The Power of What-If Calculations in 2023
In the wake of the global pandemic and its impact on the hospitality industry, financial planning and revenue management have become crucial for the survival of hotels. The uncertainty of when travel restrictions will be lifted and when travelers will return has made it necessary for hotels to plan for multiple scenarios. With the help of software for financial planning and revenue management, hotels can use the What-If calculation tool to simulate different scenarios and calculate the impact of changes in variables on their financial performance.
The benefits of What-If calculations include gaining insights that guide decision-making, quick response times to short-term demand variations, and risk assessment for long-term commercial decisions. The tool offers flexible time periods as well as individual evaluation for each hotel department, which helps in driving decisions and analysing sales strategies and price regulations.
For instance, hotels can compare three alternative “Post-Corona Scenarios” to make the right strategic decision. These scenarios could be a delayed start into the summer season with limitations and partly opened borders, a start in midsummer with relatively strong restrictions, or a start in autumn with a very strained economic situation. By using What-If scenarios, hotels can determine which scenario would generate the highest level of profit margins and make provisions for the corresponding room rate.
In conclusion, the What-If calculation method is a necessary tool for hotel financial planning to ensure long-term economic performance and competitive advantages. As a proven hotel-specific software for planning revenues and costs alike, FairPlanner can help hotels plan for uncertain times and make informed decisions based on fundamental economic principles.