Inside Hotel Forecasting (2024)

Hotel owners and managers must operate on two levels simultaneously: the now and the future. Each day, they need to ensure the hotel is properly staffed and stocked and ready to receive and service guests. At the same time, they’re planning and preparing to do it all over again tomorrow, the next week and the next several months — ideally, at a profit. Hotel forecasts are the starting point for managing those future operations and financial results. If you already own a hotel or are planning to open or invest in one, it’s critical to have sound hotel forecasts. This article explores the benefits hotel forecasts bring, describes the process and challenges involved in creating them and offers best practices to help make forecasting easier and more accurate.

What Is Hotel Forecasting?

Hotel forecasts are financial and operating documents that outline what is likely to happen to a hotel business in the future. It’s a detailed economic prediction, showing expected commercial activity, revenue, expenses and profits (or losses). Forecasts are vital tools for guiding hotel management in their day-to-day operating and financial decisions, such as scheduling staff and making better-informed plans for the future — for example, whether to build more rooms. A hotel forecast should be regularly updated using the most current trends and data to reflect what is likely or expected to happen, unlike a static budget (which represents the hotel’s planned results). Hotel forecasts have three primary components: a revenue forecast, operating forecast and financial forecast. When done well, the three components synchronize, serving as a fiscal roadmap that guides hotel managers in navigating through periods of smooth operations and alerts them to upcoming twists and turns in the road.

Key Takeaways

• Hotel forecasts show the most current predictions of likely financial and operating activity for a future period, which is valuable to internal management and external stakeholders.
• Forecasts are vital to help maximize profitability and to optimally serve guests.
• Because of endemic industry challenges, including finite inventory, seasonality and traveler preferences, creating accurate forecasts requires a good deal of data analysis.
• The forecasting process is methodical and continuous and is best facilitated by technology that features data synchronization, business analytics and scenario revisions.

Hotel Forecasting Explained

Forecasts are dynamic estimates of how a business will likely perform in the future. Because of all the unknowns involved in predicting the future, forecasting demands both art and science, as it mixes historical company and market data with predictions of future economic conditions. While all types of businesses benefit from forecasts, these documents are especially critical to hoteliers, who are perpetually challenged to maximize value from their limited and perishable room rental inventory, which is a hotel’s primary source of revenue. Revenue forecasts focus on this issue by estimating future demand. The operating forecast component flows from the revenue forecast, helping hotel managers determine the resources needed to fulfill the expected revenue. And the financial forecast puts all the pieces together to show overall financial results. Considering all the moving parts, hotel forecasting requires quantitative data analysis, thorough knowledge of qualitative variables and industry insights.

Benefits of Creating a Hotel Forecast

Hotel forecasts provide value to various stakeholders and are an important part of hospitality financial management. Hotel owners, managers, administrators and their financial teams use forecasts to help manage day-to-day operations and the business’s profitability. Lenders rely on forecasts when assessing a hotel’s creditworthiness, and hotel investors review forecasts when contemplating their potential returns on investment. Here’s a rundown of the key ways hotel forecasts help hoteliers effectively manage their business.

Estimate Future Profitability

A hotel forecast shows the likely profitability for a future period. Its purpose is to extend a business leader’s line of sight so that they can steer the organization toward success — and toward maximizing profit. To achieve this, forecasts typically show revenue, expenses and profitability for a fixed 12-month period or on a 12-month rolling basis.

Plan Revenue Boosting Strategies

Because a forecast shows expected revenue for future periods, it gives advanced warning when business is predicted to be lower than the hotel’s goals. This benefits hotel managers by providing time to develop and implement plans to increase revenue, such as marketing campaigns and promotions.

Control Periods of High and Low Demand

Hotel room inventory is finite, while customer demand can be unpredictable. Forecasts can identify periods where supply and demand are expected to be out of balance and adjust accordingly. When room inventory is greater than expected demand, revenue boosting strategies may be deployed to boost demand, or cost reduction plans might be put into play to protect profitability. On the flip side, analyzing whether periods of higher demand than available inventory are temporary or persistent can inform hotel management’s long-term plans.

Predict Resource Levels

Many hotels operate 24 hours a day, 365 days a year. It can be challenging to ensure that staff and supplies remain adequate to support the services that underpin a hotel’s revenue. An operating forecast that is aligned with the revenue forecast helps hotel managers predict and schedule the right level of resources to serve guests, without overspending.

