Hotel forecasting strategy during normal or low-demand periods
By recognizing low-demand days far in advance, you and your commercial team can proactively capture market share, using a range of tactics that aim to drive bookings during periods of soft demand.
Here is how you can optimize your revenue using Market Insight on days with low demand:
Ensure your individual pricing is right when travelers are looking to stay
Ensure your group pricing is reflective of the demand trends identified in Market Insight
Promotions & Offers
Target feeder markets that drive a high volume of searches with market-specific offers on OTAs, Metasearch sites, GDS and/or Brand.com
Target length of stays that drive a high volume of searches with LOS offers on OTAs, Metasearch sites, GDS and/or Brand.com
Open Mobile rate offers. Tip: On OTAs, you can target specific markets through member deals
Become part of the OTAs' member programs to increase your visibility.
Overbook low room categories and ensure your low rates are available to book (corporate, FIT rates, friends & family, etc.)
Ensure your website is on parity or offer special offers to drive higher direct revenues
Boost your visibility on OTAs, Meta, GDS, search engines in these markets via commission increase or ads
Optimise your advertising spend down to the city level
Reduce costs associated with campaigns in geographical areas of low source demand - eliminating some of the trial-and-error in the process
Develop new partnerships with travel agencies, OTAs and wholesalers located in countries with high volumes of searches
What software can you use together with a predictive market intelligence solution to improve business performance?
In order to fully capitalize on your predictive demand intelligence tool and make the most of location-specific, segmented demand data, you should be integrating it with a rate shopper, business intelligence tool, and even a revenue management system.
Once forecasts indicate demand levels, you can leverage a rate intelligence tool, such as Rate Insight, to ensure you are setting the right price.
You can then look to see which of your strategies are working effectively - be it a pricing, a promotional, a distribution or a marketing strategy - with the help of a business intelligence solution like Revenue Insight.
Integrating a predictive market intelligence solution with an RMS means that forward-looking data will flow directly into your RMS. By combining your RMS hotel occupancy forecast with the market demand forecast in Market Insight, you can discover days with lower and higher demand much earlier than competitors.
What should you look for in a predictive market intelligence solution?
If you are thinking about investing in a predictive demand intelligence solution for your hotel, here is a list of some important considerations you'll likely want to confirm.
Is there a 365-day future demand heat map?
The market demand heat map provides an instant overview of booking intent in your market where demand signals collected from multiple data sources will help you to predict more precisely demand at your hotel.
Segmenting demand by sub-location, geo-search, stay pattern, and accommodation types provides an even more granular view of shifting demand, up to 365 days in advance. The heat map also shows areas of demand and market prices with demand evolution.
Can you see flight searches?
Flight searches enable you to target the right traveler, at the right time by identifying early demand spikes during the travelers’ buying journey.
You can instantly see demand sources, including from GDS searches, for any given day and begin to recognize travelers’ stay patterns, before adjusting your offer.
On average, flight searches occur more than 4 months prior to departure.
On average, hotel searches occur more than 3 months prior to departure.
Can you see traveler stay patterns and trends?
By identifying demand peaks on hotel searches, stemming from GDS and Meta/OTA, you will be able to see significant shifts in lead times or length of stays in real time and adjust your strategies to optimize your revenue.
On average, hotels are booked 7 weeks after flight searches occur.
On average, hotels are booked 3 weeks after hotel searches occur.
Are alternative accommodations included?
The competitive landscape has changed, meaning it has become even more important to know who you are competing with.
By understanding what percentage of hotel-like listings you are competing with for 1,2,3,4+ LOS on any given day, and what price point your hotel is up against, you can adjust your strategy accordingly.
Is there a smart Comp Set?
In the eyes of your prospective customers, who is your competition? A smart Comp Set ensures you’re always positioned against the most relevant Comp Set - a dynamic, industry-first competitor set that changes with market shifts.
It identifies "hotels similar to yours" (e.g. location, review score, star rating and pricing patterns) to provide comparisons on every demand condition so that you can strategically position yourself against your smart Comp Set, compare pricing strategies against your entire competition and never miss out on revenue opportunities.
Do you get real-time alerts?
Real-time alerts allow you to focus on the days that present your biggest revenue opportunities, giving you a competitive advantage to adjust your pricing strategy through an opportunity feed that delivers constant demand indicators, paired with instant alerts.
Is there an OTB integration to give insights into your market performance?
If you can see how your demand and occupancy on-the-books have evolved vs yesterday, 3, 7 or 14 days ago you can proactively take action before the rate becomes too high or too low; open or close promotions; negotiated rates; or adjust other strategies that affect your forecast.
This is certainly not an exhaustive list, but it is a great place to start when considering how a predictive market intelligence solution can add value to your hotel.
Why not take a free trial of Market Insight to see if it’s right for your hotel?
What is the best predictive market intelligence solution for your hotel?
Predictive market intelligence is currently breaking new ground in the hotel industry. Market Insight is the hotel industry’s first real-time, predictive market intelligence solution, featuring the most comprehensive demand data sources. It is suitable for smaller independent properties, all the way through to global chains.
Market Insight uses a combination of machine learning and regression models to marry different demand signals, evaluate the demand impact, and predict the demand level on a particular day. When you break it down further here is what sets Market Insight apart from the rest:
Anticipate future market behavior
With data aggregated from a wide variety of sources, you can see demand evolve before any bookings are made. Monitor any shifts in demand up to 365 days in advance, using market heat maps updated in real-time, segmented by sub-location, stay pattern (e.g. LOS) and accommodation type.
Take action with instant alerts
Instant alerts notify you as soon as demand shifts so that you can get the critical information needed to take advantage of market opportunities and make revenue-generating decisions before your competition is aware of them.
Understand your full market competition
Ensure that you are always positioned competitively against the most relevant Comp Set, with smart Comp Set - the industry-first Comp Set that dynamically adjusts to market conditions.
Market Insight users see who customers considering their property also looked at prior to booking, giving them an unbiased and constantly updated true Comp Set.
Bridge the gaps between commercial teams
Market Insight helps to break down the silos in your organization, enabling all teams to work holistically to achieve business goals.
With access to this forward-looking data, each department can align their strategies efficiently across Revenue, Marketing, and Operations to ensure the entire hotel commercial takes advantage and benefits.