What is Demand Forecasting, and How Rev-AI Helps You Make More Profitable Forecasts?

If there is one word that describes the car rental market today, it’s ‘volatile.’

Given the debilitating scenario of Covid-19, the volatility across all markets has gone up multifold. So, for any business to thrive in unpredictable markets, it became essential to do away with ‘assumptions’ and rely on machine learning forecasting methods.

The more accurate the forecasting, the better chance any business has at attaining a fair grasp on the changing market demands.

Specifically speaking, the change in demand in the car rental industry is complex and dependent on several factors, yet it’s also potentially regular. As such, if a car rental company anticipates the future demand correctly, it could just change the entire course of its business.

What is Demand Forecasting?

In business terms, demand forecasting can be defined as making reliable estimates about how the demand curve will look in the future.

This future demand is studied for a certain period while using historical data, current trends, facts and figures.

So, with an accurate demand forecast, a business earns a chance to attain essential information about its position in the current market. This dramatically helps managers to do revenue management and make well-thought decisions about growth strategies, pricing, and future market potential.

Without it, any business, especially a car rental business, risks making ill-informed decisions that could negatively impact supply chain management, customer satisfaction, and profitability.

You wonder why a car rental business, especially?

Well, the pandemic caused quite a paralyzing effect on the car rental industry. And with this sudden fall in demand, a lack of fleet supply, and several car hire alternatives arose.

But now, the travel sector is witnessing the renewed zest of the long-lost travelers.

This makes it the right time to forecast future trends and gain an early-bird advantage. Keeping this in mind, demand forecasting is crucial for the car rental industry at this stage of the post-pandemic world.

Why is Forecast Important?

An accurate demand forecast does more than offer a fair idea of future customer demands. Its importance can be understood through the following reasons:

• It allows businesses to gain resourceful insights, which helps set goals and set a budget. This would inadvertently help in matching the supply with the customer demand.
• It helps businesses to assess the number of staff required to ensure the smooth running of operations.
• It ensures that businesses can optimize their inventory or fleet according to customer demand.
• It enables the business to move their fleet or inventory from one location to another, as per customer demand to provide better service and less wait time to customers.
• It allows businesses to understand the spike in future cash flow. This can further help them to invest in the business with great exactness.
  So, in short, to be well-prepared to deal with the oscillating market changes, a demand forecast is essential.

How Effective is AI at Forecasting Demand?

Relying on traditional forecasts may help to a certain extent, but there is no way to ensure how precise it might indeed be. This is because the traditional forecasting methods always only consider the historical facts and figures and the competitors’ pricing.

However, now since both the businesses and markets are getting increasingly complex, the amount of data that needs consideration is also immense.
This is where the magic of artificial intelligence waltzes in.

An AI-powered solution can help reduce manual errors from 50% to 30%. Additionally, AI forecasting can reduce sales losses arising from a lack of inventory situation by 65%.

These numbers are so big that they simply cannot be shrugged off.

Moreover, with machine learning involved, businesses can now enjoy a higher degree of practical and precise demand forecast. This means the accuracy of the forecast comes from the usage of real-time data that makes the best of both the external and internal data sources.

Not to forget, AI not only utilizes sources like social media, demographics, weather, online reviews of competitors, etc. but also implements a machine-learning algorithm.

Thus, this AI-led demand forecast can outperform the manual forecasts undertaken by other companies. To add to that, it ensures that businesses are armored with specific solutions that can help them make adjustments to certain external changes.

What is Rev-AI, and How does Rev-AI Work?

Rev-AI is the world’s first AI-powered solution for revenue management.

Its functioning is relatively simple. The revenue management platform has about 25 demand indicators that offer insight into the hyper-local demand, thus allowing businesses to understand market potential.

The car rental businesses can then get automatic price recommendations to adjust the prices based on the location, car segment, and channel and distribute these prices across channels with a single click. To add to that, it helps the business reach its maximum revenue potential every single day while helping businesses track and monitor the most important metrics for their growth.

Furthermore, Rev-AI’s price optimization module enables the business to capture extra market share. This is possible through an AI-powered engine that accurately recommends prices as per the market demand.

Moreover, the revenue optimization platform will also highlight future dates that need extra attention and recommend specific pricing for the next 90 days.
So, with Rev-AI, there will never be a miss of opportunity when it comes to revenue maximization!

How can Rev-AI Help you Forecast Demand?

If you are still wondering how Rev-AI would help your car rental business, here’s how:

1. Offers accurate future demand
   
   If you want your business to be a leader and not a follower, then it’s essential to grasp the changing trends of the market. While businesses once indulged in historical forecasting methods, the same is not good enough anymore in this post-pandemic market. But, with Rev-AI, you do not have to depend on the traditional methods. Its foolproof AI algorithm and 25 demand indicators will help your business identify the macro-level and hyper-local demand. So, knowing these specific high-demand dates will allow you to navigate your car rental business accordingly, and match the customer’s needs.
2. Provides genuine insights about the market potential 

   The traditional pricing methods indeed ensured that you fairly priced your services, but you had no way to gather real-time information about market potential. However, Rev-AI can help fix that! It provides the actual picture when it comes to the market demand and enlightens you about the market share that will fall in your lap. Hence, overall, it allows you to track competitive prices, steady your booking pace, make the best utilization of available car fleets, and set the average rental length.

3. Helps to optimize rates
   
   Rev-AI is not only an AI-powered solution that helps understand future demands but also helps in achieving the optimum pricing for each car in your fleet. In an industry like car rentals, dynamic pricing is crucial. For that, it’s essential to understand the changing demand, which could then possibly help you change your prices accordingly. So, based on the car fleet you own and the end goals you have in mind, Rev-AI helps you adjust your prices to the optimum level. This also means that the next time the market demand hits a new peak, Rev-AI will prompt you to boost your pricing, allowing you to maximize your returns! As such, no more spending hours comparing competitive rental prices to formulate a car rental pricing strategy. And you no longer have to navigate through varying data sources and turn them into complex spreadsheets. Rev-AI will help optimize your pricing efficiently while mitigating any room for human error.

Case study

Established in 1989, Budget Nevada is the biggest ABG car rental franchise in North America that is now navigating through post-pandemic changes with Rev-AI.

Like any car rental business that wants to bounce back into the game in this post-pandemic world and maximize its revenue, it had to leave historical data methods only and adopt machine learning.

So, that was exactly what Budget Nevada did!

It made the best of Rev-AI’s 25 demand indicators to understand the hyper-local demand and the overall market potential. Additionally, it navigated through the dynamic pricing strategies via Rev-AI’s price optimization module.

So, with this AI-powered solution, Budget Nevada could now enjoy detailed and precise real-time market insights and curate a concrete action plan. This is what any car rental business needs in the present market scenario to find its footing again in the industry!

Wrapping up

Markets are always best known for their unexpected changes and transient stability. Given the global pandemic, that brief moment of stability also went for a toss.

But, now, with the new normal awaiting us and traveling becoming increasingly common, it’s time for the car rental business to shine yet again!

This is the time to ditch the manual rental car price comparison methods and take the help of the best AI-powered revenue optimization platform.

With Rev-AI’s inbuilt metric system, AI algorithm, and demand indicators, your car rental business can enjoy the most accurate demand forecast. Not to forget, it also helps businesses surpass all the risks related to revenue adjustment.

This means that you can focus on offering your customer an excellent experience, while Rev-AI will take care of the rest to help your business grow and thrive!