Group forecasting accuracy in hotels

Yield management helps hotels more profitably manage the capacity of their rooms. Hotels tend to have two types of business: transient and group. Yield management research and systems have been designed for transient business in which the group forecast is taken as given. In this research, forecast data from approximately 90 hotels of a large North American hotel chain were used to determine the accuracy of group forecasts and to identify factors associated with accurate forecasts. Forecasts showed a positive bias and had a mean absolute percentage error (MAPE) of 40% at two months before arrival; 30% at one month before arrival; and 10–15% on the day of arrival. Larger hotels, hotels with a higher dependence on group business, and hotels that update their forecasts frequently during the month before arrival had more accurate forecasts.