Optimize Inventory and Pricing Strategies

Unsold room inventory represents lost revenue that can’t be recovered. Hotels use dynamic pricing to maximize revenue, similar to the airline industry. This approach means that hoteliers change room rates based on demand factors, such as seasonality, occupancy and local events, rather than charging a consistent rate. Forecasts identify when it might be appropriate to increase or decrease prices based on expected demand, helping hoteliers optimize their inventory for the highest price.

Identify Profitable Market Segments

Many hotels generate revenue from activities other than room rentals, such as room service, conferences, on-site restaurants and bars, valet parking, vending machines, spa and massage services, gift shops, in-room minibars and movie rentals. In fact, some hotels generate up to half of their revenue from these sources. Forecasts can help hoteliers identify whether these ancillary services are likely to be profitable or drain resources. This information helps managers decide whether to expand services, adjust operations to increase profitability or intentionally continue to offer a service at a loss to support room revenue.

Another way forecasts help identify profitable market segments is by looking at the types of customers who frequent the hotel and how they do business. Examples include corporate and individual customers who book directly, via corporate travel or using online booking sites. Each of these segments has different room rates and spending patterns and contribute differently to the hotel’s profitability. Tracking and forecasting these segments individually helps identify which customer types are likely to be profitable.

Implement Measures to Improve the Guest Experience

Providing the best possible guest experience is how hotels protect their brand and drive repeat and referral business. There are many ways to improve the guest experience, such as providing complimentary services and upgrades, but most have a cost attached. Even softer approaches, including personalized service and communication, can increase costs because they may require additional or upskilled staff. Having an updated, accurate forecast helps hotel management understand the hotel’s likely profitability, so they can allocate resources wisely. Otherwise, they might unknowingly commit spending on guest experience that ends up harming the bottom line.

Help Define Clear Key Performance Indicators (KPIs)

The hotel industry uses a plethora of KPIs to monitor performance and track progress toward strategic and operational goals. Some hotel-specific KPIs focus on top-line revenue goals, such as revenue per available room (RevPAR), occupancy rate and total revenue per available room (TRevPAR). Other KPIs measure profitability, such as gross operating profit per available room (GOPPAR) and labor cost percentage. All of these metrics are best viewed comparatively or over time. Forecasted KPIs show what a hotel’s performance is likely to be in the future, which gives managers helpful context when comparing KPIs from prior periods or from budgets and industry benchmarks.

Identify Potential New Revenue Streams and Adjust

Preparing a forecast forces hotel managers to think about the future. When forecasts predict that results might vary from budgeted plans or past experiences, it signals management to determine why and to act on that information. For example, if room rentals are forecasted to underperform the budgeted levels, yet hotel events bookings are booming, management may redirect marketing toward accelerating the events business — in other words, “lean into” the strength of events. Alternatively, if forecasted revenue from in-room movie rentals is dwindling, management might encourage switching to different entertainment options, such as renting gaming consoles instead.

Hotel Forecasting Challenges

Forecasting is inherently challenging. Hotel forecasting adds a layer of industry-specific challenges that make forecasting demand even more difficult. Some of these factors are more cyclic and predictable than others, such as seasonality and macroeconomic conditions. Others, such as changing customer preferences, are less likely to fit into neat trend lines, so they require a keen eye to spot. Capturing the right data in hotel forecasting models can help overcome the following challenges.

Seasonality

Many hotels experience periods of high and low demand due to seasonality. Accurately forecasting seasonal spikes (and troughs) is especially critical because these periods can make or break many hotels’ annual results. Hoteliers rely on the level and timing of seasonality indicated in a hotel’s forecast to manage related operational fluctuations while continuing to provide a positive guest experience. As crucial as it is to accurately forecast for the high season, it’s equally important to forecast for the off-season, which brings a different set of operational and financial pressures. Forecasting the timing of seasonality is less difficult when it is tied to holidays or specific events and more complex if correlated with something else, such as weather.

Economic Conditions

Economic conditions, at both the macroeconomic and consumer levels, have a significant impact on the hotel industry. While it’s important to consider these conditions in the forecast, predicting them can be a challenge. Industry studies indicate that changes in U.S. gross domestic product, employment rates and inflation and interest rates usually correlate to changes in forecasted demand for lodging. For consumers, personal income, exchange rates and hotel prices are economic conditions that impact demand and are also complex but necessary variables to consider when developing hotel forecasts.

