On January 27, 2014, PKF Hospitality Research, LLC (PKF-HR) released the results of their latest assessment of the accuracy of their Hotel Horizons® forecasts for the U.S. lodging industry. This is the third periodic review conducted by PKF-HR since 2005 and is an important and critical component of the firm’s forecasting efforts.
Measuring the accuracy of forecasts involves an analysis of errors and often an examination of the sources of these errors. PKF-HR’s recent assessment, involved an investigation of both absolute errors (the difference between actual and forecast performance) and relative errors (the difference between results from the Hotel Horizons® model and forecasts from an intuitive approach). The assessment analyzed PKF-HR forecasts for the period 2007 through 2012.
“When we initially entered the econometric forecasting business 14 years ago, we committed ourselves to a process of continuous self-evaluation. Overall, we remain pleased with our demonstrated accuracy. We have learned that the accuracy of our forecasts varies with changes in the business cycle, as well as size of the market to be forecast.”
- Mark Woodworth, President, PKF Hospitality Research
PKF-HR’s Hotel Horizons® is a series of hotel forecast reports that analyze the historical and expected performance of U.S. lodging markets. Driven by a series of econometric forecasting models, the Hotel Horizons® reports cover five years of supply, demand, occupancy, ADR, and RevPAR for 50 major U.S. markets, as well as six national chain-scale segments and six national location categories. Within each market forecast, separate estimates are prepared for upper-price and lower-price hotels. The model relies on historical lodging data from Smith Travel Research, as well as historic and forecast economic data from Moody’s Analytics.
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