Demand forecasting is estimating how many bookings you will receive for future dates. Why does it matter? Because a good forecast makes dynamic pricing calmer: instead of reacting late, you act with a plan.
The most important beginner signal: pickup
Pickup is the pace of new bookings for future stay dates. Glossary: Pickup.
1) Signals to track
- Pickup (booking pace): new bookings by arrival date.
- Lead time: how far in advance guests book (by segment).
- Seasonality: patterns by month, day of week, and holidays.
- Events and compression: conferences, concerts, sports, holidays.
- Cancellations: especially with flexible policies.
2) The simplest model: compare to historical patterns (with context)
A classic approach is to compare current pickup to historical pickup for similar periods. Important: history alone is not enough when the market changes. Add context:
- Is there an event that wasn't present in prior years?
- Is booking window shifting shorter or longer?
- Did your channel mix change (more OTA vs more direct)?
3) Turning a forecast into pricing decisions
When a date is building faster than normal:
- raise gradually (small steps);
- check if you are underpricing strong segments;
- consider rules (min stay) to protect peak nights.
When a date is weaker than normal:
- test a small move rather than a blanket discount;
- test value adds (breakfast, parking) instead of pure price cuts;
- review visibility, distribution, and restrictions.
4) Where Sigma Revenue helps most
Sigma Revenue can automate much of the analysis with Demand Forecasting, and keep key trends visible in the KPI Dashboard.
The goal is not to replace judgment, but to give you a faster, more reliable basis for dynamic pricing decisions.