Competition

Hotels face several types of competitive challenges that need to be considered when developing a forecast. Changes in competitor prices or offerings might cause a hotel to alter its forecasted rates or make different occupancy assumptions. Additionally, when new competitors enter the locality, such as timeshares, owner rentals or guesthouses, market share assumptions in the forecast can become inaccurate. Yet another challenge arises when competing destinations suddenly become trendy, making historical demand analyses less relevant and, therefore, forecasts less reliable.

Unexpected Events

Sometimes you just don’t know what you don’t know. Even the best hotel forecasts can become irrelevant when unexpected events occur. Political unrest, weather events or global pandemics are gamechangers for forecasts. However, having a good forecast process in place means that a hotel can quickly update their forecasts and reset for the future.

Changing Traveler Preferences

Customer travel preferences are always changing, which complicates hotel forecasting because changing preferences can alter revenue, cost and profitability forecasts. Sometimes travel preferences change abruptly, requiring wholesale forecast changes, such as when a destination becomes popular or falls out of favor. Other times, changes happen subtly and can be uncovered by data analysis and reflected in forecast updates, such as reservation lead times becoming shorter. Additionally, preference changes that impact costs, such as heighted post-pandemic cleaning standards, must be included in forecasts because they impact profitability.

Data Accuracy

Predicting what is likely to happen in the future is a hard enough task, but trying to build an accurate forecast from shoddy data presents a particularly painful challenge. Bad data leads to inaccurate forecasts, which can mislead business managers. Data accuracy is a common concern for hotels of all sizes. Large hotels and hotel groups may use multiple property management systems that aren’t adequately integrated with their various financial systems, which also may not be using a consistent, standardized chart of accounts. Small hotels, meanwhile, may rely on error-prone manual systems or generic software not tailored to the data needs of a hotel.

Hotel Forecasting Models

When choosing the hotel forecasting model that best fits a business, it’s helpful to keep a few factors in mind. First, determine what the forecast will be used for, and by whom. Then consider the resources available for the forecasting process, including the people, software and data. Additionally, consider whether the hotel forecast will be fixed or rolling and how often it will be updated. Depending on the answers to such questions, determine which of the following forecasting models is best for the business.

Basic Hotel Forecasting

Forecasting is always tricky because of the many unknowns, so it may be helpful to start with a basic approach. This means relying on a hotel’s own historical data to identify trends and extrapolate them into the future. Focusing on only a few KPIs that are particularly meaningful and available can keep the exercise manageable. If the purpose of the forecast is financial, then consider broad metrics that measure revenue, such as average daily rate (ADR), and profitability, such as GOPPAR. If the objective is to better manage operations, then other KPIs, such as rooms available or staff productivity statistics, might be more helpful. Figuring out the rest of the forecast can be done using basic calculations, including percentage of sales, or incrementally increasing the prior year’s actual results.

Advanced Hotel Forecasting

With strong data, hotels can upgrade to a more advanced forecasting model. This approach involves creating the three different forecasts — revenue, operating and financial — and expanding the dataset beyond the hotel’s historical data. Advanced forecasts factor in external data about the economy, industry and competitors and prepare each of the three forecasts for every revenue stream — for example, analyzing and forecasting the room rental business separate from the hotel’s restaurant. In advanced forecasting, the revenue forecasts might be prepared according to customer segment, meaning by customer booking and travel habits, such as corporate bookings, group bookings and individual stays. Advanced forecasts tend to be more accurate than basic forecasts because of their granularity and, therefore, are more useful. But they are much more time consuming to prepare than basic forecasts.

Short-Term Forecasting

Taking a short-term approach to forecasting means focusing more intensely on upcoming time periods, rather than farther down the road. For hotels, this can mean that revenue demand forecasting is concentrated on advanced bookings for the next several weeks. A short-term forecasting approach is especially useful for operating issues, such as scheduling staff and ordering supplies.

