Optimise Your Hotel’s Room Inventory Management For Better Occupancy

In my previous blog on inventory management, I mentioned that we would be discussing about doing your hotel’s room inventory management next time. Well, no more waiting. 

In this blog, I will be touching upon all the aspects related to it, along with some tips to do your hotel’s room inventory management effectively.

What is Hotel Room Inventory Management?

Room inventory management is allocating your property’s room nights evenly without compromising the resulting revenue. If done correctly, it can help you maximise your hotel’s sales and minimise unsold room nights.

It’s one of the important tasks where the sales and front office staff have to work conjointly, since both departments manage various sources of bookings.

However, I’ve seen many hotels allocate inventory vaguely, without proper analysis. Let me share my experience with you. 

I used to work for a well known OTA as a hotel contracting specialist. This involved onboarding accommodation facility providers, updating their saleable room inventory, and running promotions on their listings.

But when asked to share the inventory count, many hoteliers would say random numbers. Budget hotels usually took this kind of approach due to low room count; and filling rooms is a priority than the sources. 

Such casual behaviour towards room inventory management by hotels can lead to various problems. Let’s discuss why you should be doing it in the first place. 

Why Should Hotels Focus on Room Inventory Management?

Room nights are perishable inventory, hence hoteliers have to channelise the sales through various sources like websites, OTAs, social media platforms and offline sales.

To achieve 100% occupancy or at least 60%, the room inventory needs to be distributed strategically. If you under-allocate your rooms on any of the platforms, you tend to lose last-minute bookings from that channel.

On the other hand, if you over-allocate the inventory, you may end up with various sold-out cases in your bucket. 

Apart from that, uneven distribution of room inventory will impact your targeted annual revenue, depending on your unsold nights. 

How to Distribute Room Inventory of Your Hotel?

Well, now that you know why your hotel’s room inventory management is a vital process, here are some tips that can help you in doing it effectively. 

1. Analyse Sources of Bookings

Begin with gathering information about your hotel’s sources of bookings, both online and offline. Make a list of all the on-ground partners, OTAs, social media pages, and other online channels along with the business they have provided to you. 

It’s better if the data is on a day-to-day, MTD, and YTD basis. Once you have the statistics, align them in descending order.

Based on this, you can distribute the inventory to gain maximum business from top providers. But that doesn’t mean you can ignore the other ones that have not performed well.

You can redesign your strategies, work out on offers, and approach those platforms in a new way.  

2. Check Performance On OTAs

Here are some statistics from Statista on OTAs’ contribution to the hospitality industry that are sure to blow your minds: 

That’s huge, I Know. And considering the pace at which the hospitality industry is going digital, OTAs would be a trillion dollar industry. 

So, do keep a check on the business generated from OTAs. Also, see which are popular amongst travelers and register your property on them. 

In case if you find any platform where the booking inflow is low, contact your property/account manager. Additionally, for the time being, keep the room inventory count low for that source. 

3. Invest Time in Guest Segmentation

Whilst you are focusing on sources of bookings, do not forget the different types of guests. It’ll help you allocate room inventory in a better way.

For instance, if your property is a business hotel, then the majority of your guests would be corporate employees. Hence, you can dedicate a higher count of room inventory to the partnered organisations.

Or, if you are a resort which is preferred by large groups and families, then your focus should be on offline travel agents, tour guides, event and trip planners. 

Similarly, you need to determine your audience and share your hotel’s room inventory with sources of bookings accordingly. 

4. Ease Out The Task With Technology

Room inventory management is definitely a tedious task, as you need to update the available inventory on a regular basis for all booking channels. Also, remembering passwords for all the dashboards is another challenge.

However, technology has made this task easier for hoteliers. With the help of a robust PMS and right channel manager, you can do this in a couple of minutes. You just need to check if the former one supports easy integration.

Further, if you need more clarity on factors to consider before opting for a PMS, here’s a complete guide for you. 

Another reason to use these software is automation. Because of that, updating room inventory as closed during sold-out situations becomes easier. 

However, I’ve seen many hotels marking themselves as sold-out on OTAs during peak season to facilitate maximum direct bookings. 

I would say don’t do that. Instead, you can smartly channelise it through offline sources. 

Didn’t get it? Let me explain. 

5. Don’t Forget Offline Sources

Travel agents have been an integral part of the hospitality industry for a long time, even before the internet came into existence. 

However, with OTAs in the picture, these travel agents lost their hold on the market to a great extent. In fact, the ones dealing in the B2B segment had to get themselves online to promote their business. 

Hence, many hotels prefer online booking platforms over travel agents. But, let me give you an insight. 

Even though OTAs have larger discounts, when it comes to booking a group or family trip, guests still prefer going to travel agents for packages. Especially during peak season, they reach out to trip planners to get an end-to-end solution.

So, while you update room inventory for online platforms, allocate some to offline agents as well. Just invert this process during peak periods.

