Forecasting

Forecasting For Optimum Profitability Opportunity to Improve BSC scores

Agenda

1. Why Forecast 2. Current Forecast Trends a) 2019 Results & Trends

b) Best Practices and Learnings

3. Best in Class Hotels

a) SLLN- Rooms Revenue b) SLBL- F&B Revenue c) SLV- Cost Forecast

4. Optimal Use of Tools For Better Forecast

5. Changes to BSC Measurements for 2020

Forecast: To Enable High Value Business Decision Making

High

S&M Plan

Staffing Levels

Cash Flow

Inventory & Distribution Strategy

Purchase Decisions

Intervene

Operations Planning

Hotel Maintenance

Pricing Strategy

Financial Forecast

Low

2019 Results

BSC Score 2019: EBITDA Forecast Accuracy

O P P O R T U N I

4.1

Best Performance- SLLN

No. Of Months < 1% : 4

No. Of Months 1- 5% : 4

2.6

2.3

T Y

1.3

1.2

1.1

0.7

0.5

0.3

HJMD SLTO SLPR

SLAD

SLIB

SLND SLTR

SLMD SLMU SLV

THAD SLBL

SLDB

SLLN

2019 Trends : Average Forecasting Variance (Monthly)

25%

EBITDA –Below 10%

23%

No. of hotels : 1

21%

Lowest Yearly Average : 9.8%

20%

Highest yearly Average : 37.5%

GOP –Below 10%

15%

No. of hotels : 0

Lowest Yearly Average : 10.4%

10%

Highest yearly Average : 31.4%

GOR –Below 5%

No. of hotels : 3

Lowest Yearly Average : 2.6 %

Rooms

F&B

Banquets

GOR

Dept Cost

UD Cost

GOP

EBITDA

Highest yearly Average : 10.6 %

Best Practices

and Learnings

GOR Forecast Process Flow and Ownership

Room Revenue Forecast DORO

Groups Forecast

DOSM DOS

Catering Revenue Forecast DOEM

Inhouse Covers & Event Covers for ADD

GOR Forecast

DORO DOSM

F&B Outlet Forecast

Reviewed & Approved by GM

Occ. & Covers

DOFB

OOD Revenues

DORO DOSM

Respective HOD

DORO DOSM

Forecast by Segment by Day Forecast by Seg ent by Day

Forecast by Day

Hotel GOR

ODD Revenue Forecast

Forecast by Outlet Forecast by Outlet

GOR to EBITDA Forecast Process Flow and Ownership

DOR

EHK

Room Cost

Chef

DOFB DOF

F&B Cost

EBITDA Forecast

HOD

DOF

OOD Cost

Occupancies by Day, Covers & Total Revenues

DOHR

HODs

Labour Cost

Undistributed Expenses

Consolidated & Verified by DOF

DOF

DOE

DOSM

DOC

A&BP

High value decision require long term visibility

Hotel SLV SLTO SLPR SLLN HJMD THAD SLTR SLND SLMU SLMD SLIB SLDB SLBL SLAD Apr 0% -1% 0% 0% 0% 1% -15% 2% 4% 0% 1% 0% 0% 0% May 0% 0% 0% 0% 0% 1% -6% 0% 20% 0% 7% 0% 0% 2% Jun 2% -5% -2% 0% 0% 0% -1% 0% -11% 0% 7% -4% 0% 1% Jul -1% -6% -3% 0% 0% 8% 9% 0% 0% -13% 2% 0% 0% 2% Aug -2% -4% -5% 2% -1% 0% -1% 0% -4% -13% 0% -11% 0% -1% Sep 0% 0% -11% 1% -2% 1% 0% -2% 15% -8% 2% -10% 0% -2% Oct -18% -7% -10% 5% 0% -10% 0% -2% -5% -25% -2% -13% -4% -1% Nov -10% -11% -11% 0% -4% -16% -3% 0% -13% -27% -9% -18% -6% -11% Dec 2% -2% -10% 4% -7% -14% 4% 2% -18% -32% -16% -14% -7% -16% Forecast Vs Budget

We tend to over Forecast “Volume”

50% Room Revenue Forecast > Actual

68% F&B Revenue Forecast > Actual

Occupancy: 6 times out 10 times

Covers: 5.7 times out 10 times

•

ADR: 4.2 out 10 times

Check: 5.5 out 10 times

•

Room Revenue: 5 out 10 times

F&B Revenue: 6.8 out 10 times

•

Over Forecast “Volume” = Over Forecast Cost

69% Forecast Total Cost > Actual

Over Forecasting Cost: 6.9 times out 10 times

Best in Class

SLLN: Room Revenue Forecast Variance

8.0%

6.2%

6.0%

SLLN : Avg Variance 2.4%

4.5%

4.3%

No of Months below =>2% : 7

4.0%

No of Months below 2- 5% : 4

2.0%

1.8%

2.0%

1.4%

1.3%

1.0%

Average ADR Variance : 3.3%

0.0%

Average Occ. Variance : 4.2%

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

-0.7%

-0.1%

-2.0%

-2.6%

-3.3%

-4.0%

Start by building a Robust Strategy

Understand demand trends- pace vs STLY or vs. similar period CY.

•

Impact of Strategy by Segment

Build in impact of your strategy.

•

Demand Trends

Look at and forecast special events separately.

•

Special Events & Market trends

• Forecast by segment by day – do not just forecast the segment for the month overall.

Detailed Day by day forecast

Focus on the BIG 3 segments – get these right.

•

Focus of Big 3 Segments

• Implement sell strategy by segment.