Long-Term Forecasting

Forecasts that look beyond the current year are referred to as long term. These forecasts can extend out three to five years and often accompany a hotel’s strategic business plan. Typically, large hotels and hotel groups have the longest forecast ranges, while small hotels tend toward a shorter time horizon, even for their long-term forecasts. Because uncertainty increases with the length of a forecast, long-term forecasts tend to be prepared using more quantitative data, combining hotel-specific information and data about the industry as a whole. The trends that emerge from the data are then adjusted to account for large-scale anticipated changes, such as capital projects and offering upgrades like the launch of a hotel spa. The longer the range, the less accurate the forecast tends to be, so long-term forecasts require regular updating.

Hotel Forecasting Process

The forecasting process for hotels is similar to the steps followed in other industries. It begins with collecting and organizing data, moves on to calculating and analyzing that data and ends with review and refinement of the resulting forecast. It’s also important to note that forecasts are constantly updated with current information, so the process is never really “over.” Here are the key steps for creating a hotel forecast.

Data Collection

A data-driven forecast has a better chance of being accurate and useful than when business managers build forecasts based on their knowledge and experience alone. This is especially true when both quantitative and qualitative data are collected and analyzed. Therefore, it’s unsurprising that the first steps in the hotel forecasting process involve data collection.

• Gather past performance data. Extract the right historical data from the hotel’s systems, such as occupancy rates, ADR and expense data. Include multiple reporting periods — as many as possible (or reasonable) — so that any subsequent analysis is better able to identify trends and patterns.
• Collect relevant external data. Given the correlation between hotel performance and economic indicators, it’s important to gather the most current market outlook data. Additionally, qualitative data, such as industry expert opinions and customer anecdotes, can add context that factors into forecasters’ assumptions.

Data Cleaning and Preparation

The old saying “garbage in, garbage out” is particularly relevant when it comes to data used for forecasting. Extending faulty trends can be detrimental. Verifying that data is flowing properly between management systems, and then adding a layer of quality control, can ensure that forecasts are built on the most solid foundation possible.

• Determine if there are any gaps. Gaps in data occur for a variety of reasons. Perhaps systems changed over time, and historical data wasn’t brought over to the current system or was corrupted in the migration. Additionally, be aware of any potential data gaps from systems that aren’t automatically integrated and require manual intervention.
• Identify and manage any outliers. Once all the data is collected, it’s important to determine if there are unusual or specific items that could skew trending or measurement. For example, a single, large non-recurring event, like a one-time conference, should be removed before the data is used to create a forecast for the next year.
• Segregate data based on relevant categories. Advanced forecasts should segregate data for each revenue stream and market segment for independent analysis. This approach usually results in a far more accurate forecast than viewing all data as one category. But this can only be done if the business is able to separate all its operating data and financial activity cleanly and accurately by the relevant segments. Doing so can be cumbersome and error prone if attempted manually — and can even become messy with automated systems if they don’t have consistent mapping for the different revenue centers.

Choosing a Forecasting Method

Choosing a forecast method entails a few different decisions. First, determine whether a basic or advanced forecasting approach best fits the hotel’s objectives and resources. Identify the length of time to be forecasted and whether the objectives will be best served with a fixed or rolling forecast. Then consider different forecasting methods for extrapolating the data within the forecast, such as straight line, moving average or single or multiple regression analyses. Those are listed in order of execution difficulty, with straight line being the simplest (and easiest) to execute.

Generate the Forecast

At this point in the process, you can draft a forecast. At minimum, the forecast documents should include two financial statements: an income statement (P&L) and a cash flow statement. More advanced forecasts should also have a revenue forecast, operating forecast and all the supporting details.

• Run the model to produce the forecast. Put all the pieces together to create the forecast. Often, forecasters create multiple scenarios for managers’ consideration by starting with a base forecast and then adjusting it to reflect changes in the underlying assumptions. For example, they might rerun the model to produce multiple scenarios that assess the potential effects of an economic recession.
• Understand what the forecast numbers mean for hotel performance. Take a step back and challenge whether the numbers all make sense in relation to each other. Are the volume/pricing/occupancy assumptions working together properly? Do the forecasted KPIs make sense? How does the forecast relate to the hotel’s goals, and is it sustainable?

Review and Adjust the Forecast

Forecasts are dynamic. Since they are meant to show what is likely to happen, it’s important to keep them current. In the fixed-forecast approach, forecasters overwrite predictions with actual results as they occur, so that a full-year forecast becomes a mix of actual and forecasted periods, with the latter being re-analyzed based on a comparison of the actuals and their original forecasts. Rolling forecasts are adjusted by dropping a period when it actualizes and adding an additional forecast period on the future, and are also reassessed in light of what actually happened so far.

