Forecasting is an important management tool for any business. It is the process of reviewing past performance and combining it with present trends and market conditions to project business volume for the next week or month. It is important for a business to be aware of the economic conditions in its market and the actions and performance of its primary competitors.

Forecasting includes projecting future revenues and scheduling future expenses to maintain productivities and profit margins. This all starts with volumes as expressed in rooms sold or customer counts. The amount of activity in a hotel or restaurant will require an established level of wages and other operating expenses to deliver the expected products and services. As business volumes increase, additional wages and operating expenditures will be necessary to properly deliver these expected levels of service. Likewise, when business levels decrease, these wage and operating expenses will also need to be reduced to maintain productivities and avoid unproductive waste in wage and operating costs. It is important for operations managers in any business to possess adequate forecasting skills that will enable them to adjust operating expenses with expected levels of business.