SLBL: F&B Outlets Forecast Variance

10.0%

6.4%

5.0%

4.1%

SLBL : Avg Variance 5.8 %

2.0%

No of F&B Outlets: 9

0.3%

0.0%

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Ratio of Outside Covers: 70%

-2.3%

0.0%

-5.0%

No of Months below 5% : 5

-5.2%

-7.4%

-7.8%

-10.0%

-10.6%

-15.0%

-15.5%

-20.0%

Ownership and Long Term Planning

3 Months Rolling F&B Calendar

Ownership with Restaurant Managers

Division’s forecast is built up from

F&B Promotions Calendar is planned

•

each outlet manager’s inputs thereby promoting individual ownership.

well in advance and is finalized 3 months out by the participating outlets

SLV: Total Cost Forecast Variance

6.0%

4.4%

3.7%

3.6%

4.0%

3.5%

SLV : Avg Variance 3 %

2.0%

No of Months below 1% : 4

0.4%

0.0%

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

No of Months 1-5% : 8

-1.1%

-1.4%

-2.0%

-1.6%

Ratio of Months with Cost Over Forecast : 50%

-3.5%

-4.0%

-6.0%

-6.4%

-8.0%

BSC Best Practices Sharing – Our Business

1. Importance of ownership and establishing lines of communication ▪ Overall responsibility of DoF but collaboration with all HoDs ▪ Each HoD should own their respective P&L

2. Adhere to the Forecast Sequencing

Preliminary Forecasting Discussions with ExCom

• Room Revenue Management • F&B P&L • A&BP expenses adjustment • Labor Costs

Soft Forecast

Final Forecast

3 rd /4 th

26 th

Last week of the month

Monitor the expenses daily

BSC Best Practices Sharing – Our Business

3. Have the right cost control processes in place ▪ Direct Costs:

– Purchase Order control on the procurement system – F&B purchases monitored by the cost controller – Daily food flash sent to the Kitchen team and F&B leaders – Phasing costs across the months to help manage cash flow (e.g. bulk orders, guest/operating supplies) ▪ Undistributed Operating Expenses – Utilities: monitor weather forecast & predict consumption changes – Preventive Maintenance Program ▪ Fixed Costs ▪ Contingency Plan required for unexpected events and market volatility: know where are the savings, where to freeze first

4. Always forecast costs by monitoring your cash balance to avoid any type of liquidity crisis. Adjust the working cap accordingly

5. Publish, monitor and adjust results

Optimal Use of Tools

Tools: Turn Big Data into Smart Data

Data Analysis

Market Trends

Comp Set Intelligence

Pillars for Forecasting

Market Trends

Comp Set Intelligence

Internal Data Trends

IDeaS RMS: Uses Advanced Analytics to Forecast for rolling 365 days

IDeaS RMS: Easy to use Dashboards providing Demand Forecast and Trends

IDeaS RMS: Operations Planning Report

MINABA/Ontrack: Demand Forecast data for better Labour Management

Director of Revenue inputs forecast

Occupancy

• • •

Arrival/departure

Guest count

IDeaS Operation Report

MINABA Report / Ontrack.

Combined & Misc Activities Room Credits

Combined & Misc Activities Arr + Dep

Rooms Statistics Ttl Arrivals

Room Statistics Ttl Departures

Room Statistics Ttl Rooms Occ

Room Statistics Ttl Guests

Date

Weather Hi

Weather Low

Weather Sky

12/6/2018

-3

Mix Snow / rain

179

197

214

185

12/7/2018

-3

-5

Light snow

137

108

115

193

12/8/2018

-2

-5

Mix Snow / rain

126

183

202

219

169

12/9/2018

-1

-5

Light snow

139

107

114

196

12/10/2018

-1

-2

Light snow

132

146

158

111

12/11/2018

-2

-3

Light snow

154

171

184

155

MINABA/Ontrack: Demand Forecast data for better Labour Management

• With the determined labor standard the actual allocated hours for next week are determined for each HOD • They will input the schedule and will need to ensure that the labor is in line with the forecasted hours • This will be review and adjusted on Thursday if unable to justify the variance

• Tuesday – Room forecast Enter for next 2 week • Wednesday – DOH Input covers & Schedule • Thursday – Labor Meeting& Revision of Schedule • Friday – posting Schedule in department

Tableau: Easy to use Business Trend Dashboards

Pillars for Forecasting

Internal Data Trends

Market Trends

Comp Set Intelligence

Demand 360: Use Historical & Future pace data to anticipate comp sets action and strategies

Demand 360: Detailed information even to a per day level

Demand 360: Information available at Market and Channel Segment level

Pillars for Forecasting

Internal Data Trends

Market Trends

Comp Set Intelligence

Forward Keys – Identify Risk and Opportunities for Planning

HOTSTATS: Market Cost & Profit Trends

Forecasting in

Uncertain Times

Scenario Planning- dealing with uncertainties (i.e.Covid-19)

• Define the multiple potential scenarios • Revenue drop by X%

Assumptions

• Clearly define your Trigger Points • e.g. Travel Restrictions announced/ Flights from largest market stopped •OTB drop to X level.

Trigger Point

• Daily Tracking • Consistent Reporting

Tracking

•What actions will be taken ? •Who is responsible ?

Action

• Action have been implemented and are getting the desired results

Review

BSC 2020 Targets

Changes to Measuring Mechanics

Three Months Trends

1% Bonus Points

15%

The calculation will be based on a average of monthly and 3 monthly forecast trends.

If the variation is below 5 % for half of the forecast.

Expanded Variation Range

Going Forward

2020

Forecast to Optimum Profitability

Forecasting is critical step for strategy and planning.

•

• It is a team exercise, but with clearly defined ownership.

• Hope for the Best but plan for the Worst, keep your scenario’s ready.

• Forecast EBITDA for at least rolling three months, to enable high value decision making.

Focus on profitability not volume.

•

• In present business environment for planning and forecasting market and comp set information is critical.

Q&A

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