• Regularly review and update forecasts. Forecasts should be updated on a regular schedule. At a minimum, they should be updated as reporting periods are actualized, but some hotels choose to update more often, such as weekly or even daily. In addition, forecasts should be reviewed to test whether the embedded assumptions and estimates still hold based on actual results, and then adjusted accordingly.
• Adjust as necessary based on new data or changes. Off-cycle forecast updates can be done at any time if new information comes to light that could change the expected results. Such updates ensure that hotel managers are working with the most up-to-date forecasts. For example, it may be appropriate to adjust forecasted occupancy rates if a neighboring, competitive hotel goes out of business, or if an airline adds service to the area.

Apply the Forecast to Business Decisions

The primary purpose of forecasts is to help guide management as they make forward-looking decisions. Together with other financial documents, such as budgets, the most current forecast should be applied to business decisions.

• Use the forecast to inform operating and strategic decisions. The forecast can help guide operating decisions, such as setting prices and timing marketing and promotion efforts. It also can help managers determine staffing needs and make a schedule, based on expected sales activity. From a strategic perspective, the forecast might show that the hotel restaurant is likely to be unprofitable for the year, challenging management to decide whether to keep it open.
• Compare actual results with forecasted results. This is an important step in two ways. Regularly analyzing variances between forecasts and actuals can uncover the reason why results weren’t as expected. The reason may prompt a necessary operating adjustment to bring results back in line, or suggest changes in the forecast assumptions going forward. For example, investigating why the actual occupancy rate for a period was 55% rather than 52%, as forecasted, may uncover that the new advertising campaign is working better at driving room sales than anticipated, or that the forecast assumptions improperly excluded room rentals from a particular sales channel.

Continual Improvements

Like the forecasts themselves, the forecasting process should be continually updated and improved.

• Analyze the accuracy of past forecasts. Compare different forecast iterations to understand their accuracy at different points in time. This means creating a set of metrics about the forecast itself. It’s typical for forecasts to be more accurate in the short-term and become less so for periods further into the future. Identifying a percentage of accuracy at, say, 30, 60, 90 and 120 days can give a hotel manager a feel for the potential error in a forecast. Ideally, analyzing the accuracy of past forecasts can help make new forecasts more accurate for periods farther into the future.
• Use insights from the post-forecast analysis to improve the forecasting process. Try to improve the forecasting process in any areas that are consistently less accurate than others. Typically, this means getting more or better internal and market data, embracing more analytics and leveraging automation technology.

Hotel Forecasting Best Practices

If you’re new to forecasting or new to creating forecasts in the hotel industry, there are several best practices that can help make the process more effective. For example, it’s essential to become familiar with guidelines in the Uniform System of Accounts for the Lodging Industry (USALI), which includes standardized accounting classifications, industry terminology and best practices for presentation of financial information. Here are five other useful practices.

Monitor Market Trends

Stay current on what’s going on in the market. This not only can improve the forecast, but it can also increase your understanding of changes in the business. Monitor industry reports and macroeconomic indicators to be aware of developments that may create business opportunities or challenges that could impact the revenue forecast. For example, the growing trend of “bleisure travel,” when business travelers tack on a few days of leisure time, may change hotel demand forecasts.

Consider the Impact of Events/Holidays

External factors, such as events, holidays and weather, may have an impact on the overall revenue forecast, so it’s important to consider their influence. Events and holidays may be outliers or cause timing changes when analyzing data for a forecast. For example, if a national holiday falls on a Thursday, it may create a natural opportunity for increased business-leisure travel, in contrast to the prior year when it fell on a Wednesday.

Segment Your Forecast

For most hotels, room sales are the largest source of revenue. However, because room sales are not hom*ogenous, it’s a best practice to break room revenue down into segments and forecast each individually. The broadest way to dissect the room revenue is by the type of guest: corporate, group or individual. Other high-level segmentation approaches use distribution channels, such as online booking sites versus direct booking, or room type, such as double versus suite. Other more granular but standard segments include group on business (GOB), individual business traveler (IBT), local event indicated (LEI), rack rate/general tariff (RACK or GT), convention (CONV), committee meeting (CMTG) and international traveler (IT). An added bonus is that forecasting by segment can help hotel managers better plan for the different services and preferences of guests, such as complimentary coffee for leisure travelers as compared to free WiFi for business travelers.

