Project Overview: Forecasting Hotel Average Daily Rate (ADR)
This dashboard presents a comprehensive and innovative approach to forecasting Average Daily Rate (ADR) for the U.S. hotel industry. The project was initiated to overcome the significant cost barrier of purchasing industry-standard STR data, a common challenge for startups and budget-conscious organizations. By pioneering a new methodology, we have successfully created a reliable and cost-effective forecasting tool that delivers crucial market intelligence.
The Challenge and a Creative Solution
The primary goal was to forecast ADR without the steep expense of a subscription to STR data. The breakthrough came from identifying a publicly available, yet highly relevant, data source: the Producer Price Index (PPI) for 'Hotels and Motels, Except Casino Hotels: Guestroom Rental' published by the Federal Reserve Economic Database (FRED). This index, which tracks the change in guestroom costs across the USA, provided the foundation for our analysis.
Data Validation and Model Development
To ensure the PPI could serve as a reliable proxy for ADR, we conducted a historical analysis comparing it to previously published monthly ADR figures from STR. This critical step confirmed a strong correlation between the two datasets, allowing us to accurately tie the PPI index value to a specific ADR. This validated relationship became the cornerstone of our predictive models.
Automated Forecasting and Actionable Insights
With a proven methodology, we developed a robust forecasting system. Leveraging the FRED API, we have direct and continuous access to the PPI data, enabling automated updates and dynamic forecasts. This dashboard is the culmination of that work, offering a forward-looking view of hotel ADR that is both data-driven and financially accessible, empowering strategic decision-making without the high cost of traditional data providers.