Trust me, this tip will definitely come in handy during your hotel’s room inventory management.

6. Promote Last-minute Booking

One of the trending ways that hotels approach to achieve 100% occupancy is promoting last-minute bookings. This is the last strategy to be followed during your hotel’s room inventory management. 

The reason I kept it for the end is that if not done correctly, this technique can backfire. I even have a relevant example to prove it. 

When I used to work in a known OTA, one of my clients activated a last-minute offer to get maximum bookings. However, he failed to put an end date for the same. 

This resulted in bookings being made at discounted rates for the entire week, leading to a loss of around ₹30,000. Since they made the error at the hotelier’s end, the property had to honor the reservations. 

So you see, if you are resorting to last-minute bookings to achieve 100% occupancy, ensure you do it in the right way. Here’s a blog you can refer to for the same. 

How to increase last-minute bookings?

How to Do Your Hotel’s Room Inventory Management on OTAs Effectively?

As I said earlier, OTAs hold a majority share in the online booking market. And you need to have robust planning to manage them effectively. Because if you go with your hotel’s room distribution haphazardly, it’s going to affect your revenue. 

Here are some tips on how to do it properly. 

1. Update Inventory for Longer Duration

First of all, you need to understand that not everyone makes spontaneous travel plans. Some people plan for later too. 

For instance, many events like sunburn, travel fest, and food fairs are scheduled at the start of the year. Hence, people attending such events need to plan their stay accordingly.

Not only such events, long weekends and holidays also fall in this list. That’s why, it’s better if you update your inventory for a longer duration.

Websites like Booking.com, Expedia, and other renowned OTAs allow you to update your hotel’s room inventory for 1 year. This means that if guests are trying to book a stay at your property even for 6 months later, they can do that. 

But, don’t forget to update your hotel’s tariff too for that duration. 

2. Bring Revenue Management Services to Aid

These days, a lot of hoteliers are opting for revenue management software (RMS) or hiring revenue managers. It helps them in shrugging off the burden of calculating, updating, and monitoring rates every moment.

Apart from this, revenue managers guide you on:

• Booking platform that provides good business
• Packages that your hotel should promote
• Offers that can help in increasing business
• Improvements needed to bring an influx of bookings
• Other opportunities to maximise your annual revenue

Basically, a huge part of a hotel’s business development is transferred to revenue managers, which they handle efficiently with help of RMS and, of course, their experience. 

To help you learn more about this topic, here’s an archive of some of our best blogs on RMS. 

Learn Everything About Revenue Management Here

3. Ensure Rate Parity Across All Channels

As I said above, that I was working with an OTA, another challenge we faced on a regular basis was rate parity. And this was a big problem; not only for luxury hotels, but also for budget properties. 

The reason being, every OTA has a different commission structure. Generally, it ranges from 8 to 25%. Hence, it’s obvious that hotels would update higher tariffs on platforms where they shed more commission. 

However, displaying different rates on portals can result in uneven business flow. For example, if you update a tariff of 100 USD on Booking.com and 125 USD on Go-MMT, guests would prefer the former one. 

Which means, your booking flow from the latter one will go down, and eventually due to rate discrepancy you’d lose a source of business. That’s why it’s vital that you maintain rate parity across all the platforms. 

4. Update Proper Cancellation Policies

Another factor you need to consider during your hotel’s room inventory management is cancellation policies. It’s no secret that guests tend to cancel travel plans at the last moment. 

It can be due to some change in plans, intriguing deals at other properties, or some unexpected circumstances. In either of these situations, it’s the hotels who suffer the loss. 

In fact, this is more problematic when the bookings are at pay at hotel mode. Therefore, when you allocate inventory on OTA, ensure that you update cancellation policies. 

Pro-tip: Keep a zero or 50% refund policy if the bookings are cancelled less than a week before the check-in date. In this way, you’d be able to avoid huge losses and have ample time to get those unsold rooms booked. 

5. Keep a Check on Cut-off Periods

For the final check, keep your cut-off period for a minimum of 1 day and maximum of 3 days. Now, if you are unsure of what the cut-off period is, let me tell you about it. 

Cut-off period is the time set by hotels up to which the guests can book their stay. Post-that the inventory would be shown as sold-out. 

Let’s say you’ve updated the cut-off period as 3 days. This means that guests can book their stay up to 3 days prior to their check-in date. However, if they want to reserve a room on the same day, your property would be shown as sold-out. 

This part is useful if you plan to up-sell your inventory or facilitate direct bookings. However, if you’ve a lot of unsold inventory, update the cut-off period as -24 hours. It will enable you to fetch last-minute bookings. 

This part is useful if you plan to up-sell your inventory or facilitate direct bookings. However, if you’ve a lot of unsold inventory, update the cut-off period as -24 hours. It will enable you to fetch last-minute bookings.