Continually Review Your Forecast

To keep forecasts up to date, it’s a best practice to set a schedule for reviews, such as weekly or monthly. In addition, put a process in place that monitors changes in the world that impact an underlying forecast assumption and sends alerts to managers to trigger an unscheduled forecast update. Public health issues are the most obvious example, in light of events of the last few years. Forecasts that are updated more frequently help hotel managers make operating decisions more quickly and confidently.

Analyze Your Competitors

Keeping abreast of competitors is another tip for creating high-quality forecasts. When competitors make changes, they often have a ripple effect on the other hotels in the market, rendering forecast assumptions obsolete. Competitors’ changes in pricing, loyalty programs and service offerings can create pressure on revenue assumptions, operating costs and, ultimately, forecasted profitability.

Hotel Forecasting Technology

Most hotels use specialized technology to manage various operating functions, such as reservations, billing, property management and customer relationship management. Together with point of sales and property management systems, this technology provides hotels with a plethora of useful data for forecasting. Harnessing the power of all this data is made easier if the hotel uses automated business intelligence and data analytics tools. When linked to budgeting and planning, forecasts, and all their iterations and scenarios, can be created and maintained more efficiently.

Unlock the Future of Your Hotel’s Success With NetSuite

Technology is essential for creating timely, accurate forecasts. However, it’s important to select a solution that can bring together all the information from disparate hotel operating systems into a single scalable database, such as NetSuite Planning and Budgeting. With NetSuite, hotel forecasters and business managers can spend more time identifying patterns and analyzing trends rather than collecting and cleaning data. Beyond increasing visibility, having an integrated technology solution with NetSuite at the center means that any changes to the forecast can automatically update all the different supporting schedules, reports and KPI dashboards, saving time and eliminating version confusion.

NetSuite Planning and Budgeting helps with all three components of a hotel forecast. It captures statistical data, such as occupancy rates by season or rates paid by room type, to help build revenue forecasts. It connects costs and operational assumptions, which helps build out the operating and financial forecasts. And while it complies with the USALI’s standardized chart of accounts and accounting industry financial reporting standards, it is also fully customizable to reflect the unique needs of each hotel business.

Hotel forecasts and their components — revenue, operating and financial forecasts — are documents that predict the likely future revenue and profitability of a hotel and its ancillary businesses. Such forecasts support decision-making for short-term operating activities, such as setting prices and scheduling staff, as well as long-term strategy, such as capital projects and launching new services. Forecasts help hotels stay on track with overall financial results, extending visibility of likely profitability and cash flow, so it’s critical to produce forecasts that are as accurate as possible. Understanding the hotel industry’s unique challenges and general forecasting best practices can help make hotel forecasts more accurate and useful.

Hotel Forecasting FAQs

How is forecasting done in the hotel industry?

Hotel forecasting is typically done in three parts: a revenue forecast, an operating forecast and a financial forecast. These three pieces align to show the likely revenue and profitability for the period. Creating a forecast requires internal and external data collection and analysis to identify patterns and extrapolate trends, and then apply them to produce one or more expected financial scenarios. The forecasts can be approached using several methods and can focus on short-term or long-term periods.

What types of forecasts do hotels need?

Hotel forecasts have three primary components: a revenue forecast, financial forecast and operating forecast. Revenue forecasts estimate future demand. The operating forecast helps determine the resources needed to fulfill the associated revenue. And the financial forecast puts all the pieces together into a set of forecasted financial statements. Hotels that have substantial ancillary businesses, such as a restaurant or spa, typically produce separate sets of the three forecasts for each of these revenue streams.

How important is forecasting for a hotel?

Hotel forecasts provide many benefits to stakeholders. Hotel owners and managers rely on forecasts to help manage operations and profitability, including setting prices, allocating and scheduling resources and making capital investments. A hotel’s lenders may use forecasts to assess the business’s creditworthiness. And hotels looking to raise capital will likely need to provide forecasts to potential investors.

What is the hotel forecast for 2023?

Several industry analysts believe the hotel industry will have a strong 2023. This forecast is partly based on observed increases in hotel revenue per available room that exceed the increase in U.S. gross domestic product. It is also partly based on certain qualitative factors, such as pent-up demand for both business and leisure travel, post-pandemic.